Direct Mail Tire Kickers

20 Replies

My first direct mail campaign is now beginning its' second month. As expected, most of the calls that come in are folks that just want to know what I am up to. They throw out huge numbers for their properties and hope I'm dumb enough to take the bait. So my question is, other than that first phone interaction where you find out if they are serious, is there really any use in doing any real research and following up with these people (i.e. making a formal offer)? 

I think it's generally pretty easy to tell they aren't seriously motivated within a few minutes on the phone and then when they throw out that number that is 40% higher than market, or refuse to give you a number at all, it would seem a forgone conclusion that no deal is to be made with that particular individual and that I should just cut bait and run. Thoughts? 

Tom

I think I'm kind of contrarian in this, but yes I do keep track of and follow up with these folks from time to time. I set them up in my database to be contacted at a certain time....3, 6 months down the road. And then I shoot them a quick text or email just checking in with them.

Sometimes, their circumstances change, and by keeping myself on their minds, I'm the one they call when that happens. People can become suddenly motivated for many different reasons. Using mass text and mail merged email is a very easy way to handle this. (By the time you get off the phone with anyone you should have ALL of their contact info)

But even more frequently, what happens is this. This person who has no apparent value has an entire sphere of influence: friends, family, coworkers. Sooner or later they are going to run into someone with a Real Estate problem. When that happens, you want the referral. It happens far more often than you would think....but you have to put in the work (via auto responder) to build the relationship and make that happen.

So....be quick to say "Next!" and get off the phone to conserve your time.....take them off your list and don't waste any more stamps.....but don't trash the prospect unless they tell you to.

Medium mlaw logo v1Jerry Puckett, New Refined Images LLC | [email protected] | (214) 699‑7565 | http://www.marketlikeawholesaler.com

It takes a certain chutzpah to complain about people giving you numbers you don't like when you contact them, when they have not listed their property, and then further insist that they throw out the first number.

@Richard C.

All trolling aside, I am quite cordial to everyone I speak with and have yet to question a sellers asking price over the phone other than asking if that's the best they can do. They have the right to throw any number at me they wish, but in general most of these folks know the market for their house and are purposely asking for well over this amount in an attempt to see if I will pay it. I sent them a letter so it was completely voluntary that they call me and leave me a voice mail asking me to call them back. Also, I don't typically insist they throw out the first number though most will when asked what they want for the property. If pressed on the issue I will happily make an offer on the phone, but in my limited experience, once you've gotten that far it would seem a lost cause. I'm going to assume, by the condescending tone of your post, that you are not a fan of direct mail, and that is fine. I am not trying to swindle anyone, I just want folks to call me so we can talk about their property. If they want to sell, they will make a reasonable offer and we will proceed. If they don't want to sell I will say good day and be on my way with no ill will at all. Maybe instead of posting a snarky remark, next time you could just hit the back button and go about your day not having crapped on someones post. 

Tom

@Tom Scott  I love this phrase... 

Maybe instead of posting a snarky remark, next time you could just hit the back button and go about your day not having crapped on someones post.

IMHO I think if I send someone a direct mail piece that reads call me if you want to sell your house and they respond and when asked dont have a number in mind or their number is highly inflated then shame on them for wasting their time. 

They arent wasting mine as I believe in the idea that you cant lose what you dont have and that every unreasonable offer made by a seller to me gets me one step closer to the seller reasonably willing to discount their property. 

The fact is that a lot of sellers see our mail and think "Big Fish" where reasonable sellers think "I found a solution to my problem". 

And we need both types... 

Just suggesting a change in perspective.  You drove the car into their garage, and asked them what they thought.  Don't be upset if they kick the tires.

I get a certain amount of direct mail from "investors." It is mostly annoying. I almost never respond. But if I ever do, they should keep in mind they are offering to buy a property I was not offering for sale. I could sell it at any time for 70% of FMV. Actually, I could sell it at any time for 100% of FMV (That is what FMV means.) So if you ask me if I would be willing to sell, don't complain if I know something about the market and refuse to give it away.

You will be happier if you just train yourself to be happy you are getting responses, and not to get upset about people YOU made contact with, "wasting your time."

Real estate investing does not work based upon offering 70% of FMV (Fair Market Value).  That's just LOW-BALLING.

