July, 2013

The Five Stages of Foreclosure Grieving

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GriefWhen trying to market to a specific niche or motivated seller group, it’s important that you understand what they are going through, and what emotional buttons to push in order to get them to respond to your direct mail or other advertising medium.  This is especially the case when dealing with those in foreclosure, as they go through wide range of emotions during the process, much like someone who is grieving the death of a loved one or facing their own imminent demise.  Being able to relate to them, and build a strong rapport, may mean the difference between whether or not you are able to land a highly profitable deal.

In her book entitled, “On Death and Dying”, Elizabeth Kubler-Ross explains the five stages a terminally ill patient goes through when informed of their potentially fatal illness.

The five stages she identifies in her book are:

  • Denial (this isn’t happening to me!)
  • Anger (why is this happening to me?)
  • Bargaining (I promise I’ll be better person if…)
  • Depression (I don’t care anymore)
  • Acceptance (I’m ready for whatever comes)

Stage 1 – Denial

Many sellers take a long time to come to grips with the fact that they are in fact losing their home, and that one day very soon a sheriff will be Denialshowing up with an eviction notice.  They have heard random news stories about how people have fought their foreclosures and won (a myth), or they think that somehow they will be able to come up with the money to reinstate the loan.

If someone stays in this stage for a long time, they will most likely NOT respond to your first marketing letter, usually sent at the time the foreclosure is first filed in public records (Lis Pendens or Notice of Default).  This “stage of grief” is the exact reason why it’s so important to send multiple letters, over an extended period of time (depending on your state’s foreclosure timeline), because you never know when they will move on to the subsequent stages.

Stage 2 – Anger

This can also be a very challenging and difficult stage in which to deal with distressed sellers. Many homeowners remain angry throughout the foreclosure process, and blame their troubles on those “crooks” at the bank, rather than accepting their responsibility for the promise they made to pay the lender at the agreed upon terms.

If the anger never subsides, homeowners have been known to significantly damage their home while moving out, stripping the property of anything of value, and even intentionally vandalizing the home.   However, the vast majority of homeowners simply need someone to “vent” to, and that oftentimes is the investor that they call for help.  If you lend them a sympathetic and understanding ear, you can oftentimes “talk them off the ledge” and help them see the benefits of doing a short sale, rather than just walking away from the home.

Stage 3 – Bargaining

BargainThis is the stage where sellers exhibit a lot of ambivalence, and can be easily swayed by a lender representative who promises to “take the pain away” by doing a nice and simple deed-in-lieu of foreclosure.  The seller is oftentimes terrified of an actual foreclosure at this point, and if they haven’t heard from you in a few weeks, they may just take the lender up on this offer…completely unbeknownst to you.

This is why it’s extremely important that you tell your short sale leads to notify you anytime the bank calls.  They should tell the lender that you are handling everything, and if they have a question, they should contact you.  If you remove the decision making from the seller, you are much more likely to avoid a disaster when you are possibly just days away from an approval…and a big paycheck!

Stage 4 – Depression

At some point in the foreclosure/short sale process, every seller will come to the realization that this truly is the end of the road for their slice of the American Dream, and it may really hit them hard.  Of course this is much more of a traumatic experience for a homeowner who has lived in the house for years and raised their kids there, as opposed to an investor who has never even seen the home.

Each seller deals with this process and this stage differently, however it’s important that we stay in regular contact with our sellers, and continue to reinforce the benefits of enduring the short sale process as opposed to a foreclosure.  Sometimes you have to act as part-time investor, part time financial counselor, and part-time psychiatrist.  However, the seller will thank you in the end when you have saved them from a foreclosure, and settle the largest debt of their life without a deficiency judgment.

Stage 5 – Acceptance

Eventually, nearly every seller will get to the point in the process where they will begin to accept the fact that they are losing their home, and they will start to move on emotionally.  At this point, they might go ahead and move out, or at the very least begin to make plans for where they are heading after the sale.  Once they start talking about life after the sale, they have officially made the switch in their head, and you can breathe a sigh of relief.

However, never let your guard down, as oftentimes sellers can slip back into one of the previous stages because of a chance encounter with an old friend, or a conversation with a “Realtor-friend” who has sold one house in the last 10 years, but somehow feels they are world’s expert on everything real estate.  You need to make the effort to stay in contact with your sellers on a regular basis, and continue to reinforce the benefits of short sales vs. foreclosures.

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5 Keys to Success with Lead Sources

lynchpinMarketing and lead generation are the lynchpins of any successful business.  You can have the greatest product or service in the world, but if you are unsuccessful at getting the word out, and introducing your company to new customers, you are almost certainly destined to fail.  In the real estate investing business, the leads that we pursue are usually in 3 important categories: motivated sellers, private money lenders, and cash buyers for wholesale deals.  Though there are numerous effective marketing methods for generating these types of leads, there is none more fruitful and affordable than establishing quality lead sources.

