The biggest challenge for both new and experience investors is finding and creating a consistent source or quality motivated seller leads. Some newbies mistakenly think that there is a plethora of high-equity deals just hanging out on the MLS, just waiting for them to come snatch them up and make a fortune on them. Those of you who have been in this business for a while know that is not even close to reality.
In fact, experienced investors are not just realistic about the lack of high-equity deals on the MLS or other websites…they are leery about deals that are on the open market that have not been purchased yet. They ask the question, and rightfully so, “If this is such a great deal, why haven’t any of the other thousands of investors who scour the internet every day found this deal and purchased it already?”
It’s really as simple as the timeless business principle of supply and demand. If you take something that is in limited supply (a great deal on the MLS), and add in a massive volume of demand (every Tom, Dick, and Harry that wants to make money in the flipping business), then you are bound to see prices driven upward. More exposure always leads to more competition and a higher price.
In contrast, let’s say you implement a marketing plan, and you get a motivated seller to call you who hasn’t yet spoken to a Realtor, and their house is NOT on the open market. You now still have a limited supply (one house), but also a very limited demand….YOU! You’re not competing with dozens of people that are clamoring to pay top dollar for this seller’s home. It’s just you and them, and you will have a much easier time creating a win/win situation and a profitable deal in this scenario. That’s why it’s so critical for EVERY creative real estate investor to have a consistent marketing plan targeted at motivated sellers.
One of the most effective, targeted, and cost efficient forms of marketing to motivated sellers is through direct mail. Direct mail allows you to choose a specific niche or target customer, and then customize and send your marketing message (and irresistible offer) right to their front door. You can affordably create your own postcards or letters with standard programs like Microsoft Word & Publisher, or there are numerous templates you can edit and purchase online.
Another benefit of direct mail is that it creates a warm lead environment. Even though cold-calling “for sale by owners” or “for rent” ads can be very effective, most people don’t enjoy it very much. You can overcome that awkward conversation by marketing through direct mail. In this situation, the motivated seller is calling YOU (not the other way around), and so the ice is already broken…and you can just easily move through your call script to get the necessary information to analyze the deal.
In my next blog post, I will discuss some of the possible niches and target markets that are available in your area. We will also discuss how to find a database of these potential leads, and even outsource the mailings to a fulfillment company if you are too busy to do it yourself. But until then, let us know in the comment section below if you’ve ever tried direct mail. If so, what were the results? Would you do it again? Join the conversation, and let us know!
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