Express Homebuyers hosted the most well-attended, highest rated real estate wholesaling meetup ever on January 16, 2017. The focus was on getting leads, closing deals and making money. Here’s the complete video from that evening. Watch to the very end because Brad Chandler shares news about a couple of NEW programs that make it easier for you to enjoy a more profitable 2017.
Brad started the meeting asking the question “what is keeping you from wholesaling deals. What is keeping you from your dreams, your goals, your aspirations?” Here’s a summary of the responses he received:
Peggy’s said she has a tough time finding product, finding the houses.
Tom’s biggest challenge is he’s brand new and doesn’t know the first step to take.
Phil’s major obstacle is overcoming seller objections and feeling like he’s not adding any value in the process, and not adding any value in his mind is equating to not getting deals done.
Others said they’re stymied by difficulty finding motivated sellers, not being able to value the property, finding people who have the construction resources to fix the house and make a profit, and spending too much time on something that’s not going to be viable.
Brad started answering these questions and concerns with a commentary on the importance of marketing. Companies and businesses cannot be successful without some form of marketing. He reminded audience members that the first two Meetup topics were on marketing – how to find motivated sellers on a champagne budget and then on a beer budget. The third Meetup focused on follow-up. Those presentations are all still available and you can find them at www.ExpressHomebuyers.com/category/wholesalers.
That follow-up system is the most important component of your business. If you don’t have a follow-up system, no one should be surprised you’re not making money. Do your research and pick a follow-up system, otherwise you’re just wasting your time. Brad stressed that if you take away nothing else from this Meetup, remember this point.
Some CRM systems are $10-20 a month – really inexpensive. Look at Sugar CRM, Zoho and Podio. There’s absolutely NO reason to not have a CRM system.
Now, moving on to actual marketing. Direct mail is consistently the #1 source of deals for all the top real estate investors from around the country. Direct mail isn’t difficult to figure out. First, you have to get a list. There are three, four, ten places from which to get lists. List Source is one of the biggest ones.
From there, you can get any kind of list. You want someone who is 60 years old with purple hair and two left feet? You can get it. Realistically, start with people who have equity. Next you need some type of motivation.
Brad shared that most of Express Homebuyers’ clientele are between the age of 45 and 70. You want to target that age group. You also can do how long they’ve owned the house. Most of the people we buy from have owned the house at least 20 years. Whether you do owner occupant or absentee owner doesn’t make much difference. You have to test that variable and see what works for you.
Now you need a mail house. Express Homebuyers uses TriWin in Texas, but they’re not for the small guy. There are thousands of mail providers. Google “mail houses” to find one.
Next come up with your message. You can see what other people are doing on Bigger Pockets. Keep in mind, when you speak to someone, when someone makes a buying decision, there’s always an external/rational reason AND an emotional reason.
For example, I need a new pair of jeans. Why do I need a new pair of jeans? My other ones have holes in them and I’m embarrassed to wear them out. I’m embarrassed. It’s an emotion.
When a great jeans company markets to me, they don’t talk about needing a new pair of jeans. They talk about the fact that I’m embarrassed. They speak to my emotions. In your marketing, you can’t talk all and only about yourself because home sellers don’t care about you. They care about their problem and how they feel. The problem you’re going to help them with.
Make sure your postcard, your marketing message speaks to the heart of their problem. They have an external problem. They need to sell their house. What’s their internal problem? It could be any number of things. They could be embarrassed by the condition of their house when their friends come over. They could be about to hit foreclosure and they’re panicked, they’re nervous, they don’t know where they’re going to live. They’re facing homelessness.
Look at how Apple markets. They talk about how their product is going to change your life for the better. Believe it or not, as real estate investors, you change peoples’ lives for the better.
We help people who are in some really bad situations. Speak to those emotions and challenges. Then be consistent with your mailings. If you don’t have the money or you don’t have the energy or you don’t have the resources to mail to each address at least four times, don’t bother doing it. The key to successful marketing is you’ve got to do it consistently.
At Express Homebuyers, we hit our list six times over six months and then we regenerate and refresh. We get a new list and start all over again.
Tom reiterated that if you’re going to mail, don’t expect to just mail one month and get a deal. Budget for three or six months and stick to that list. You can’t just do one mailing and say, “Forget this. This isn’t working.”
The conversation moved on to discussion about choosing and focusing on ONE area instead of spreading yourself thin trying to cover two or three.
And then, how important it is to respond to inquiries as soon as they come in. If you can’t answer the phone right away, maybe because you’re still working a full-time job, then you need to hire a call center or a virtual assistant who can take the call live. Home sellers have urgency and want to talk with someone directly.
Tom then talked about how to structure and move the conversation along with the seller, including how to find out their asking price and the general condition of the property. The next step is in analyzing the property – what’s important and what isn’t and coming up with a repair estimate. Then it’s about setting the appointment and the value of meeting the seller to establish rapport and build a connection.
How do you conduct the in-house visit? How do you set the seller’s expectations?
At the end of the evening, Brad and Tom discussed a new program they’re rolling out in which Express Homebuyers partners with you. You bring in the lead and Express Homebuyers handles all the follow up. At the closing, there’s some kind of split in profits. There are still many details to be worked out, but if this is at all interesting to you, post your comments, questions and suggestions on the closed, Wholesaling Meetup Facebook page.
Sign up for the February Wholesaling Real Estate Meetup HERE.
January 2017 Meetup
Brad: Welcome to the Express Homebuyer’s Wholesaling Meet-up group.
We’ve bought and sold over 2000 single family houses. I personally have been involved with over 5000 real estate transactions so it probably puts me in the top one hundredths of a percent in terms of knowledge in real estate. I’ve been fortunate enough and blessed to make a lot of money in real estate and lose a lot of money in real estate.
If you’re in real estate and you don’t lose money, then something’s wrong. I’ve made a lot and I’ve lost a lot but I’ve been fortunate and I live a great life. I have a great family, and want to give back. We started this group back in I think it was April of last year with the sole purpose of giving to you guys.
For all of you who have been here, have you gotten good value out of the group? Every time you come, do you walk out of here saying, “Wow, that was great. We learned something?” Okay, have I ever asked for a penny of any dollars? Okay, that was the purpose of the group and continues to be the purpose of the group.
Something we’re doing is not working because three people in this room raised their hands and we have not seen wholesale deal flow, I don’t know how long it’s been. It’s been months and months since we bought something from the group or from a wholesaler period, so we’re not doing something right.
When we don’t do something right in our business, we pivot and we try something different. Instead of coming up here tonight and talking about search engine optimization or how to convert, or how to set up your mailers or going over copy, we want to switch.
I want to ask you guys. You got to give me input like what is keeping you from wholesaling deals. What is keeping you from your dreams, your goals, your aspirations? If you guys were all doing two or three, a deal a month, you may not be here, you may be here.
I want to hear from the group. What is it that’s keeping you? What can we do as an organization to support you more, to give you stuff? Again, we feel like we give a lot. We have a Facebook group that if you showed up tonight or if you’ve ever been, you’re a member of our closed Facebook group.