Traditional real estate marketing is about employing numerous strategies and marketing methods in search for that single motivated seller to call you with a single house for sale.  While this theory can certainly be effective, and has been used by real estate investors for decades, most new investors have limited budgets and need a more affordable way to generate a steady streams of leads.

In contrast to traditional marketing, guerilla marketing is about generating the greatest impact with the smallest budget.  Guerilla marketers understand that the most efficient deployment of time and resources is to build strategic relationships with the person or persons who can bring you multiple deals.  These are people who are entrenched in industries that come across motivated sellers on a daily basis, and can help funnel those individuals in your direction.  Some examples would include probate attorneys, divorce attorneys, bankruptcy attorneys, pawn shop or title pawn store owners, just to name a few.

Here are some helpful tips to make sure the pursuit of lead sources in your business is a successful and profitable endeavor:

1.  Be Selective – Make sure that the people your are “courting” as a lead source in your business are real connectors.  If you cultivate your leadselective_goals sources effectively, you will be investing quite a bit of time in building and establishing these relationships, including face-to-face meetings over lunch or coffee, e-mails, phone calls, and other strategic contacts.  So you want to make sure that those you’re spending time with are true movers and shakers who can help you grow your business and generate a consistent stream of leads.

2. Send them Your Goals – Whenever you sit down and establish new goals, whether at the beginning of the year, or at the start of the each quarter, make sure you take time out to share your plans with your lead sources.  This makes them feel a part of what you’re doing, and like a key contributor to your success.  Recently, a marketing director for a local title agency sent out an e-mail regarding how many closings her office needed to meet her company goal.  Instead of sounding desperate, and begging for more business, she incorporated her company contest into her e-mail pitch.  This made the recipient feel like they were part of something fun and exciting by helping her achieve her goal.

3. Stay Engaged – People can’t stand users and abusers, and they can tell when you’re just stopping by every 6 months or so because you want something from them.  Lead sources are people too, and they prefer doing business with their friends and people that they know, like, & trust.  So don’t be a stranger!  Be sure that you make a concerted effort to connect with your top lead sources at least every 4-6 weeks.

4. Share on a Personal Level – If you’re going to use social media to stay connected with your lead sources, then make sure it’s SOCIAL media.  Don’t talk about business all the time, or you risk sounding like a commercial…and no one wants to be friends with a commercial.  Take time out to ask them about their kids, their spouse, their 100-year-old grandmother…whatever!  If you are genuinely caring and personal with them, you will not only build lasting friendships, but profitable ones too!

evolve5. Allow it to Evolve – You must understand that change is the only constant thing in life, and you can’t allow yourself to get stuck on a certain group of people.   Your inner circle of lead sources will evolve over time.  Some people that started out as great lead sources will stop sending you business, some people you thought would be terrific will end up being duds, and then some guy you don’t even consider as one of your lead sources will just keep calling with a new lead.   Your business is a living, breathing organism, and you can’t be afraid to let it evolve over time, along with the relationships you develop with your strategic lead sources.

 

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Financial Independence Day

Indepence Day SigningJuly 4th marks the anniversary of one of history’s most amazing experiments…a little thing we call the United States of America.  Never before had a country been formed in such a manner, with individual freedom and liberty as the cornerstone of its existence.  We have certainly seen some dark days and very challenging times over the last 230+ years.  But it’s a true testament to the American Spirit that we have stayed together as a nation, and continue to fight for the rights of all men and women to pursue life, liberty, and happiness.

The “American Dream” is still very much alive and well, and available to all of us who are willing to put in the effort to create a better life for ourselves and our families.  Unlike other nations around the world, there is no caste system, nor are we bound to any specific socio-economic status.  We live in a nation that is rich with resources, talent, education, technology, and affordable mass transportation.  If you are willing to put in the effort, the sky truly is the limit.

However, we must never forget that this freedom we enjoy was certainly not free.  It was purchased with the blood and sacrifice of countless veterans, who have fought, bled, and died for you and I to have this liberty we enjoy.  They believed very deeply in this “experiment” and were willing to not just talk the talk, but walk the walk, in order to ensure its longevity.  And today, and every day, we must never forget their sacrifice forStatue of Liberty Fireworks our great nation.

What better way to repay them, than to fully enjoy the freedom that they helped provide?  What better way to say thank you, than to work hard (and smart), to achieve the American dream for you and your family?  What better way to pay homage to their heroism, than to walk the path to upward financial mobility that they helped pave with their service?

Whether you flip houses, flip burgers, or flip off people in traffic…never forget that you have that freedom because of the men and women of our Armed Services.  If any of you are reading this today, on behalf of the membership of the Professional Investors Guild…I salute you!

Let me know your thought in the comments below…and have a happy Independence Day!

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