Secret to Finding Motivated Sellers

Have you ever wondered why some Realtors or Investors seem to find all the motivated sellers while the majority of others seem to struggle?

The answer lies in their marketing.  Successful real estate professionals have a proven marketing plan in place and continuously and consistently execute it.  These winning marketing plans lead to more opportunities to buy and sell houses, thus, more profitable activities. The 3 steps to having a successful marketing campaign is 1) find your target market, 2) use an effective method of advertising in which to connect 3) track performance and make any necessary adjustments.

Your target market depends greatly on which strategy you are using.  Different strategies require a different target market.  For example, if you are looking to specialize in short sales, you will not want to mail to people who are current on their mortgage.  By the same token, if you are looking to purchase properties with no money no credit strategies, such as subject to financing, you would not want to mail to a list of 90 day past due.  Combine your target list with your strategy correctly and you will have tremendous success.

What is the most effective method of advertising in which to connect to your target market?  This question is where many real estate professionals struggle.  Flyers, bandit signs, networking, and newspaper ads all work, but it requires quite a bit of money and effort as well as time with no guarantee of success.  People who are looking to sell a house don’t go to one particular shopping mall or all read the same newspaper.  Therefore, general campaigns that require hundreds of eyes to see your message before someone calls you don’t not work well alone.  Broad marketing campaigns in conjunction with a specific, targeted marketing program work best.

The targeted marketing program that works best is direct mail, provided you utilize the right message to the right market.  Direct mail generally comes in two forms:  postcards and letters.  Many people are initially reluctant to direct mail because of the costs involved as testing direct mail can be very expensive.  A traditional direct mail campaign can yield you anywhere from 2-4% response.  However, if your campaign doesn’t work well, you will have invested considerable money to get this feedback.

Postcards are the form of direct mail that most new investors start out testing.  The main reason is that it’s quick, easy, and less expensive.  You can create your message and design your postcard online in very little time.  The stock or materials are inexpensive and even the postage is under $.30.  And you can outsource the printing, stamping, and mail to another company.  Overall, you can create a postcard online, ship out several hundred, keep your costs under $.60 per postcard (including postage) and not have to invest very much time or effort. 

There are downsides to postcards.  Studies show that very few people will actually look at a postcard. Most likely, postcards will immediately wind up right in the trash.  Also, you may offend your potential seller with your message.  For example, if you send a foreclosure postcard to a family’s home, and the children check the mail, they may ask the parents questions about why they would receive this type of letter, putting the homeowner in an awkward position.  Chances are you will not be rewarded for creating this scenario. 

The bottom line, however, is that you do get what you pay for.  Like the general methods listed above, postcards require hundreds of eyes to see your message before someone will take action and your conversion rate will typically be very low.  So while there is less time and effort than bandit signs, flyers, or networking, most investors wind up with the same results at several times the cost.   Therefore, many savvy, experienced investors will stay away from postcards.

Letters are more effective than postcards, but with greater rewards come greater risks and investments. A typical letter writing campaign should yield you close to 4% return and a great campaign up to 14%!  Letter campaigns require more money for the paper and the envelopes, plus the extra time and effort of stuffing and stamping.  While all this can be outsourced, it is more expensive.  And the scary part is that if your message is not dead on, then you will have learned a very expensive lesson. 

Why are some letter campaigns 4% and others 14%?  The success of a letter writing campaign lies in two areas.  First, you must create a letter that makes people want to open it.  Everyone can recognize junk mail or bills.  If you have a logo on the outside, a printed stamp, a source of a different city, or is mailed in a standard sized white envelop, then you will be categorized as junk mail.  And the majority of the population discards junk mail. 

Second, once people open your letter, you must have a simple message and immediate call to action.  Many investors make the mistake of trying to ‘copywrite’ a letter, or sending out 3 pages, hoping that if someone reads the entire letter, they will be so excited that they’ll call you and sell you their house.  However, most people who see type written letters on multiple pieces of paper will read the first couple of lines and throw away.

What type of message works in direct mail?  How do you get people to open the letter rather than discarding it?  Is there a proven direct mail campaign that works?

The most proven and effective direct mail campaign for real estate professionals is that of handwritten letters.  They are exactly as they sound; letters with a simple message that are written by hand and stuffed in an envelope that is addressed by hand as well. These letters are more personal and likely to be opened. If done properly, you will yield a 14% or higher response rate, which is almost 4 times industry average for direct mail programs.

Again, it is important to perform direct mail correctly.  First, make sure you are utilizing the proper list for your strategy.  Second, use the proper sized envelope. For best results, utilize an invitation or birthday card sized envelope (who doesn’t want to open a card or invitation?).  Third, use the right color font.  There is a difference in response rate among black, red, and blue ink.  Fourth, use yellow notebook paper.  If you follow these steps correctly, you will be able to have a 14%+ response rate on your direct marketing.

The caveat is that this type of direct mail is difficult and time consuming.  Depending on your printer, your yellow notebook paper may jam frequently.  And stuffing envelopes is not very much fun either.  If budget allows, it is recommended to outsource these tasks to another company.  I’ve known several investors who are excited about the process and give up after a couple of days due to the labor involved.  But this process can be outsourced, and I would recommend doing so.  A simple and easy marketing program will be consistently performed.  Difficult, time consuming tasks will generally not be performed.  So keep it simple and easy and outsource this task to a professional company.

Finally, track your performance and your results.  You should have a good call resource manager to keep track of everyone who calls, their demographics, and the outcomes of the calls.  You will want to know how many calls it takes to get to make an appointment and how many appointments it takes to close a sale.  These numbers will vary depending on the profession you are in and the strategy you are utilizing.  Tracking your calls and consistent follow up will allow real estate professionals to maximize their leads best.

In conclusion, if you are a real estate professional looking to grow your business, direct mail may be the best way to grow.  Find a targeted lead list and utilize the handwritten letters methods for maximal results.  Track your performance to see how you are doing and make any necessary changes to the lists as needed.  These steps are the keys to having a marketing campaign in real estate.