We’ve put a lot of really great content. Is anyone on that closed Facebook group? Is there some good stuff that goes through there? We’ve got contracts. I put some stuff about my travels. I put my notes from Dean Graziosi. It was a phenomenal talk. I got to meet him a couple of weeks ago in Denver, and to hear his story.
I got some notes from a top Keller Williams agent that was just three pages of notes that were phenomenal, and a lot of people commented on it. Again, we spent our time. We spent our resources. We want to continue this. We are going to continue it, but something has to change because we want you guys to be receiving a bunch of checks from us every month in the form of assignment fees and that’s not happening.
It’s either something we’re doing or something you guys aren’t doing. Let’s get to the bottom of it, and then what we’ll do in this meeting is we’ll pick a couple of those hot topics and we’ll go through them because there’s nothing Tom and I can’t talk about when it comes to real estate. We can get you on the right path, and hopefully we’ll be sitting here a couple months from now having a whole different conversation about, “Wow, whatever we changed was great.”
Does that sound reasonable to you guys and ladies? Peggy, you were the first one that raised your hand.
Participant: Yes, I could wholesale all day long to you if I could find a house. It’s tough. There is so much competition. There are so many people looking at the same house. It’s very tough to find houses, whether through direct mail or not. It’s tough.
Brad: Peggy’s comment was that she has a tough time finding product, finding the houses. We’re going to put that in a bucket here. I want to hear hopefully every one of you can give me an answer on why you aren’t where you want to be in real estate and why are you here. Yes, sir, what’s your name?
Brad: Nice to meet you.
Participant: The last one I did was in November. I’ve been trying to do this. I’m brand new. I’m trying to figure out how to find properties, how to set up the deals, and everything.
Brad: Let me summarize that. Tom’s biggest challenge is you’re brand new and it sounds like you don’t know the first step to take. Is that fair enough?
Brad: Okay, keep them coming guys and gals. Let’s get to the bottom of this.
Participant: One of my biggest challenges is being able to challenge the objections from the seller. It’s very informed and sophisticated, and whose property could help them accomplish what they want by just listing on the MLS. There’s literally no value I can really add.
In the conversations where I know they can get after three to five days of listing it, it’s an insult to their intelligence to continue to try to justify selling to me to add value. This is a whole variety of types of lists. These are scrapes from public websites, land record websites. There may be inefficiencies with the lists.
Brad: Phil’s major obstacle is overcoming seller objections and feeling like he’s not adding any value in the process, and therefore no value in your mind is equating to can’t get a deal done. Fair enough? Thank you sir.
Participant: My biggest problem I think is landlords, absentee owners. You want to buy my house? Okay, I don’t want to sell but that’s not a motivated seller. I’m looking at houses in Alexandria seemed like in really good shape. I think I actually used your sheet of what to look at and how to value it. I came up with $40,000 of repairs so I offered him $240,000, turned it down and said he wanted three something.
Brad: I’m going to put that in Peggy’s bucket and that’s your struggle is finding motivated sellers.
Participant: My name is John. We found some properties outside the area but aren’t able to find properties in the area. The other thing is I guess partner (8:49 inaudible).
Brad: Again, we’re going to put that in finding motivated sellers is the challenge. Again, rapid fire guys, in ten seconds tell me your biggest challenge and what’s keeping you from reaching your goals. You got another one, Peggy, if no one else?
Participant: There are motivated sellers out there but they’re also raising the stakes so you’re not getting the deals at reasonable prices, not to make a killing but we’re in it to make money. You want it to be win/win. They’re asking way too much. You can’t flip it.
Brad: I think that comes back to your original motivated sellers. It just sounds like they’re not motivated.
Participant: I think that’s my main problem.
Participant: (9:50 inaudible)
Brad: His question was he sees a lot of properties that we’re trying to wholesale, and we’re going to hold that because this isn’t pertinent to this conversation but we’re going to touch on that a lot towards the end of the meeting. We’ve set a couple things here, overcoming objections, motivated sellers. What other problems are you guys having that has not raised their hand? If you can keep it to 15 seconds, one or two sentences, “I can’t achieve my goals because of this.” What is that?
It’s going to be like class soon. I’m going to start calling on people, come to the front of the room.
Participant: For me, it’s spread (10:35 inaudible).
Brad: Okay, not enough spread. I’m going to put that in the not motivated seller bucket.
Participant: Not knowing valuation too.
Brad: Is that a problem with you guys, not knowing the value of the property, being able to tell the value of the property? No, okay. Stuart and Pamela, what are your biggest challenges?
Participant: Finding someone that’s motivated to sell or the price.
Brad: Anyone else, George?
Participant: This is not my problem but the biggest problem is construction. When you’re trying to get into a property, having to get out (11:25 inaudible) construction resources to be able to get out of, sell it to someone if they don’t have the resources. You don’t have the resources because you’re trying to sell it and they don’t have the resources.
Brad: Finding people who have the construction resources that can fix the house and make a profit, great. You said that wasn’t your biggest challenge. What is your biggest challenge?
Participant: I don’t have any challenges. The only challenges I have in the real estate market is what I choose to get into at a particular time. I’m a real estate broker. I’m also a licensed contractor. I do a lot of two or three K contracts, renovations for homeowners. I’m the reason why you can’t get properties because I’m teaching home buyers how to compete with investors. That’s what is driving prices up because homeowners don’t need a margin.
They’re spending all the margin that you need. They’re spending it on renovation.
Brad: Thanks George. Mike, 15 seconds, what’s your biggest challenge?
Participant: I don’t have any.
Brad: You don’t have any, you’re good? You’re rocking and rolling. Then bring us properties, man, let’s make some money together.
Participant: I will add that I’m looking to reenter the buying and flipping more for myself. I do a lot for my clients. The challenge is finding properties.
Participant: My biggest problem has been determining the value for the home.
Brad: That’s a new one we’ll put down. What challenges are you guys sitting here thinking about that haven’t been said yet? We want to get them all out. Anyone has a challenge?
Participant: Running comps.
Brad: Determining the value of the property, accurate comps.
Participant: One thing I was telling my husband and business partner is that I think we spend too much time when someone potentially calls us with a lead. I don’t know if it’s just them because we have a screening sheet and we ask them the questions but we don’t really get the answer, and we go out to the property, and it’s more and more added on.
I remember we were here when you guys were asking the questions, “You got to get back to me,” that type of thing. Sometimes I think maybe we’re spending too much time on something that’s not going to be viable.
Brad: That’s a great one. When I was going with REAs 15 years ago, I remember people at the front of the room saying that, “Don’t spend your time on things that aren’t deals, because that will kill you for spending the time on the deals,” great one, thank you.
Participant: Are you dealing properties locally?
Brad: Yes, DMV. We’ve always wanted to be a national company so hopefully this year we’ll enter our first or second expansion market. A couple more, then we’re going to start diving into these things. Guys, to give you the 30 second version, we’re talking about overcoming what is keeping you from reaching your goals that you have in real estate. Give me one thing in 15 seconds, your biggest obstacle in doing the amount of real estate deals that you want to do on a monthly basis.
Participant: Finding the buyers in our area.
Brad: Finding the buyers, so you can find the properties, you just can’t find someone to flip it to. What is your area?
