How Do You Screen Which Sellers To Spend Your Time On?
Investor · Tampa, FL · Member since 2010 · 377 posts · 56 votes
Hey guys,
I am about to send out a little over 600 letters to sellers with at least 40% equity in their homes in certain areas of my city to make them offers so that I can buy and flip or buy and hold w/ terms.
Once sellers start calling you, how do you filter out which ones you're willing to spend time making offers to or meeting with in order to view their properties and making appropriate offers? What key questions do you ask to know if you're going to be able to get it at a price you want? I would love to meet all sellers to figure out a way to patch together a deal, but theres got to be a more efficient way.
If it's a flip, of course I need to buy it low enough to make a 20% minimum profit, but if it's a buy and hold and the seller is going to finance it with maybe 10% down, sure I'll pay a better price.
Would love to know what you guys have experienced. Any help would be appreciated - thank you!
I agree with the above posts. Get to know your market, but in reference to what questions to ask, a typical evaluation sheet would look like this...
1. Why are you trying to sell this property?
2. Address (also ask for a subdivision name if applicable)
3. Number of bedrooms _____
4. Number of full baths _____
5. Number of half baths ______
6. Year built ______
7. Basement? Is it finished? Is it a walk-out?
8. Number of levels (always ask if they are including the basement in this number)
9. Is there a garage? For how many cars? Is it attached or detached from the house? If there is no garage where do they park their car (carport? Street? Driveway? Assigned in parking lot?)
10. What repairs need to be made to make it ready for a new homeowner?
11. What updates or upgrades have been made to the home within the last 5 years?
12. Whose name is on title?
13. What is the monthly rent you need if we were to lease the property ?
14. How much money do you need for the property?
15. Is the property vacant or occupied?
16. What is your email address?
17. What is a good call back number?
18. What is the mortgage balance?
19. What is your monthly payment?
20. Are you behind on payments?
21. Do you need all cash or could you have someone take over your monthly payments?
What I usually do is not take the initial callback and on the voicemail figure out who it is so I can research the property. After I run my numbers I can't exactly put a number on the house but can say "we typically pay around $70k-$80k for homes in your neighborhood." That number is usually 70% of ARV less a generous amount for possible repairs.This way I weed out the ones who want top dollar. If they don't hang-up on me or laugh I have something to work with. If they do, just saved me a bunch of time. At the beginning of the call I talk about the condition of the house and why they are selling to break the ice and get them to chill out a bit.
In the beginning, it's best to get a feel for the market and the area by looking at the existing inventory up for sale. In my opinion, it's not a waste of time to meet with sellers (motivated or not motivated) if it helps you to learn the market. Hope that helps!
I agree with the above posts. Get to know your market, but in reference to what questions to ask, a typical evaluation sheet would look like this...
1. Why are you trying to sell this property?
2. Address (also ask for a subdivision name if applicable)
3. Number of bedrooms _____
4. Number of full baths _____
5. Number of half baths ______
6. Year built ______
7. Basement? Is it finished? Is it a walk-out?
8. Number of levels (always ask if they are including the basement in this number)
9. Is there a garage? For how many cars? Is it attached or detached from the house? If there is no garage where do they park their car (carport? Street? Driveway? Assigned in parking lot?)
10. What repairs need to be made to make it ready for a new homeowner?
11. What updates or upgrades have been made to the home within the last 5 years?
12. Whose name is on title?
13. What is the monthly rent you need if we were to lease the property ?
14. How much money do you need for the property?
15. Is the property vacant or occupied?
16. What is your email address?
17. What is a good call back number?
18. What is the mortgage balance?
19. What is your monthly payment?
20. Are you behind on payments?
21. Do you need all cash or could you have someone take over your monthly payments?
I try to not over qualify my leads. I have a saying, 'You don't know, if you don't go", I have learned that if I am only going to chase the house, I will have a tough time buying anything. When I arrive on the appointment, I am not interested in looking at the house. I spend at least 15 minutes sitting down with the seller and try to understand their "pain". Then I look at the house.
By taking the time to bond and rapport with the seller will help me tremendously to solve their problem (pain). People will sell their house to someone who cares about them.
I have also learned that people do not tell you the truth when they call. The are embarrassed and ashamed and only after you gain their respect will they open up to you.
