Involved In Real Estate · Nashville, TN · Member since 2012 · 75 posts · 14 votes
Every business needs to watch the "Numbers". I'm not talking about the Profit and Loss statement (although very important), I'm talking about your Closing Ratios. Wholesalers, please comment with your ratios for the following areas:
-How many leads will get you one appointment?
-How many appointments will get you one contract signed?
-How many contracts will get you a closed deal (meaning you successfully sold the property)?
As a business person, these ratios help you to:
A) Build a predictable business.
B) Plan your finances.
C) Determine which marketing methods are effective.
D) Determine if what you're saying to the sellers are effective.
Be honest! No "fishing stories" or embellishing. Examples of ratios are; 1 out 5, 20% or 1/5.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
12y
I don't keep track and after working with someone who tracked every thing down to the .001 cent, my big take away was knowing all that data made zero difference in our success. During that three years, many months went by and we didn't buy a thing. Now that I work alone and track nothing, it has been a long time a week has passed and I haven't purchased a house and many weeks I am buying 2 or 3.
Here's the secret - if you aren't closing deals, you just need to attract more leads. That means you need to not be afraid to spend money. When it comes to spending money on the various methods of marketing I use, I have no fear.
To answer some of your questions;
-How many leads will get you one appointment? I have no idea.
-How many appointments will get you one contract signed? I don't go on appointments. I make the offer over the phone. If they're not open to my ridiculously low verbal offer, seeing the house isn't going to change that.
-How many contracts will get you a closed deal (meaning you successfully sold the property)? Also don't know this number. I never took any business classes so I never found value in metrics and statistics. I focus on 2 things; Did I buy a house this week and did I hit my monthly cash/equity goal this month.
Investor · Philadelphia, PA · Member since 2012 · 135 posts · 80 votes
12y
@Jared are you saying that you need 560 phone calls to yield one deal closed?
Using a generous 10% response rate on a yellow letter campaign that would mean you would need to mail at least 5600 people to get one deal. I know that I'm way off that's why I'm asking for clarification
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
12y
I don't keep track and after working with someone who tracked every thing down to the .001 cent, my big take away was knowing all that data made zero difference in our success. During that three years, many months went by and we didn't buy a thing. Now that I work alone and track nothing, it has been a long time a week has passed and I haven't purchased a house and many weeks I am buying 2 or 3.
Here's the secret - if you aren't closing deals, you just need to attract more leads. That means you need to not be afraid to spend money. When it comes to spending money on the various methods of marketing I use, I have no fear.
To answer some of your questions;
-How many leads will get you one appointment? I have no idea.
-How many appointments will get you one contract signed? I don't go on appointments. I make the offer over the phone. If they're not open to my ridiculously low verbal offer, seeing the house isn't going to change that.
-How many contracts will get you a closed deal (meaning you successfully sold the property)? Also don't know this number. I never took any business classes so I never found value in metrics and statistics. I focus on 2 things; Did I buy a house this week and did I hit my monthly cash/equity goal this month.
Flipper/Rehabber · Columbus, OH · Member since 2013 · 1k+ posts · 655 votes
12y
I'm with @Tim G. , we don't use appointments as a metric because we screen for motivation and get a ballpark price range before we would ever go meet the seller.
We are at 28 leads per deal right now.
We contract 90% of the deals we go visit because of our qualifications.
We close 90% of deals we contract.
I am wondering what criteria everyone uses as a lead. I use every call and email, regardless of the info I get. I may have someone leave an address but phone number doesn't work, or may leave name and no address but email is in error. Because of our website marketing I get submissions for properties 200 miles outside of my buying area. Do you folks count these, or only people you are able to get ALL the info from and have a chance to close?
My ratios are slightly skewed because I can spin a wholesale deal into a listing and still get paid from it.
If you're going on 20 appointments to get a contract maybe you could pre-screen the client better to save yourself time. I used to go on appointments out of curiosity or hopes that it could be an awesome deal, after a few months of this I got sick of me spending an hour with them just for them to throw out a number above retail. Now I get this info over the phone. Some Guru's preach you should go on every deal and convince them to sell. During one of our large mailers I would need a few full-time employees to go meet every lead that comes in.
Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
12y
Haha, Aaron, you are awesome. I don't track much either. I'd think you need to be doing higher volume than any of us to to get those numbers to mean anything.
Depends on what you call a deal, really. I put a thin deal short sale under contract in Feb when I didn't have much going on that just came in and punted it because I've got 4 right now and didn't want to cheat on the my numbers/tie up the cash/work that hard when it finally came in. I was pretty excited about it back in Feb when I hadn't bought one in a while.
So much depends on the quality of leads and what you're doing with them. I'm rehabbing to retail, so I need bigger spreads than someone rehabbing to rent and (supposedly) less than a wholesaler. I pass on stuff a lot of investors would pay good money for, so my conversion rates are low.
Also, like has been said, they come in waves for some reason. Back when I was doing high volume I'd buy 5-6 one month then none for two, then 4 in a week and stuff.
Saying all that, from my website leads lets do a fictional 100 leads (which is prob 6 months worth, it doesn't kick off that many- yet.) I probably don't call back 30% of them. Of the 70 I talk to, I may see 10. I make offers on everything I look at. Of those 10, maybe 1-2 say yes.
Last one I bought from a lead like that I looked at the day they called, had it under contract the next day and owned it 5 days after that. Most of the people around here don't have any equity, so Im more weeding them out than anything. If the deal is there I move pretty fast.
I do full rehabs so only want one a month or so, it'd be a different business model if I was wholesaling or building up rentals.
Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
12y
I'm on the same mind set as @Aaron Mazzrillo. I have a saying "Bunch, Some, Few."
I send out a bunch of letters, I get some calls, I buy a few of them. If I need more houses, I increase the "Bunch". I don't think tracking the success is wrong, I just think it's a personality thing. Some people are more analytical and numbers driven, and some are more abstract and bigger picture focused. For the newer people, remember that it's more important that you do it, than that you do it perfectly with all systems in place.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
12y
I'm also not a one trick pony - I don't only wholesale. I also rehab properties, I sometimes fund the deal and pass it along to a rehabber who I partner with, and I hold. So, a deal that might not make sense as a wholesale may be a great rental. I also refer stuff out to an agent friend of mine for listings with her paying me a 25% cut of the net commission. I think it is important to have a full service business model. You don't want to look back at your business 10 years down the road and lament about all the deals you let slip through your fingers because you only wanted that wholesale fee. When the phone rings, ask yourself "How can I convert this lead into a check?"
- The key word to your question is "client". They are not your client unless and until you have a signed agency agreement with them (at least that's the way it works in TN, check your local laws). If they are a FSBO, or they call you from some of your "I Buy House" marketing, they are not your client - and you need to tell them that. Now, on the other hand, with you being a combo investor/Realtor, you truly can offer many, many services to them, including whatever might be in their best interest - whether that be a fast wholesale deal, a l-o deal, or a tradition Realtor listing. You can make money on all of the above.
Investor · Seattle, WA · Member since 2013 · 47 posts · 9 votes
12y
I think it's important to keep track of ratios at the beginning of a wholesaling business, as it sets expectations and helps with finance planning as mentioned before.
While markets will likely differ, my experience so far:
1,000 contacts results in about 5-10 appointments.
5-10 appointments = 1 contract.
3/4 contracts close.
These numbers tell me I need to 1) improve my appointment setting with motivated sellers or 2) increase the number of contacts to generate more appointments 3) diversify my business w/ more options ie. lease options
I think it's important to keep track of ratios at the beginning of a wholesaling business, as it sets expectations and helps with finance planning as mentioned before.
While markets will likely differ, my experience so far:
1,000 contacts results in about 5-10 appointments.
5-10 appointments = 1 contract.
3/4 contracts close.
These numbers tell me I need to 1) improve my appointment setting with motivated sellers or 2) increase the number of contacts to generate more appointments
I don't necessarily agree with statement #1, but #2 is right on the money. Mainly because I don't go meet people and instead do everything over the phone. If anything, I've learned and have proven that going to people's houses to negotiation with them was a time consuming nightmare that kept me out of the office, which kept me from working my leads and making more verbal offers.