Participant: It’s easier to find buyers in California than Virginia.
Participant: Is that one of your expansion markets?
Brad: For the right numbers, we would buy in Winchester. Let’s talk afterwards. One or two more, anyone, biggest challenge in reaching your goals?
Participant: Finding the deals.
Brad: We got that one knocked over the head 20 times.
Tom: That’s why they’re here, they’re here to figure out how to find deals.
Brad: You came to the right place because we find a lot of deals. How many did we do in 2016?
Tom: Over 200.
Brad: We as well – don’t throw anything at me – wish we could find more deal too. We would love to do 400 deals.
Tom: That’s my biggest problem too by the way. We’re at scale. It’s the same thing.
Brad: You guys have a one person shop, or you have multiple people. We have 20 people and we have this behemoth overhead. If we don’t get a certain amount of properties, we’re losing money every month. It’s glamorous to look up at us and think, “Oh, you’re doing 200 properties,” but that’s not 200 properties with a $10,000 a month overhead. There are a lot of zeros added to that. It’s the same thing for us.
It sounded like the number one concern was finding deals, so we’re going to spend 10 or 20 minutes going over finding deals. Again, this is going to be different. Instead of me just talking the whole time, if I say something and you guys have a question, raise your hand.
I’ll usually ask you to wait to ask questions until the end but we’re going to do it a little bit different. It’s going to be open communication. I just ask that when you ask a question, be real brief, short and to the point because we have a lot of material to cover, and the more time that I can have speaking, the more time you can learn stuff.
Finding deals, Gary Vanderchuk says it best in that if you’re not marketing, you’re basically – I don’t know the word he used. He probably says you’re stupid. When he hears people say, “I don’t spend any money on marketing,” it’s laughable.
That shouldn’t be as a badge of courage to you, “I don’t spend any money. I get all my business from referral.” Great, but go tell that to GEIKO. Go tell that to Apple Computers. Go tell that to Wal-Mart. I just listed some of the best companies in the world.
If they didn’t market, they would be out of business. Marketing is a fundamental thing that all business owners have to do. It’s just as important for real estate investors. You got to market. When I did the first presentation – and I love marketing so this is close to my heart. This is what I spend most of my time on.
Again, you guys have me as a resource, a free resource. You have a Facebook group that you can post any marketing question you want. Guess how many marketing related questions I’ve seen in the last six months? I don’t know that I have seen one.
I’d be on there all night answering these things, guys. You’re in this room. I’m going to beat you up a little bit too because again, we got to switch things up. You have a resource here that I will in the next probably year start a coaching program where I’m going to charge $100,000 a year, and that’s no lie. I will get people beating down my door.
You guys are sitting here, and you get the same value for nothing, and you don’t use it. You got to start asking these questions. I’m giving you an open forum to ask these questions 24/7, so if you have a question and you want to post a copy of your letter and say, “Is this good copy?” I’ll look at the freaking letter and say it sucks or no, it’s great, or change this or do that.
Use me as a resource. I got all excited about meet-up group and my first topic was marketing, marketing. Anyone here for the first meet-up group? It was how to find motivated sellers on a beer to a champagne budget. One day was on beer. The next day was on champagne.
I put together great two presentations which are still on our Web site, www.ExpressHomeBuyers.com/category/wholesalers and they’re there. I think the videos are there too. Then at the third meet-up, we did follow-up. If I could have wound back the clock, I would have done the follow-up first because no one in this room should be spending one dime on marketing without having a kick ass follow-up system.
We live in a day and age today that it’s the greatest time to own and start a business because of technology. We have a follow-up. You guys could go home this weekend and create a follow-up system from a technology standpoint. It would be better than anything you could have done 20 years ago and would cost you $50 a month as opposed to $200,000 which it would have cost you 20 years ago.
You have no excuse for that. Number one, before you start marketing, we’re here to build businesses and make a lot of money. You got to get a follow-up system. I’ve done this, I spent $15 million on marketing since the business started so I know a couple things about marketing. Take my advice and you’ll make money.
The number one thing is get a follow-up system, and again, all of this, I’m rehashing stuff but I’ve got to do that. Go back to those podcasts. We have all those things in detail, Sugar CRM, Zoho, Podio. All of these things are less than $50 a month. If you’re serious about real estate and you don’t have that up and running by the next meet-up, I can tell you why you’re not making any money because you have to have a follow-up system.
Last year alone, we closed eight deals from calling back missed phone calls. That’s $200,000 to $300,000 in our pocket that we wouldn’t have had because of our follow-up systems, not because we’re so great. It’s because Tom and our staff took a lot of hours putting together InfusionSoft. Do you guys need InfusionSoft? No, you don’t have a 19 person staff. You don’t have 600 to 800 leads coming in.
One of these other ones will work just fine but you have to have a mechanism for when the lead comes in, you follow up, you follow up, and you follow up. If you hear nothing else tonight, that is it. If you guys don’t go out of this room and start researching and find a CRM that works for you, you’re wasting your time. Just go do something else. Pack it up.
Continue your job, whatever it is, because you are wasting your time if you’re doing any marketing and you don’t have a follow-up system. You might as well be throwing money out the window on the way home. We got that. Everyone good on that, any questions on the follow-up system?
Tom: Let me make a point on that too. One of the reasons, and we’ve mentioned this before. We’ve lost millions of dollars because we didn’t have great follow-up systems years ago. You’re talking to sellers. What’s their number one asset? Their house, so you’re talking about a big decision.
They’re not going to buy a car or buy some new shoes, or something. This is their biggest asset. It’s not reasonable to expect that everyone is going to make a decision as soon as you pick up the phone and talk to them. If you don’t have a system, a mechanism to stay in touch with these people after they first contact us, like Brad said, don’t even bother because yes, there are deals that we get a lead at eight o’clock and we set an appointment at nine, and we’ve signed it up at noon.
That’s probably less than five percent. In most things, there are multiple conversations. There’s a lot of touch points. If you’re not touching them, then they’re going to talk to someone else.
Participant: Write down a note or something to remind yourself when to follow up and ask them when to follow up.
Tom: You can automate it. You can create a whole task.
Brad: That’s the whole point I’m making. Don’t write down anything. You got to have that in a system, in a technology system. You can’t rely on Evernote. You can’t rely on notes. You got to have a CRM. You have to buy CRM, $19 a month I think or $9 a month is what Sugar CRM, or Zoho.
I would probably go with Zoho. If I were starting today and had no money like I did when I started, I started with a negative $80,000 net worth, I would have gone with Zoho. Do you know what I did? I wrote down on the lead sheets I printed off and I would alphabetize them, when I look back, what an idiot.
Tom: When I first started, yellow piece of paper, “Hey Tom, I just took a call. Can you call this?” I would never know what to do with it.
Brad: When I say we lost millions of dollars, that’s not even including the millions of dollars that we don’t know that we lost because of poor follow-up. We’ve closed leads in the last year that the lead came in seven years ago.
We’re going to move on from follow-up to some marketing stuff but before I do, someone is sitting here thinking in their head, “I can’t do that for this reason.” What is the reason? I’m going to tell you why that’s not the case. Why can’t every single one of you, if you’re all serious about real estate investing, why can’t every single one of you in the next seven days go sign up for a $10 to $20 a month CRM system?
