If I had a “secret sauce” (besides determination and persistence), I would say it comes down to how I pull my leads. Whether acting as a real estate agent or investor, your whole business in real estate marketing is based on the quality of the list you pull. And for real estate agents out there reading or investors who are thinking about picking up their license, I am about to share with you one of the most lucrative methods I know to get high converting potential listing leads (sellers) as an agent. These leads are individuals who are often ready to move, and the beauty is you are often contacting them before they start to actively look for an agent to represent them and before they start receiving marketing from anyone else.
The Most Lucrative Real Estate Agent Leads
Most people just get their data from a third party and call it a day. That’s fine, but I would strongly advocate getting your hands dirty and doing it yourself. The way I approach this is like a data scientist — but you don’t have to have a bunch of experience or a technical degree to do this. In fact, it’s pretty easy, and if you remember elementary math, you will be fine. But being able to understand what is going on within the data is the difference between getting mediocre leads and getting a highly converting, lucrative list.
Now, carpet bombing has its advantages; don’t get me wrong. This is something I love to do if I want to announce a new listing to a neighborhood or let everyone know the house on the corner was just sold by me, but for my bread and butter, there are more cost and time-effective ways.
They Key: Subdivision Turnover Rate
The variable I am going to teach you when looking for listings is what I call “subdivision turnover rate.” To put this into laymen’s terms, everyone is going to move for one reason or another, whether that is to upsize, downsize, move for a job or move out of state. No one is going to stay in the same house forever.
For any given house in a neighborhood, you can view a detailed history, and within that history will be a certain amount of time on the deed date. Whether that is a few years or over a decade, you want to get this number — use either the average or median for the whole neighborhood. You can obtain this data from your local Central Appraisal District (CAD). I do this with basic software tools that come with Windows, namely MS Access and Excel, once I have the data. Every county is different, from how they organize their data to how they store it. For some counties, you can download it for free off their website, while in others you have to pay for it, and some won’t even list it on their website; you may have to call or email around before you can obtain it — and even then, they might charge you for it.
Once you have filtered down to your target market area and the neighborhoods you would like to market to, you need to find the subdivision turnover rate. This is very simple, and all you need to do is look at the difference between the current year and what the deed date was for the last owner of record. You are looking for the deed duration of the PREVIOUS owner of the house, not the current owner. Once you have this, you can simply find the median or average (depending on your preference) of the deed date. Usually this is anywhere from 5 to 11 years or so.
If you know a little bit about Access or Excel, this can all be automated for you once you know what you’re doing when you poke around the database. Alternatively, this can be something that can easily be outsourced once you teach someone how to do it correctly.
Find Your Targets
Now here comes the fun part: You can start to target individual houses within the subdivision that will likely be moving soon.
What we will do is filter out all occupants that have been in their house for greater than or equal to whatever number you found for the subdivision turnover rate. For example, if one of my target market areas is Dallas and I am farming the Preston Hollow subdivision, let’s say the database showed the subdivision has a median turnover rate of 10 years. I will filter out any occupants within that subdivision that have not been in the current house for at least 10 years. What I am left with is prospects within the neighborhood that are likely to move sometime soon in the future. How can I be confident in saying this? Because we already looked at the subdivision turnover rate. This is historical and hyper-local for that specific neighborhood. I have been doing these types of mailings for many years and can tell you first hand this technique works.
How to Mail Prospects
For these leads, I recommend mailing them once every 3 months or so — about 4 times a year. Whatever your marketing piece, just stay in front of them. I have historically found this to be my single best use of marketing dollars for acquiring new listings as an agent. This is in essence how I would recommend people “farm” an area. Remember as well to pull the list for your neighborhoods at least once a year so you can make sure you are always mailing the warmest prospects.
Investors: Do you use this method to find deals? What’s your favorite way to find motivated sellers?
Let me know with a comment!