Avoid This #1 "Lead Killing" Marketing Mistake|Wholesaling Real Estate
Are you making this #1 "Lead Killing" marketing mistake? Most real estate investors and wholesalers are making this #1 mistake every single day, and without even realizing it, they are flushing potential deals right down the toilet. How do I know? Well, I did it too, and once I flipped the switch, my deal volume skyrocketed from the exact same marketing spend! So, in today's blog post, we will cover this #1 mistake, and how to avoid it so you can get more contracts, close more deals and make the income you desire!
So What Is The Number One "Lead Killing" Marketing Mistake?
Over-Qualifying leads is the number one lead-killing marketing mistake that sends more opportunities to the real estate opportunity graveyard than I can tell you. New investors do it all the time, and even seasoned investors do it too! Here's the good news...it's avoidable!
Over-Qualifying happens when you have too strict of a "buy-box" and expect every lead to fit those criteria and when it doesn't, the lead is discarded. Huge mistake. For example, many wholesalers and real estate investors will have a Seller lead come through, and if they cannot contract the property at 50% of the After Repaired Value or less, they tell the Seller that the deal will not work. Confession: I did this too when I first started, and I can honestly say that it cost me hundreds of thousands of dollars. Not cool, but I'll get into the full story of that later in the post.
Where Does Over-Qualifying Happen Most In The Marketing Process?
Here are several areas where over-qualifying can start killing your deals:
1. Repairs - Most real estate wholesalers and investors cannot estimate these correctly and are using their base of knowledge to determine what the repair number is. When repairs are over-estimated, it affects how much you can offer the seller or the Maximum Allowable Offer. I see this happen the most with larger renovations or special situations like fire-damaged properties, gut remodels, and sinkholes.
How you can prevent this: If repairs are outside of your scope of experience, then you can use a simple system that I outline in the blog post series, The Science of Comping, as a guide (this should answer the majority of your questions), and you can also ask someone else for help. NEVER be too proud to ask for help and admit that you don't know what you are doing. Most of the time, people with more experience are willing to help and can be invaluable resources on your journey.
2. Offer Formulas - I remember when I first started in real estate wholesaling, my mentor told me to contract properties at 50% of the after-repaired or market value. The issue was, that I took his advice literally. If a Seller was not willing to sell for 50% I discarded the lead, which brings me to my next point - Offer Formulas. I had to learn the hard way that offer formulas are simply a guide and not a matter of fact. In other words, if you "hug" an offer formula too closely and don't account for the property being in better or worse shape, a better or worse location, or additional selling points. You will likely make an offer that is too low to get accepted, which can be a big problem in competitive areas. Here's the truth, Offer formulas can be incredibly useful tools, but since not every property is created equal, we need to view them as only a starting point of evaluation.
I wrote 2 blog posts that can help with this.
1. The Science of Comping - this is a 3 part blog post that will tell you all that you need to know about comping properties
2. Wholesaling 101 - This walks you through a wholesale deal from start to finish.
I actually can't believe I am giving away so much value in the above posts. Maybe I'll take them down. Just kidding...I wouldn't do that to you, but seriously check them out just in case I change my mind ;-).
Here are the main quick takeaways from this post:
1.) If you don't know something, then ask someone who does! Do not try to figure it out on your own, or you might miss something that would cost you 10X what you could have paid someone else to teach you. Sometimes you can even get this valuable information for free (like in this post).
2.) Repairs vary by property, and estimating them can be an art form. Just accept that you're not going to get them right out of the gate. You are going to make mistakes, and it's going to cost you money, but as long as you learn from those mistakes, then you can't lose. The information I provide in the blog posts above will help you learn faster and lose less. I'm rootin' for ya!
3.) Offer Formulas are a guide and NOT a matter of fact. Every property is different and should be treated that way. Offer formulas are great as the start to evaluation, but you must consider the property's unique features too.
4.) All the information above works, whether if you are a Realtor, wholesaler, flip, or buy and hold.
To Your Success,
- Chris Logan
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