If you change things up so that you are getting more appointments from the same number of contacts, there's no guarantee you're going to close more people. You'd have to take a bunch of salesmanship, negotiation and NLP seminars and ultimately you realize that a lot of these hucksters selling you their systems and info, when you boil it all down, are just teaching devious, hard sell routines which is not in your or the seller's best interest. I've been to more than 100 seminars and training events. I've run into some real scuzzo's at the many events I've gone to trying to learn to be a better closer. There is one guy, initials DD, who is such a sleaze bag, even being in the same room as him makes my skin crawl. Nothing works like good ole personality and rapport.
From my experience dealing with private sellers, and I have a lot of it at this point, if you want to double your business, you need to double your contacts. If you are currently closing a deal for every 1,000 contacts, and you want to do 2 deals a month, the easy math says you need to contact 2,000 people. There are only so many people on your list who are ready to sell now. Ron LeGrand said it best; Some will, some won't, so what. Whose next?
Investor · Seattle, WA · Member since 2013 · 47 posts · 9 votes
12y
@Aaron Mazzrillo Yeah,I agree that most of wholesaling negotiation should be done on the phone, fielding motivated sellers rather than waste time meeting with unmotivated sellers.
When I said improve my appointment setting with motivated sellers, I meant taking more action for the motivated (call leads back faster, schedule appointments closer to present).. I missed out on a deal with a motivated seller by setting an appointment a week out. Unfortunately, the next day, she met with another investor the next day and put it under contract.
Aaron, do you do lease options negotiations over the phone as well? I'd like to add lease options to my sales arsenal but heard that is better to negotiate those deals in person, to show cash options and seller finance options.
@Jared are you saying that you need 560 phone calls to yield one deal closed?
Using a generous 10% response rate on a yellow letter campaign that would mean you would need to mail at least 5600 people to get one deal. I know that I'm way off that's why I'm asking for clarification
Yes, that's why I'm trying to get some ratios from experienced wholesalers so that I can see where I need to improve my business.
Jared DeValk - you have 1/4 contracts close? 75% of your contracts DONT close? Seems like I must be misinterpreting here...a little help?
You are correct. I have had sellers back out after a contract has been signed and some of the properties have had more issues than I expected that made it unmarketable at the prices that we needed (owner financing wasn't on the table as well).
Investor · Virginia Beach, VA · Member since 2013 · 84 posts · 26 votes
12y
@Aaron Mazzrillo - not to side track this thread (because it's a good one), but i'm just wondering how you verbally deliver your "ridciulously low offers". In other words, do you brace the person ahead of time that your number is likely lower than they expect, or do you just throw it out as if it's a completely normal number?
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
12y
Originally posted by @Tony K.:
Aaron, do you do lease options negotiations over the phone as well? I'd like to add lease options to my sales arsenal but heard that is better to negotiate those deals in person, to show cash options and seller finance options.
I don't do lease options. I used to run a REIA here in California and I only knew one guy who did a few. From my experience, it isn't a viable business model here and is very rarely workable in my market. I've done quite a few sale-lease backs. Just got the keys from a seller yesterday on one I closed last month. I prefer to get the deed when I do a deal. I don't like land sales contracts and I don't like lease options. I've done straight options and they have been very profitable the few instances I found that it was the right solution for the seller and myself.
@Aaron Mazzrillo - not to side track this thread (because it's a good one), but i'm just wondering how you verbally deliver your "ridciulously low offers". In other words, do you brace the person ahead of time that your number is likely lower than they expect, or do you just throw it out as if it's a completely normal number?
I was going to divulge how I go about it, but my closing techniques really are the bread and butter of my business. Without them, I'm just another squirrel chasing nuts and paying too much for houses. I will say that confidence has a lot to do with it. Also, nothing buys houses for pennies on the dollar like rapport and friendliness. I've been an over-the-phone salesman for 12 years this fall and I'm refining my conversation skills and always actively working at giving good phone.
That little quote helped me a lot today! I'm new to this business- I've made 10 offers and gotten 3 properties under contract (and I had 2 other sellers considering it but eventually declining). I'm beginning to see that I'm actually doing quite well with that statistic, but the rejection has been discouraging! I know I need to thicken my skin and get used to being hung up on sometimes! It just comes with the territory of low-balled offers.