Is there any reason? Is there anyone that says, “Oh, I can’t do it because I don’t know technology?”
Tom: I think Podio even has some that are free.
Brad: Free, there are no excuses. I don’t know technology – go on YouTube. They’ll have countless videos on how to set up everything you do. All you have to do is sit down and write a series of 12 to 15 emails that they go out every month, so for a year, that’s going to buy you a lot of time, or actually those 12 emails could go out in the first three months.
That buys you three months to write another 12 emails. Then you sit down and set up a campaign. A new lead comes in. I’m going to call them in an hour. Excuse me, you should have it immediate. Call them immediately. Then we’re going to follow up with a text, email, and phone call a day later.
Whatever it is, there is no magic formula. You just have to be all over that lead forever until they tell you to stop calling, and then I’m not even sure I’d tell you to stop calling at that point. You’re just all over them just like we are. No excuse on that one, are we good there? No questions? I’ll give you three CRMs like you’re good?
Participant: When you do follow up (25:09 inaudible) it was your recommendation and it’s very effective.
Brad: You bought one, Podio, you’re buying a blank canvas and you can go paint what you want. You bought the portrait. You bought the really nice portrait so it was already done. Just so we’re clear, you can probably get a free version but then you’re going to have to build everything.
Participant: Right, which is expensive but my question was you’re right, the system (25:39 inaudible) but when we talked to them, they’re just kind of like, “Would you guys stop texting and email me?” What do you do?
Brad: We’re getting there. That’s going to be marketing. We’ll go from having a follow-up system to marketing, to how to close these folks, if you’ll just hang tight there. Any others? No one can come back here in a month and say, “I didn’t get my CRM because blah, blah, blah,” right. We’re good?
Everyone is going to get a follow-up system. If you’re serious about the business, do it. If you’re not serious about it, then don’t do it because you’ll never be successful without it, I guarantee it. Marketing, where do I start with that?
Direct mail is consistently the number one source that I have heard over the last 13 years and I could never figure it out until a couple of years ago, and probably it’s because we weren’t doing it consistently, but when I’m on these forums and I’m on Bigger Pockets, and I’m in my mastermind group, and I’m sitting around with 100 of the top real estate investors from around the country, direct mail is always their number one thing.
I’m going to focus on that mostly. Not a hard thing to figure out – you number one have to get a list. Where do you get a list from? There are three, four, ten places but List Source is one of the biggest ones. Core Logic supplies the data but List Source is fine. You go to List Source and you can get all kinds.
It’s incredible what you can pull out, someone who is 60 years old with purple hair and two left feet if you wanted to. The demographics are crazy. What do you want to target? In this business, in order to buy a house, the person has to have equity. That’s the number one starter.
Don’t select any house that doesn’t have equity. Is the model perfect? No. Is it good enough? Does it work? Yes. I would go if I’m starting out now and I’m sitting in your chair like I was 13, 14 years ago, I don’t even think there was a List Source and no one was giving me this information.
I was actually hand addressing letters to absentee owners. I was pulling the tax records because I had no money and I was looking at people who didn’t own the home, and myself and my sister who was a stay-at-home mom would just send letters. Some of you have heard the story.
I got a call from a lady one day, and she said, “I was not planning on selling my house but I just got your seventh letter.” That was my sister. I told her to keep writing because she was going to get a percentage of the profit. Seventh letter, I wasn’t planning on selling.
I go meet with her. She had a tenant in the property. They weren’t paying. She didn’t want to kick them out. That was a perfect scenario. When you find someone who has a tenant and they don’t want to kick them out, don’t know why because in my opinion, they’re stealing money from them.
I bought the house, I got the tenant out, and I made $40,000 on the house. Had I not sent multiple letters, I would have never gotten it. I’m going to go back and forth on direct mail. You got to have a list. Number one, the list is start with equity.
If they have equity, then the next thing is some type of motivation. Most of our clientele are between the age of 45 and 70. You want to target that age group. You also can do how long they’ve owned the house. Most of the people that we buy from have owned the house at least 20 years.
Those are three data points right there. Now, some people say, “Oh, you should do owner occupant.” Some people say, “No, it should be absentee,” which means they don’t live there so they have a higher level of motivation. Really, we see results from both so I would just test both.
Now you get your list. Now you need a provider. We’ve given you guys providers in the past. We use TriWin out of Texas. They’re not for the small guys so it may not work for you but they’re just a couple cents cheaper so it’s not the end of the world. There are thousands of mail providers. Go home and Google “mail houses.”
You got your list. You got to come up with a message. The message is important but it’s not the end of the world. There are so many in this day and age. You can see what other people are doing on Bigger Pockets. Just get something that’s decent. Get something that’s good.
When you speak to someone, when someone makes a buying decision, there’s always an external reason. I need a new pair of jeans. Why do I need a new pair of jeans? My other ones have holes in them and I’m embarrassed to wear them out. I’m embarrassed. It’s an emotion.
When a great jeans company markets to me, they don’t talk about needing a new pair of jeans. They talk about the fact that I’m embarrassed. When you guys market to people, you can’t talk about yourself because people don’t care about yourself. They care about what problem are you going to help them, what emotional problem.
Make sure your postcard, your marketing message speaks to that. They have an external problem. They need to sell their house. What’s their internal problem? It’s a number of things. They could be embarrassed by the condition when their friends come over. They could be about to hit foreclosure and they’re panicked, they’re nervous, they don’t know where they’re going to live. They’re facing homelessness.
The first deal I ever bought, the lady had five kids – five. She had six, and one of them died tragically in the bathtub. Her husband was a Schwan’s truck driver and was taking his paycheck. I don’t know what she was doing with it, but she wasn’t paying the mortgage.
A week before she went to foreclosure, she called me and said, “I’m going to lose my house. I have nowhere to go. I’m going to be on the streets homeless.” I got her enough money. She rented this beautiful house even west of Winchester. Where was I going with that story? I got so wrapped up in the story. Oh, the motivation.
Now you have your list. You got a postcard that speaks to them. It’s not all about us. Again, people don’t care about us. Look at how Apple markets. They talk about how their product is going to change your life for the better. We change people’s life for the better believe it or not.
We help people that are in some really bad situations. Speak to that. Then the follow up, if you don’t have the money or you don’t have the energy, you don’t have the resources to mail at least four times, don’t bother doing it. You got to do it consistently just like with every marketing.
We hit our list six times over six months and then we regenerate and refresh. We get a new list and start all over again. Now, I could spend hours and hours on marketing but I gave you a pretty good brief overview on how to get started. I gave you the list source company. I gave you the criteria that I would market, and we still continue to this day to do.
I gave you the copy and how many times you’ve got to hit them. The next thing, any questions on that? We’re not going to go off into Web site stuff tonight but just in terms of direct mail, because if you decide tonight, you could go home tonight and start pulling a list in your neighborhood. You could do a zip code, you could do a county.
You’ve got to figure out what you can afford to spend each month, and then just back into it knowing that I would probably use between 35 and 40 cents to get the postcard out. That means with postage and everything. If they’re doing low volume, it might be a little bit more than that, 50 cents worst case.
