cold calling to find deals - viable?

Question

LA has a 5% turnover rate, meaning 5 in 100 homeowners sell their home and move into a new one every year.

Knowing that, couldn't someone just cold call homeowners and say something like..

"Hi, this is Marc Phips from Cool Real Estate Company..I am calling because my company has buyers looking for a home in your neighborhood. Are you thinking of selling in the near future?"

The math tells me that if I was on an autodialer making 1000 dials per day, I'd have to find a decent lead every day or two.

Why wouldn't this work?

Robert Lorenz · Answer

@Marc Valencia cold-calling homeowners is absolutely a viable strategy! Many very successful agents and wholesalers make cold-calling one of their primary lead gen spokes. Look on YouTube for videos of wholesalers and Realtors (and various other business/sales people) cold calling prospects for business.

disclosure: this (cold/warm calling) is my primary lead gen spoke, second only to door-knocking and networking.

disclosure: this (cold/warm calling) is my primary lead gen spoke, second only to door-knocking and networking.

Dominic Turner · Answer

Cold Calling WAS good before everybody and their momma started doing it. Lol! It works, but if you're in a competitive market you have to do major big volume of calls to see any decent return.

Andrew Johnson · Answer

@Marc Valencia Simpler way to think about it:

What’s the ratio of wholesale deals to total residential real estate transactions?

Multiple that ratio by the 5% of Los Angeles residents and you should see what a ballpark conversion rates of a non-targeted cold-calling campaign might look like.

Robert Lorenz · Answer

lol agreed on my best days I'm just hitting 500 calls using Mojo 3-line. Also, that line Marc uses "calling because..." sounds like it came right off a Mike Ferry script ;]

Andrew Johnson · Answer

@Marc Valencia As far as I know, realtors still do occasional door-knocking for business, hand-written notes in envelopes dropped on a doorstep, cold-call, and they also do mailers as well.  And that's just to get a potential listing rather than trying to buy.  @Robert Lorenz is probably on the right track with searching on YouTube for people doing it.  However, if you're taking the shotgun approach you might have to think through the "deal" that you think you're going to offer:

1.) Are you going to try and wholesale the property?  Get it under contract at 70% of the value?  Why would I (in an active market like Los Angeles) do that?  There are reasons why: a.) no holding costs for a vacant house, b.) frees up capital to buy a new house sooner, etc.  But that's a small portion of that responding group.

2.) Are you going to do a buy-and-hold strategy?  Most Los Angeles properties have trouble cash-flowing at anywhere close to retail price.  Whatever price you can pay to make the deal cash-flow, I can probably get a better net (after realtor fees) by selling the "conventional" way.

3.) Are you going to try and do a rehab project?  How do you know your list is going to be just run down homes?  I'm not saying it's not possible to buy that list but it's probably going to take some effort.  Not to say it can't be done, just to say it's not that simple.

Anyway, the big difference is that realtor can be happy with *any* deal.  They are there to resell and make a commission.  So the 5 responders are all viable leads for them and potential business.  Depending on what you want to do those 5 responders could be potential leads but it's far more likely that it's 5% of those 5 responders that are real leads.  And there is a challenge in Los Angeles (and other affluent areas) where fewer people "need money quickly".  If I moved I could afford two mortgages for a few months to get the best price for my primary residence.  If I was in fly-over country making $15/hour in a sawmill (I know, this is a horrible unfair almost parody of middle-America) I probably can't do that.  So, unless you're a realtor, you'll have less leverage in a place like Los Angeles.

And I hope you mean 100 calls a day, not 1000 calls.  In my experience it takes 2:30 to dial the phone, have it ring, hit a voicemail box, leave the message, press # or whatever to confirm it was sent, etc.  2,300 minutes is 38 hours.  :-)

cold calling to find deals - viable?

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