So my motto ALWAYS is "It's not the house, it's the seller".
I think more people could buy more houses if they followed this principle. Also, when you treat people good and they like you, they will tell you about their Mom, Sister, friend, whatever, and that they have a house for sale too. If you qualify them on the phone, they will tell people that you blew them off. I buy allot of houses from referrals after the appointment.
Hey thanks everyone for the feedback. I'm thinking that I will do a soft prequalify over the phone by asking them why they are selling and possibly telling them a price range that I'm willing to pay. The low end would be my buy to flip price and the higher price would be buy to hold price w/ terms. If they continue to speak to me and want to set up an appointment after that, I will then make the time to meet with them to build rapport, learn about their situations and do my best to make a deal.
Get all the stats on the home make a tour and then examine all the sold homes within a mile of the home that compare favorably with this property and then take the average of the "sold prices" to set a preliminary "List Price". The look for any unique features of the home or location that would justify a price over the average.
I am not sure I would give them any indication of your offer without first getting to know them. I also would not throw out scenarios until you understand their situation. I always tell that I have no idea what I can offer until I understand their goals first. By issuing a ball park number upfront will turn them off and you can expect hang-ups. Just ask them if they will allow you to come visit them for a free consultation. This method has been the most successful for me.
that makes a ton of sense Rob. out of curiosity, how many leads do you get with your source of marketing and how much are you marketing? last time i sent out about 80 letters and got 11 calls. To go on 11 appointments with sellers who are tire kicking, doesn't seem efficient. I'm on board with you about building rapport, but time is such a valuable asset for all of us. Something I should mention though is regarding those 80 letters, those were apartment owners, not primary home owners so the process may be a bit different.. Different meaning with primary home owners, there usually is a reason why they are selling and since they are emotional, meeting w/ them in person may be the best way to go. With apartment owners though, they may be all numbers so regardless of their situation, they most of the time won't let go for a good price. Just thinking out loud =)
We spend anywhere from $3K to $5K a month and get about 75 to 100 leads. If you are getting a 10%+ call rate from your marketing that is astonishing! We average a 1 to 2% call rate. But I think you may be right as I have never marketed to multi-unit owners and they maybe more inclined to call.
I understand the inefficiency aspect of having to go on every call. I was that guy too. I solved the problem by hiring a "Buyer". My Buyers sole purpose is to attend appointments and make offers. He does nothing else and is a hired gun to make deals happen. His job also is to get leads from either the seller and/or the neighborhood he is cruising through on his way to and from the appointment. We pay our Buyer 10% of the new profit and give him incentives and bonuses for performance.
But back to qualifying over the phone. I just won't do it. These people are in a bad situation and they need help. They don't want to hear a guy who never seen their home or looked them in the eye tell them he can't buy their home. Who does it benefit to do this over the phone. Only you. Not the person who needs to sell. And as I said earlier, your business will never gain any respect if you make offers over the phone.
Just my two cents...
We spend anywhere from $3K to $5K a month and get about 75 to 100 leads. If you are getting a 10%+ call rate from your marketing that is astonishing! We average a 1 to 2% call rate. But I think you may be right as I have never marketed to multi-unit owners and they maybe more inclined to call.
I understand the inefficiency aspect of having to go on every call. I was that guy too. I solved the problem by hiring a "Buyer". My Buyers sole purpose is to attend appointments and make offers. He does nothing else and is a hired gun to make deals happen. His job also is to get leads from either the seller and/or the neighborhood he is cruising through on his way to and from the appointment. We pay our Buyer 10% of the new profit and give him incentives and bonuses for performance.
But back to qualifying over the phone. I just won't do it. These people are in a bad situation and they need help. They don't want to hear a guy who never seen their home or looked them in the eye tell them he can't buy their home. Who does it benefit to do this over the phone. Only you. Not the person who needs to sell. And as I said earlier, your business will never gain any respect if you make offers over the phone.
Just my two cents...
I meant NET profit. Not new profit.
Some good ideas up there.
Why not
Identify the property with the equity you're looking for
Knowing the area, you shouldknow what price range it should be
Drive by and see what it's like
Send your letter, but now one that is more tailored to the particular property.
Give it three days and followup with a cold call.
Seems to me that sending 600 out is a little over the top that puts you in a position to work your tail off. If that's the system you want to use, why not do a hundred and work those, then move on?