Let’s budget 50 cents for a postcard. Figure out what you can spend each month. Make sure you do it for six months, and then just back in. Does that make sense what I’m saying? If you have $500 a month to spend, then you divide that by 0.5 and that’s how many postcards you can send, and consistently do that.
Any questions on that? We’ve got our follow-up system ready. We’re going to buy the list. We’re going to create a postcard, and now we’re going to mail. Now the phone starts ringing. I might have Tom help me out here because he’s the wizard at this.
Participant: Just sending a postcard out first, you find a card is better than a letter?
Brad: We’ve tested everything. We’ve done letters, postcards, zip letters, yellow letters. The most bang for your buck are postcards. I’ve got a buddy in California that works on about seven markets. He’s mailing about 250,000 postcards a month. He can do anything he wants. He has almost unlimited budget.
He sends out simple small postcards. He told me a year and a half ago that he changed from a simple small postcard to a really fancy and slick one, and he saw worse results. I think a lot of times, our biggest performing postcard right now is a postcard that looks like a kid wrote it.
Again, I’m not going to get into great detail but as you guys get some success, what you can start doing like what all great marketers do is you test. If you’re sending out 500 postcards here, 500 postcards here, put this one with kids, put this one with a picture of yourself. I’m just making that up. I don’t really like that idea.
Just test and see what happens. Postcards absolutely, keep it simple. Don’t worry about having to do something extravagant. People don’t want extravagant things. They want something really simple.
Some of the postcards that our marketing coordinator has looked at, embarrassed to send out has gotten results better than a postcard she designed that looked really pretty and sounded really good. Now the phone starts ringing. I don’t know where to begin with this.
Tom: I think one thing to be clear, just to make sure you guys understand before we jump into that because this was posted on Facebook the other week, when Brad is saying back in what you can spend, if you’re going to mail, don’t expect to just mail month one and you’re going to nail it, and you’re going to get a deal. Budget for three, six months and stick to that list.
If you’re going to just mail someone once, that was probably I think the biggest things in years past, we would send 20,000 mailers, 30,000 mailers. We’d do it once or twice. We would get one deal and be like, “Forget this. This isn’t working.”
No, it was just we weren’t doing it consistently enough. You just have to keep doing it. Like Brad said, test different copy. Split it into two groups. It doesn’t have to be anything super complicated. Then look at the results.
If you have a CRM system, now you’ll be able to track this and see, “Hey, I got 50 leads from postcard A and I got 95 leads from postcard B. I’m going to go with postcard B,” unless you look at the results and you see, “I closed more deals.” You could keep going further and further, “A, I closed X deals and I made X profit.”
It just depends on kind of what the volume is. Sometimes you just have to look at the results and make a decision based on what you see. You’re not going to have perfect analysis. You’re not doing enough at scale to say, “Oh, this is statistically significant,” but just go with it and stick to it.
Brad: I remember we mailed to Newington Forest. It sticks out. It’s a huge neighborhood in Springfield. I just sent to the entire neighborhood, what an idiot. This was seven or eight years ago. I didn’t even think to do equity. George, as a realtor, you can send to the whole neighborhood because you can help them.
If they have no equity, do a short sale. If they have equity, you can offer them a listing or purchase. As investors, we can’t do that. If you’re mailing to an entire neighborhood, you’re just wasting money. You got to find the people that have equity. Just make sure when you’re pulling your list, you’re getting equity people.
Participant: What’s performing better for you guys, postcards or your letters or are you doing both?
Brad: Like I said, we’ve stopped doing letters because we’ve tested it so many times, and I’m in this network of 100 of the top real estate investors around the country and the majority of them are all doing postcards. Postcards are fine. The great thing about postcards is you don’t have to freaking open anything.
If your outside of your envelope isn’t hand written with a stamp and it looks anything like junk mail, a lot of people are throwing that stuff in the trash. They can throw a postcard in the trash but at least they’re going to see, “Do you need to sell your house? Are you scared about losing your house?” or whatever the emotional tie is. At least they’re seeing that.
Tom: We tested not mentioning any names. We tested a big company that mails a letter consistently. We did a small test and it failed. The results were probably one of the worst that we’ve had. It was just awful.
Brad: No more letters, that’s the moral of that story.
Tom: We look at our results. I think we mail enough to see what’s working. Was the result of that letter test statistically significant to the stats people? Probably not but at a certain time, business sense just takes over and you’re like, “This ain’t working.”
Participant: (38:00 inaudible) what do you do with those?
Participant: (38:08 inaudible) equity?
Brad: We pull 50 to 100% and then we also do the other category. I wouldn’t recommend that. If you can’t spend a lot of money on direct mail, focus on the 50 to 100. We actually pull the other category too because you don’t know what’s in the other category. It just means that they really don’t know.
Someone could have zero equity, someone could have 100 percent. You guys don’t worry about that. just focus on 50 to 100% equity.
Participant: (38:37 inaudible) List Source?
Participant: Out of curiosity, have you guys ever done email successfully?
Brad: We did it one time and it was awful.
Tom: We’ve done it more than one time. We did a test of 10, 15, 20,000 and just zero. I’m not even sure we got a lead. It’s hard to believe even when I say that. I was so excited for it, and I was like, “This is great.” We actually bought a list from a TV station in Baltimore that was hooked in with Neilson.
We gave them very targeted equity, age of house, age of owner. They told me their list was double, triple opt-in, nothing. I had to fight with them. I was trying to get all our money back. I don’t think we got anything. It was a complete flop. I would not waste your money on it.
Participant: Would you consistently have one area versus three?
Brad: I would consistently pound one area instead of spreading out. If you can afford three areas, great but if you can’t, I would rather put my resources in one area. When we say an area, give me an idea of what you mean.
Participant: (inaudible 39:57)
Brad: She said we love Woodbridge. I would focus on Woodbridge as opposed to spreading out thin and going three different places. The lead comes on
Participant: That’s a big thing I’ve discovered because working with tax (40:13 inaudible) and researching that area, it’s amazing how spread thin you can get by not focusing on one or two areas. Then you start bouncing all over.
Brad: Yes. Tom is going to speak a little bit about what you say when a lead comes in, how his team – he doesn’t analyze as much anymore but how his team analyzes a property, how we go about. This is going to be like an hour conversation to five minutes. He’s going to talk a little bit about how he does repair estimates on the phone, and our goal of getting appointments and how we get out there.
Tom: You might need to remind me what you just said I’m going to be talking about. The biggest thing, I’ve been with Express Homebuyers for ten years. I’ve been fortunate to be here for awhile. I think the biggest lesson is when that phone rings or a lead comes in, it’s just dollars.
If you’re not responding right away, you might as well be burning money because you’ve spent this money to generate this lead. You’ve received what you’re trying to do. Take care of it. Pick the phone up right away. Our goal is to call back leads immediately.
Obviously we’re a big shop. We get a lot of leads. Sometimes we’re picking up instantly. The greatest feeling in the world, on our Web site, we used to have two forms. You’d have a short form and then you’d go to a long form. I would pick up the phone while someone had just submitted the short form and I would get notified, and they’re still on my Web site filling out the long form.