The "REI Formula" is OFFER = 70% of ARV (After-Repaired Value) - Repairs

The best house for REI is a crappy house that needs a lot of work. It generally will not sell on the retail market (MLS). Most people will not touch it because of all the work it needs. If we pay cash for that house, the buyer in effect got FMV because that's all someone is willing to pay for their crappy house.

Medium wbh square logoDev Horn, We Buy Houses® | [email protected] | 877‑932‑8946 | http://webuyhouses.com/profile/arlington

As much as I would love to beat up on the troll, I would rather keep the thread on topic and discuss the strategies for dealing with unmotivated buyers. 

Tom

Call me a troll all you want, but Michael Q essentially gave you the same answer.  What motivates the unmotivated is money.  Otherwise, the opportunity to begin a conversation is worth something (like putting up with "tire kicking.)

Maybe a year from now, when I am motivated, I dig up your number and give you another call (as Jerry Puckett said above.)

But seriously, you contacted them.  You want to buy their property for a below market price, so you can wholesale it to an end buyer.  They want an above market price, since they weren't even trying to sell.  You meet in the middle.  If that yields a price you cannot work with, you move on.

Any sales business requires thick skin.

When you get a call from a seller ask when you can stop by and look at the property and make a cash offer without a weasel clause, and most sellers are getting educated on investors making a low ball offer, which is an insult. Who throw out the first number doesn't mean anything?


Joe Gore

Originally posted by @Richard C.:

Any sales business requires thick skin.

This.

So does posting on forums ;)

I do think it might be asking a bit much to expect that someone who probably has no experience of real estate investment whatsoever, and has been contacted out of the blue, would know what a fair price for their property would even be. No doubt some are hoping for some pie-in-the-sky payday, but they are probably doing it out of ignorance. Most of them may just need some education on the realities of what is happening in their market. To think that they are doing this because they "think you're dumb" is a waste of your emotional energy. 

Medium team zen logo vJean Bolger, 33 Zen Lane | http://www.solidrealestateadvice.com

@Tom Scott  I wouldn't cut bait and run.  I would do what I do and send them a follow up letter and an informal offer letter in the mail.  That way when you follow up 6 months from now to see if they have sold the house they will remember you.  Also, they may not be motivated now, but whose to say that sometime down the road they won't be?

Medium web logoBen G., Ben Buys Indy Houses | 317.455.6768 | http://www.benbuysindyhouses.com | Podcast Guest on Show #91

I recently received a letter to buy one of my condos.  I guess I got on an out of state owner list.  Owned for almost 40 years.  I'm retired so I thought let's see what this guys plan is.  So first he doesn't recognize the name of my street address.   OK, it is Hawaii but if you are mailing out letters you should have an idea of where you are mailing them to.  So he has ABSOLUTELY no idea of market value or the market or anything.  I tell him that he mailed to an area of Diamond Head where properties generally sell in less than 30 days.  OK so I tell him the market value is about $400,000 and he comes up with the -30%  yada yada yada.  I ask him why I would sell him a property for 30% off and he explains the formula someone told him.  He needs the $120,000 to update and his profit.  I tell him these are mostly under 600sf condos.  Do you think it would take $120,000 to update a bath and kitchen of about 72sf ?  What a waste of postage.  So I did check and yes he's on the BP forum. 

And yes, about 4 weeks later another letter.

As soon as the mark, I mean seller states an outrageous price you should be able to say the highest price in the NBHD has been $300sf and that property was completely redone.  Gee, your home must be completely renovated.  Did you do it yourself or which contractor did you use.  At least then the owner has an idea that you have some clue or if they are really clueless about the market value they will give you information on why they think they are worth more than the highest comp in the NBHD.   Geez, do some homework before you start calling people unrealistic or trolls!

As others have said, get the information you need as quickly -- and as politely -- as possible and see if it's even within the ballpark of a deal. If it's not, then you move on and maybe put them in an email drip campaign. Don't try to force a square peg into a round hole. Your low offer is not in the best interest of almost everyone who gets your mailer. That's why you send out 300 mailers at once, not 3. Most people are not interested or even capable of selling their house for 70% of market value or whatever discount you need. It's a numbers game, so make sure your marketing involves big numbers.

Medium oahu home buyers logo2Michael Borger, Oahu Home Buyers | (808) 377‑4379 | http://www.oahuhomebuyers.com

Unless I am mistaken, are we not marketing to try and find "motivated sellers"?  