Overloading your .....self might mean you're missing deals. People call you, you put them on the back burner for one reason or another, they get ticked and move on, when you get back, they are no longer interested in what you have to say!
Never invite more customers than you can service. The shotgun is great for a turkey shoot, it's not a good way to direct your marketing to acquire homes, IMO. I can get more quality leads without wasting time in answering ugly house ads! IMHO
I agree with Bill, don't ask for more then you can handle!
I sent out 6000 yellow letters and PAT LIVE answered them. I got swamped with leads, and most of them left little details. I'm still following up on the leads and have seen two of the properties on my follow-up list get picked off by other investors.
The rest of the leads are growing colder by the day!
Chris those 6000 postcards how much all that cost you?were these to just absentee owners? I know a guy that sent out 8000 of them and made over 78k on one of those
Good feedback everyone. I think i'll go ahead and not qualify them over the phone. it does seem a little heartless since the person calling you may be one that's in the toughest situations of their lives. besides, i think it would help meeting someone in person if i'm going to make them an offer and want them to hold a note for me for 10 years! Or of course, buying low to flip.
In regards to the overload, do you guys really think I'll get swamped with too many leads? I'm pretty accustomed to making 50+ calls a day and 8+ appts a day from back in the hay day when i was selling real estate in socal. Maybe I'm underestimating the ROI of these letters? What have you guys experienced in regards to returns on direct mail letters?
Can't help you with direct mail, I never used it. Your response will depend on how well your present yourself.
I use to do cold calls and I enjoyed it, it was a high point of my day. Generally five calls got an appointment and I averaged a deal of somekind out less than five appointments.
That's what you can get when you don't use a shotgun, but an arrow and indentify the market. I could pull about a 50/50 appointment for pre-foreclosures.
Keep in mind that my approach was much different than what investors use today within a particular strategy to acquire a property, that I could switch hats for various options.
thats a pretty good closing ratio for cold calls man! i'd hate to be on the other end of line with you =D
Very hot leads, but a cold call! While times have changed, the basic situation still exists, motivated sellers, owners in trouble. Present yourself as a problem solver first, then go with the flow and do what needs to be done for a win-win. You can't win them all, but you can get very close.
Stephen, they were yellow letters and it cost me about $3300. Pat Live was another $800.
I usually don't have a problem handling the call volume in smaller increments.
I wish I could study under Bill for awhile. He's seems to know how to handle it right!
Tony -
I think when you are new it's very important to talk to every seller that calls. Think of that first call as an "information gathering call." It's great practice and it will help build your confidence.
I use a form each time I talk to a seller. I have all the questions on mine that Lafi has on his plus a few more. This guarantees that you won't forget to ask something important.
After getting your information, then tell the seller you will need to do some research and you will call them back. This will buy you some time.
Sellers often throw out a price that they don't really expect to get. Don't be put off by that initial price.
Remember that great deals are usually made - not found.
I have great luck with direct mail myself. It's my primary source of leads.
Sharon - thanks, you make a ton of sense. what kind of questions do you ask them?
I've wasted lots of time chasing after unmotivated sellers who initially identified themselves as motivated ones. I agree with some of the posters who mentioned that many sellers will lie, and some do it unintentionally. Several of them told me anything they thought I wanted to hear.
Plus, I found that asking tons of questions to prequalify a sales lead didn't fit my style, and using scripts didn't work so well for me too. I'll get the basic property stats via the land records or MLS data.
The only things that I need to know are: who's on the title, how soon a seller can close, how much a seller wants, how many liens are on the property, and how much is owed on the property. Yet, I'll shoot the breeze a little with a seller before immediately diving in just to build a rapport with the seller, and to get a better idea of how to approach that seller. Some sellers are direct, so I can ask them my questions directly. Others aren't as direct, so interject my questions at natural points within our dialogue.
I strongly agree with Rob: "It's not the house, it's the seller". I try to get each seller to tell me a story or paint a picture. Doing that helps me to identify the unresolved issues. A Realtor taught me a lesson that she learned from one of her clients: "[People] don't care how much you know, until they know how much you care." Stated another way, it doesn't matter if I know zillions of ways to structure a deal, if I don't know how to relate with people. After establishing that rapport, then I'll begin to negotiate, and so forth.