By doing that, now they’re not going to reach out to anyone else. That’s why it’s so important. If they are a motivated seller, they’re motivated to sell. If you don’t get in touch with them, they’re going to find someone else. That’s why it’s so important if you have that lead, you want to be on top of it right away.
Brad: Someone is in the crowd thinking, “I work a full time job. How can I ever do that?” What’s the answer? Pat Live, Tallahassee, Florida, you called up and you said you want the Ron Le Grand special. I think that’s their best price. I think that’s what we’re still under, and you come up with a $100 package, a $200 package. We spend $2000 a month with them but the call is answered live.
They put it through a system. You can get it texted to you immediately. I’m sure there’s no one in this room that has a job that can’t get up and go to the bathroom. Jump on your cell phone and go out, even just to talk to them and build some rapport and say, “Hey, my computers are down, my computers are slow but I’ll call you back at another time.”
Again, we’re here tonight to break down any barriers when you walk out that room and you say, “Gosh, I came with a lot of, ‘I can’t do this because of this,’ and I’m leaving here with, ‘You know what, that guy just really made it clear that there are no excuses anymore. I shouldn’t have any excuses why I can’t succeed in this business.’”
Brad: If that doesn’t work for you, you could hire a virtual assistant in the Philippines.
Tom: For $4.50 an hour.
Brad: Then you have someone answering live that you can train. Pat Live, they have their advantages. There are certainly disadvantages as well because you’re not going to have one-to-one with that individual rep. You can work with Pat Live to tell them your script, and they’re great. There are multiple option that you can take there.
If you’re a two-man shop or a one-man shop and you do this full time, what’s going to happen when you’re out on appointments and you’re sitting with the seller, and the phone is ringing? You want to have the same thing. One of our policies that I’ve instituted is we have to make sure that there’s always someone in the office able to answer the phone.
That is the number one priority for my team. I don’t care if it’s given them this deadline and it’s a project they got to get done. If the phone is ringing, that’s number one. They need to answer the phone because they can go to someone else.
Participant: You said Pat Live. What then? You’ve listed some stuff with them?
Tom: Pat Live and Ron Le Grand is a big guru. They just give you a special if you say you found them through Ron Le Grand. You pick up the phone quickly. Really what you’re doing is you’re just having a conversation, “Hey John, thanks for calling me. What made you call today?”
It’s not telling them, “Hey, I can pay cash. I can close in seven days.” We actually had someone in our office submit their information to someone that I wanted to test out the other day, I was just curious to what they did, and the call was awful, “Oh, I can pay cash, uh, I can, uh,” and the guy on our team said, “I can call you back later.”
The person said, “Okay, no problem, I’ll talk to you later.” There has to be an action step when you talk to someone. Going back, you’re just having a conversation. Again, the person is selling their largest asset.
Again, if you’re in front of the right person and they’re motivated, what does motivation mean to you guys? When you hear motivated, what does that mean to you guys? Why are they willing to sell? What’s the reason?
Participant: There’s distress.
Tom: If there’s distress, they probably just want to talk to someone about it. They want to feel that they can trust the person that they’re talking to.
Brad: Emotion, emotion, everything in life is about emotion, at least when it comes to buying.
Tom: It’s not rational to sell your house to us or to any of you guys. It’s just not rational because you could look at the math and you could say, “I can make more money if I were to list it on the MLS,” most of the time. It’s looking at getting to that emotion.
Why did you call? Tell me about your house. There is no silver bullet when you’re on the phone with someone, that you say these three things and you’re going to close the deal. Sorry, it doesn’t happen. What made you call today? Why are you looking to sell? Tell me a little bit about your house and your situation, and just listen.
Listen to what they say. Repeat what they say. A great way to build rapport is not to say, “Okay, I got it. I hear what you’re saying, John.” No, it’s repeating what John told me and saying, “So John, what you’re telling me is you would love to sell this house in a couple of weeks because the repairs are too much for you and you just want to get the cash so you can move. Is that right, John?”
It’s really summarizing, building rapport quick. It’s not the weather. You can throw that in but that’s not effective. People want to know that you’re listening to them and you’re hearing what they have to say. It’s very simple. Don’t overcomplicate it.
Then you’re doing some analysis. I hear one of the questions that gets asked, “How do you get their asking price? They won’t tell me.” Tell me your offer. We’ve touched on this. Go back to past presentations. You can ask directly, “Hey John, how much do you want to sell your house for?”
“I want to know how much you’re going to pay me for my house.” “I get that John. I just need to do a little bit of analysis. Did you have an idea if you were to buy a house similar to yours what it might go for?” You just ask them indirect, and people will tell you if you ask in a different way.
It’s not about just pushing, and then if it’s in Winchester, and John knows Winchester and he knows that their price is way too high, then it’s just, “Sorry, I can’t help you. I am an investor.” There’s nothing to hide about what you’re doing, just, “I’m here to buy homes, to fix them up, and resell them. I have to have a profit margin.”
It’s really just turning on its head. One of the things that, I don’t know if you guys experienced this but for us, because we are Express Homebuyers, people contact us that have very difficult properties to valuate. What is this thing worth? It’s next to some power lines, it’s on a busy road, there’s some mitigating factors.
This is probably, not to go on a tangent, why wholesaling is so much better because you can make those mistakes when you’re rehabbing and find out later that the house is worth $30,000, $40,000 less than what you underwrote it and there goes your profit margin, as an aside.
My goal is in these situations, how do I disqualify you? I’m not going to take the time to be like, “All right, is it 285, 280?” If your number seems unreasonable, I’m just working to disqualify it, and then I’m moving on to the next. I heard a lot of you guys say, “Hey, I don’t know if I’m talking to the right people or getting to the price.”
A lot of it is disqualifying. Our close rate on leads that we generate is three to four percent. It’s a numbers game. You got to talk to a lot of people.
Participant: The numbers you’re quoting are no different than they were 35 years ago.
Brad: It takes us about 40 leads to close a deal. When you guys are generating leads, your new CRM that you’ll have by this time next month will be able to tell you how many leads you got in, how many appointments, and how many closings. All of those numbers you guys should know really well
Tom: You’ll have sources that perform better and others that do lower. Again, that’s the beauty of the CRM. Now you have that insight into your business to say, “Hey, I thought I was making a lot of money here, but then if I take a look at the math, and the amount of people I’m talking to, and the time I’m spending, and the money I’m spending, I would be better off focusing more resources over here and I’ll be much more productive.”
Brad: The goal of the call in our opinion is to build rapport. Tom touched on that, build rapport, mirror the person, talk to them, find commonalities. Secondly is to find their pain points. I talked to you guys earlier about buying decision. Only eight percent of buying decisions are based on price in the world probably.
People don’t buy on price. They buy on emotion. Figure out what their pain points are. They’re always going to be emotional. What is their pain point? Then speak to them on how you can solve that pain point. I’m here to help you do X, whatever your X is, “I need to move to Florida to take care of my sick mom.”