Tire kickers are likely not motivated to sell on their first call, but if they (or someone they know) ever becomes motivated, it is imperative that you are prepared from that first call to promote yourself as a professional who can provide a solution to their problem.  @Bob Bowling reply underscores this.  There needs to be a connection on a personal level, otherwise you will come across as smarmy and unprofessional. Knowing what the hell you are talking about would help too (I'm referring to the person Bob inquired with, not you @Tom Scott  ).

Also, IMO, pigeonholing yourself into working with 70%ARV-repairs-fee will provide a solution for those people who control a property with significant equity that needs work and are looking for liquidity. That said, knowing how to wield more than one 'tool in your box' to help a motivated seller, based on their situation, is important to building a business.

Wow, this got out of hand quickly. Too all those who are offering advice on the original topic, thank you. I will file these dead leads into my follow up line and start contacting them every few months in some way. 

@Bob Bowling

I do a ton of work before I ever contact a seller, I know pretty well what I need to pay to get their house and still make money. I am not sure where you get the idea that I do not do any of this. I was actually referring to Richard C. as a troll because he was displaying troll like tendencies. He popped into a thread and added nothing productive to it other than a smarmy comment. I get the feeling you thought I was calling sellers with high initial offers a troll. This is not the case. As I stated in one of my above posts, I have no issues with high initial numbers other than the fact that they seem to indicate a seller is not motivated to sell. This is all good, as I will just filter them back through the list to follow up with at a later date.

To the rest who made it clear, the need for a thick skin is imperative. I'd like to clarify that my feelings were not hurt and I could care less what most folks think. I handle my business in a professional manner and am pretty polite and cordial to pretty much everyone I talk to. I do take exception to negative comments in this forum that give no real value other than to incite threads like this one. I was hoping to get some valuable conversation out of this thread but instead I have spent my time defending myself. I'm not sure why Richard C. decided to chime in with a negative comment, or why the rest decided to pile on assuming that I am in some way rude to potential sellers. It would seem that perhaps my next question should be posted int he pro forum to help eliminate some of this crap in the future.

Tom

Originally posted by @Michael Q.:

 

IMHO I think if I send someone a direct mail piece that reads call me if you want to sell your house 

The letters I've received have stated "I want to buy your house at _________ St."  I think there is a big difference in the two approaches and the sender should realize the response will be different,

I think were most wholesalers go wrong is they say on their yellow letters, they will pay cash for your home but when the seller call everything changes the wholesaler wants to put it under contract with tons of weasel clause. It is not hard to be honest with the seller.


Joe Gore

Originally posted by @Richard C.:

Just suggesting a change in perspective.  You drove the car into their garage, and asked them what they thought.  Don't be upset if they kick the tires.

I get a certain amount of direct mail from "investors." It is mostly annoying. I almost never respond. But if I ever do, they should keep in mind they are offering to buy a property I was not offering for sale. I could sell it at any time for 70% of FMV. Actually, I could sell it at any time for 100% of FMV (That is what FMV means.) So if you ask me if I would be willing to sell, don't complain if I know something about the market and refuse to give it away.

You will be happier if you just train yourself to be happy you are getting responses, and not to get upset about people YOU made contact with, "wasting your time."

Two thoughts...

One.. you get annoyed really easily. I am an out of state investor so I get similar direct mail from "investors".

You know what I do (since Im not interested in selling)? I trash the letter.

You know how long that takes me? 1 second.

You know how annoyed that makes me? Not at all.

Two...

As for FMV... that is a MASSIVE over-simplification. Yes, it can be sold at 100% FMV.. if you can wait for the right buyer and if they can get financing and if it is in "100% FMV condition". And if you sell it yourself.

If you are behind on your payments or going through a divorce or are sick and tired of dealing with tenants from out of state or if the property won't pass FHA inspection or if the OO buyer think it looks terrible then no.. you really CANNOT get 100% of FMV.

So even if you personally do not fit into any of those other categories, maybe someone else does? I have bought properties located from direct mail. It seemed like both parties were happy with the transaction.

Originally posted by @Tom Scott :

... most of the calls that come in are folks that just want to know what I am up to. They throw out huge numbers for their properties and hope I'm dumb enough to take the bait...I think it's generally pretty easy to tell they aren't seriously motivated within a few minutes on the phone and then when they throw out that number that is 40% higher than market, or refuse to give you a number at all, it would seem a forgone conclusion that no deal is to be made with that particular individual and that I should just cut bait and run. Thoughts? ...

Only 40% more the actual value? The seller is just being a seller.

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