Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
Hey folks, yesterday I was reading through a discussion in a Facebook group and someone mentioned using bandit signs to advertise "fake" homes for sale - just to build a buyers list (sorry... this property just got sold this morning - but can I add you to my list for other deals.)
Is it just me or is this ridiculous to start off a relationship with a cash buyer with a lie? Or is this just smart marketing?
I am pitching a Reality TV show where I go around to different cities, then take and deface illegal signs. I am working out different money shot ideas, my favorite currently is the one where I call the Bandit signer, have him meet me to show me a property, then I get his reaction when I show him all his signs, cut into pieces, in the back of my van.
The irony is you usually have another fraud getting added to your new list, newsflash they aren't a real buyer just as much as you aren't a real wholesaler.
It really is simple to get buyers, look at the data. You can get it for free from your title company and it will show you who really purchased a property in cash in the last 90-60-120 days etc... Then you know you have the real deal on your list.
I'll admit that I have done this when I first started out. However, looking back, I should not have. It would have been much more beneficial to be upfront about just getting started and lay it out there. This didn't seem to hinder any relationships or anything. But, I do know that when I call a sign or an ad and the wholesaler says "oh that just sold, but..." I always kind of ignore the rest of the conversation. That's probably pretty rude of me too, because we all had to start somewhere. However, I might be more inclined to give me info if they just told me their situation.
@Brandon Turner Also known as advertising a "phantom house". Unethical and a terrible way to begin a business relationship. Not to mention the majority of people who contact you will be tire kickers. If you are going to resort to this you better be prepared to triple check your "buyers" proof of funds.
Everyone here needs to lighten up....What is the difference between one of my signs that is old and not picked up yet and the house IS actually sold....and a fake house that you are calling about???? Either way I am going to tell you it is sold, and either way you are going on my list....I think it is good marketing when done correctly searching for a niche market( I do it for low end rentals, warzones, etc)
I am pitching a Reality TV show where I go around to different cities, then take and deface illegal signs. I am working out different money shot ideas, my favorite currently is the one where I call the Bandit signer, have him meet me to show me a property, then I get his reaction when I show him all his signs, cut into pieces, in the back of my van.
@Justin Stamper - This site is a place where people come to build credible businesses. No one needs to lighten up. From what I can tell, false advertising is not only shady as hell, but is also illegal, and subject to enforcement by the FTC.
I don't know if any of that applies to bandit signs... My point is, if you need to generate a lead, do it. If I don't have a buyer for low end rentals in an area, but I know where to acquire the homes but don't want to burn a bridge by putting it under contract and canceling I can always throw a sign and see what happens. Call it what you want. Tip of the hat, wag of the finger!
I don't believe it to be highly ethical and I have found better ways to get buyer leads. For instance why not put a real property under contract at a fantastic price and then advertise it for sale at a great price. Watch how fast the phone starts to ring.
The "fake" property techique (bandit signs or phantom Craigslist ads) is being taught by MANY, MANY "gurus" as the best way to build your buyers list (many are BP members). When I started wholesaling, building a buyers list was supposedly priority #1 and using signs or Craigslist ads was the preferred "easy" method according to the gurus. I didn't use signs or phantom property ads but rather I simply put an ad on Craigslist looking for buyers. It worked.
I don't believe bandit signs are misrepresentation because a buyer has a choice to give his imformation or not to the wholesaler.
I agree with Edward - from my experience, when you find a killer deal, the buyers appear.
in Columbus, Ohio there are quite a few people whom do that. you can find them in the distressed home areas of town or on Craigslist. i've seen 2 or 3 wholesalers having a contract on a house and it's advertised online as 3 different prices.
there are PLENTY of awesome, hard working wholesalers in Columbus, but there are a few you've got to watch too, they are quite shady.
@Justin Stamper - This site is a place where people come to build credible businesses. No one needs to lighten up. From what I can tell, false advertising is not only shady as hell, but is also illegal, and subject to enforcement by the FTC.
Well in my opinion if a person wants to use a "fake" bandit sign to try and generate buyers list it's ok as long as they are not doing it often maybe only once or twice so they THEMSELVES can get confidence that there actually ARE buyers out there with huge sums of cash that will buy homes, keep in mind these people using these phantom signs are usually new and unsure investors who are wondering whether this whole business even works, they want some kind of reassurance as I did in the beginning, we all have to start somewhere and sure starting out with a "lie" isn't the best way of course but as long as it build that extra confidence needed in the new investor it's a bit more justifiable, now once the real estate investor is more "successful" there will be no need for these fake signs at all and they should not use them anymore in my opinion, as far as the whole FTC enforcement .. doing this once shouldn't bring up any FTC fines of 5,000 ... as another poster stated what IF you really did have a home under contract and just left the bandit sign out, it just really isn't a big deal at all as long as you are not doing it often, we all want to run a credible buisness in the end.