“Okay, you’re concerned about your mom. If you went the traditional route, it could take you six months to sell your house. You got to fix it up. I can buy your house in two weeks from today, and you can be on a plane three weeks from today to see your mom. Does that sound good?” “Yes, that sounds awesome.”
You’re presenting the solution. The other thing is you got to figure out what the rehab costs are, which Tom will talk about in a little bit, and then how you value the property, how you have an understanding of if they say 285, is that crazy or is that a great price.
Tom: Two things, rehab costs and evaluating the value of the property; it’s not about when you’re analyzing the rehab and condition of the house. It’s not about, I don’t know if you guys saw, I posted awhile ago when Matt joked with someone where he was like, “Yes, I need to know how many kitchen tiles you have.”
It’s not about that specific. What updates have you done to the home in the last couple of years? What repairs do you think it needs? You just want to get a picture because if it’s a deal, you’re going to go out there and you’ll figure it out. That’s the next step, further down the road.
You really want to know what the systems are like. Does it have central air? Has that been updated? Have they replaced the roof, the windows? Have they done updates to the kitchen? I don’t care what type of countertops unless they say they updated it, “So you updated the kitchen. Tell me a little bit about what you did in the update.”
You may find out all they did was replace appliances and the kitchen is old. You got to be thinking about what you’re asking. What are you trying to figure out? You’re trying to figure out what this house looks like so you can make a better guess based upon some of the spreadsheets and some of the previous presentations we did where we gave you guys, “Here’s a condo, here’s a townhouse, here’s a single family house.”
There is no exact formula but you want to get a good feel for things.
Brad: There’s a repair estimate worksheet that we use on the Facebook group so you can all go and find that. Did we do a meeting on repair estimates? I think we did. We have a whole meeting about repair estimates, and when he’s going to get into valuation, we also had one of our guys who probably valued 10,000 or 20,000 REOs back in the day, he actually sat down and did an hour long presentation on how to run comps and come up with values. That’s also on our site.
Tom: Then you have the property. Now you’re looking at the after repair value. We’re already starting at the end to see what it could be. You’re looking for commonalities. You’re trying to do a close search. You’re looking at your solds and your actives.
Participant: When you go look at a house, obviously there’s a difference between the house 40 years old standing there empty. Everything has to be replaced, therefore a heating system, air condition system would be a cost, same amount of money and lower in Maryland than it does in Virginia. There’s not much cost difference.
Therefore you have quantities to qualify each of these systems, like a roof is anywhere from $5000 to $15,000. Things are pretty much the same. If you know that, you should be able to figure it out pretty systematically and quickly.
Tom: Did everyone hear that? When you’re analyzing repairs, the point was you’re looking at quantities and square footage. What you pay in Woodbridge is going to be the same that you’re going to pay in Greenbelt. It’s not like it’s going to vary that much. You’re just looking to get a range.
Again, this is a wholesale meeting group. be standing up here because we’re not the expert renovators in our business.
You’re just trying to get a good enough number.
Brad: You can do that using the spreadsheet that we came up with that we’ve looked at 100-200,000 properties.
Tom: If you can get in a plus or minus 10%, good enough. Don’t over analyze. Don’t get stuck in the detail, “Oh, is it going to be $5000 for an HVAC or $7000?” It doesn’t matter. You’re talking $2000. It’s not going to make the difference in that thing being a deal or not.
Brad: Really, when you get more than 20% is when you start to question. You want to be within that 10% deviation range.
Tom: Yes, again, he was saying being in that 10%, you don’t want to be in 20% – I’m saying 10%, trying to make a point that you just want to be close enough. You want to get a good feel for it.
You’re analyzing a property. You want to look at solds, obviously. Actives and under contracts are very good indicator too because that’s going to show you what your competition is. That’s what the rehabber is going to be looking at, what can I sell this for.
Sometimes the actives may be better, sometimes it may be worse. It depends on what the market dynamic. The market is pretty good right now, sellers have a little bit more control, so hopefully coming in spring, we’ll actually see actives under contract higher than what’s sold.
Brad: That’s a really important point. This is a mistake that we have made in our past is we’re on the phone with Joan. She has a house in Woodbridge that a sold comp, the nearest sold comp we could find was 65, 75 days ago and it’s going to sell for $300,000.
We sometimes bought that house based on the $300,000 and didn’t look at the actives. What if an active came on the market the day that we’re analyzing it for $275,000 and it’s the same exact condition? That’s an indication that there’s a damn good chance that ours isn’t going to sell for $300,000. Now we’re $25,000 off.
That could be one wrong move in the renovation numbers, and now you’ve lost money. Always look at the actives and make sure nothing has snuck up even the day before you close it, it’s 20, 30, 10,000 below because it will kill you. It’s killed us in the past.
We’ve made a lot of mistakes. We’re here to teach you those mistakes so you guys don’t have to endure them.
Tom: I will tell you when it comes to valuations, you want to use MRIS. I’ll touch on that in a second. All these auto valuation stuff, Zillow, Red Fin, whoever else, Re/max may work in some markets but I can tell you we analyzed it. Robert put it in his stats program and it is not statistically significant.
Zillow is not, their goal is not to be the best predictor of what your house is. That’s not their goal. Their end game is completely different. Don’t get caught up in the Zillow price or Trulia or any of these. There’s nothing that is going to be what a realtor is going to do for you.
I heard this, this was a great line. I was listening to a Sean Terry podcast a couple days ago, and he said – and I think this is great – “You need an agent to run comps for you and help you. How are you going to do that? Well Mr. Agent, as you know, I am a real estate investor. I generate a lot of leads. It’s likely that I’m going to generate leads that mean nothing to me but that I can refer them to you, and you can get a listing agreement out of it, and you can work it.”
You can trade leads that you generate that are not motivated sellers. Give it to that agent. That agent can help you. That agent can help you walk in that house, and maybe you’re really not sure about this deal, and you want to get into it because sometimes pictures are misleading.
I remember this house in Mclean we did where I went with my reps. I was like, “We need to go by this comp because I don’t know why this thing hasn’t sold.” I went in and they did a good job with photos but when you got in there, they left out the things that needed to be, if I would have saw those in the pictures, I would have said, “Oh, okay, yes, ours fixed up is going to be way nicer,” but I didn’t know.
Sometimes you have to go that extra step. You need to get into those comps. You need an agent if you don’t have access yourself to help you.
Participant: Can I just go back to a point when you talked about even before you closed, do you actually go back and see if your offer is still a good offer, given how hard it is changing?
Brad: Her question was do we, before we purchase a property, if we get it under contract today and we’re not going to close until February 15th, do we go back and look at comps before we purchase it? Absolutely 100, hopefully we’re doing it 100% of the time.
The market isn’t changing so much now but it certainly was and will again at some point in time so it’s just really good because you just never know. The market cannot be changing but a motivated seller could pop up that their agent says, “Hey, you got to be in Florida because of your sick mom? We probably could get 300 but let’s price it at 275,” and then if it sells at 275, then your 300 comp is shot.
The reason is an appraiser is going to look at that when the buyer’s bank financing is on the line, and they’re going to say it’s not 300, it’s 275, and so you’re not going to be able to get 300 from it.