I may be out of line as I am very new to this. However, in a book I just read it states that one of the best ways to attract new buyers was to use bandit signs. To be totally honest, this was a huge turn off to me and I will not do it. I would rather put myself out there and take a longer period of time to build an honest, credible business than get buyers in by doing something that in my mind is essentially "tricking them." The bottom line for me is honesty is the best policy and perhaps I may not get as far as fast as others who are willing to sacrifice quality and ethics but in the long run I feel that it is worth it to be credible. I am in it for the long haul and am willing to do what it takes to make a positive impact. I think that using bandit signs is just another way to do something cheap and fast however it is a marketing strategy and I guess the bottom line is what do you want from your business?
I agree, @Jennifer Dzera . I know they work, but so do lots of shady business practices. I'm not opposed to using signs, but I think I'd only use them where it was 100% legal to do so (like in yards of properties I'm flipping, or where the city is 100% okay with it) AND I wouldn't advertise fake deals, ever. As @Rob Powell said "For instance why not put a real property under contract at a fantastic price and then advertise it for sale at a great price. Watch how fast the phone starts to ring." I love that cause it's so true!
I feel that the Gurus like to push the "build your cash buyer list" because it's the low hanging fruit. It makes new investors feel like they are doing something ... when really, they are just spinning their tires. Go out and find a deal! The cash buyers are the easy thing.
If you have a 3 day inspection period and NO cash buyers on a list you should probably go out and throw a sign, because other than craigslist or sending it out to other wholesalers in the area, you don't really have time to do much more....What it all boils down to is getting paid, keeping your closing % high and building a good reputation. No one actually cares(atleast in Orlando) about what a sign says or if it is real or not. The only goal is to get the phone ringing and the list built.
Of course "bait and switch" works. Lots of businesses do it . They do it specifically because it works. But its a crappy technique and ends up alienating your potential buyers. Combine that with using illegal signs and you're well on your way to having a reputable business. Not.
I see these signs all over Orlando and like most others find them to be a blight. I don't bother calling them due to the assumption that they are a cheap guru tactic to build a buyers list based on fraud. Would never consider buying from anyone who is happy to misrepresent themselves or sees no issue with bait and switch because it's a means to an end.
@Steve K Alot of those signs are from major wholesale companies like our company Investment Homes Direct and Homepro etc etc...There are a lot of one trucker shops trying to start off by tossing fake signs but you should be able to tell within a few minutes of talking to them if they are for real or not. I call almost every sign I see just to see whats going on in the area and who is selling(or not selling) what.
I suspect that MOST real investors who have been doing this for a while (10+ years) started out with bandit signs. I also suspect that some of those same people now dump on newbies who use them. Whatever makes you feel useful. I've gotten caught up in that bandit sign argument before and now I avoid it along with debates on religion, politics, and abortion.
As far as advertising something you DON'T HAVE, regardless of the technique - bandit signs, Craiglist, email blasts, etc. - THAT sucks.
Sorry, @Dev Horn but I don't buy that for a minute. My guess, since we're just guessing here, would be that most real investors have never posted a single bandit sign. By real investors I mean people who are taking their money and investing it in real estate related ventures. Wholesalers, IMHO, are not "real investors" any more than real estate agents are investors. Either may also be an investor, but wholesaling and brokering is not investing.
OK, @Jon Holdman, if you are going to change the definition of investors to EXCLUDE wholesalers, you may be right.
I'd argue most people do NOT exclude wholesalers in their definition of RE Investors. I'll bet Josh and Brandon don't exclude wholesalers.
All that said, I'm actually in the camp of those who question the value of people that want to make money without adding much or any value to a property. But I bet ANY ONE READING THIS would gladly make a couple of grand wholesaling a deal that did not fit their own criteria/strategy for rehabs or buy/hold.
Now, what I don't buy for a MINUTE is the notion that rehabbers or buy&holders have some super productive ways of marketing that wholesalers are not aware of - i.e., wholesalers use bandit signs because they're just not quite as sharp as those rahabbers. Really? Most rehabbers I know are even more clueless than "wholesalers" about marketing - probably because they get alot of their deals from wholesalers who are actually DOING marketing.
P.S. This is one of those threads that I think is really a SET UP for some arguments among the B.P. membership. I really question the value of the OP and the thread in general.