Participant: Speaking to a potential client or lead, getting them to agree to give a quote and 10 days, seven days, whatever, what do you recommend saying once they get with, “Well, I can’t move or be out in seven to ten days, 15 days?” What’s your comeback?
Brad: The question is when you approach a seller or a seller approaches you, and our jingle is we’ll buy your house in seven days, and they’re like, “We can’t be out in seven days,” that happens all the time. People are like, “I can’t move in seven days.” We have no problem with that.
It doesn’t matter if we close in seven days. We will say to them, “We’ll close on your timeframe. Is it three weeks? Is it two months, whatever it is? Does that make sense? There’s nothing magic about the seven days.
Most people, we’ve bought probably of the 2100 houses that we’ve bought, we’ve probably bought…
Tom: It’s less than 10 percent.
Brad: Probably a lot lower than that. It’s low. It’s not many that we buy.
Tom: Ten percent we buy in seven days. I think I looked at it some point last year, and I think the average was around 21 days. It’s more of, “Hey, here’s what I can do. Just so you know, I can buy your house in seven days. I don’t have to buy your house in seven days. I can buy your house whenever you’re ready to sell it.” Didn’t you do that when you got into it because someone said, “We’ll buy your house in eight days?”
Brad: Nine days, there was a book that you guys have probably all seen, an ebook when I started in 2002. It was How to Sell Your House in Nine Days, and I’m like, “Forget these guys, we’re going seven days,” and now it stuck, and now people search, “We buy your house in seven days.”
Tom: Now people probably say, “We buy your house in three days.”
Brad: They do, I’ve seen. Honestly, I think it scares people. I would not recommend you guys saying that, not to not compete with us but how many people can move in seven days? They got to get their stuff together. They got to find another house.
Let’s keep moving. We have a lot of stuff to cover. We’ve gotten to the point where we build rapport, we’ve analyzed the house, we’ve come up with a value, we know repair estimate. Now we want to talk a little bit about how we get an offer out of them or how we present an offer, and then the goal of an appointment, and all the logistics about having the right people there, and getting to the appointment, and how we remind them about the appointment.
Tom: We’re on the phone. We sense that someone is qualified. We want to set an appointment. You want to set an appointment as soon as possible. Any time I see an appointment hit our system and it’s two weeks out, I’m immediately asking the guys, “Tell me why this appointment is for two weeks, because two weeks is a lot of time for someone else to talk to them, something else to happen.”
You really want to nail down a sooner time. Again, go back through our previous presentations. There’s easy sale 101 things to do, “Hey, I’m looking at my calendar, I have time tomorrow morning or tomorrow afternoon.” You want to nail them in if they’re kind of being, “I don’t know when I can meet.”
You kind of want to nail them down in to a time. We do all kinds of automation with our CRM. We send them a video of whatever rep is going out to their house so they know who is going out there, just kind of, “Hey, here’s what to expect.” That goes out immediately.
We do a text reminder before if we haven’t heard from them. We call to confirm again. Our time is money, I’m sure your time is money. There’s nothing worse than driving an hour to an appointment and the seller is not there. Make sure you do it.
I’m going to tell you, it happened to Matt on Friday. This is the first time I’ve actually heard this. I didn’t even tell you this. The lady left a note on the door that she left. There’s no perfect but definitely do everything you can to make sure they’re going to be there and let them know you value their time, and you value your time as well.
At the appointment…
Brad: Do you want to talk a little bit of offer and getting to an offer price on the phone?
Tom: The offer price on the phone, we’ve shifted a little bit. In the past, we used to negotiate pretty hard on the phone, and we can do that, and we still do that depending on the person but generally, what we have found now is if it’s in the ballpark, let’s just set the appointment because that’s your goal.
You got a lead and they’re motivated, and you want to go out there and meet with them, and assess it, and try to get a better feeling for it.
Brad: We didn’t always do that, by the way. We sat in the office and spent millions of dollars on TV, waiting for the phone to call, waiting for these killer deals to fall in our lap, and then we woke up one day and were like, “What are we doing?”
Since that time, we’ve closed a lot more deals because if you’re going to sell me your greatest asset or do business with me, are you going to be more likely to do it over the phone or are you going to do it across the table where you’ll see my face, see who I am, see the car I drove up on?
Every single person is going to say they would rather do business with someone who you can shake their hand. Don’t make that same mistake we made. If there is motivation and there’s equity, go out and meet with that person. Put your charm on and sell them on why you’re a good solution.
Again, because of the pain points, how can you solve their emotional pain points?
Tom: It’s a lot harder to lie and mislead when Stan is in front of you, looking at you in the eye. It’s a lot more difficult to do versus on the phone or email, you can be whoever you want and say whatever you want. There’s a lot of power meeting in person.
Again, if they press me and they want to know the price, I want to know a range. I kind of want to give them a wide range and say, “I really don’t know,” and really push if I sense this is someone who is motivated and looks like there’s room.
I really want to deflect off of it but remember, if you ever say a number or anything, once you say that number, shut up and listen to how they react. So many deals are lost by people saying something and then they just keep talking and talking, and you don’t even give that person time to process it.
There are different types of ways that people make buying decisions. You may have an analytical person. They want to see it. They want to read it. They want to look at it. You have different ways. There’s more assertive, just different styles; study the different sales personalities.
Brad: If you want to learn about what he’s talking about, Chris Voss has a book. He’s a local guy. He was a former FBI negotiator, hostage negotiator. It’s called Never Split the Difference. It is the best book in the world ever written on negotiations.
Several of our sales guys have listened to it eight times. It’s on audio and a book. It’s phenomenal the tactics that you’ll learn.
Tom: We’ve done that. Now we’re to the appointment. We’re at the appointment. Again, be on time. Be a couple minutes early. You don’t want to be late. If you are going to be late, even if you’re going to be two minutes late, pick up the phone and call them, and let them know you’re going to be late.
You don’t want to start on that foot where you’re showing up late because then you’re showing you don’t care as much. These little things, they’re going to pick up on because if the other investor shows up and he’s ten minutes late, and he’s wearing a t-shirt and jeans, we dress business casual.
We’re not suits. That’s not what we’ve decided. Little things like that can set you apart. I know some people want to do the suit. If that’s you, by all means, I’m not telling you want to do. Our sales trainer, he told us you always want, it’s kind of a little bit harder to do in B-to-C. It could be easier to do in B-to-B.
You always want to be one level above. You never want to be under dressed. You always want to be one level ahead of where you think you’re going to be. Don’t minimize the importance of that.
I’m at the house. I really just want to let them know what to expect, “Hey, thanks for letting me come out today. I’m going to take a look around, take a couple pictures, do some analysis. Then when I’m done today, I’m going to let you know if I’m going to be able to buy your house or not. John, are you going to be able to do the same thing for me today as well?”
“Well, I need to talk to Joan.” “Okay, is Joan available? Who is Joan?” whatever it is. This is a perfect time it handle objections right away. You don’t want to start doing your thing, start negotiating and then find out, “Well, this is actually my mom’s property and I need to talk to her, or I need to talk to my sister.”
It’s a great opportunity. One thing that we do strategically is if all the decision makers aren’t present, “Hey, let me go back to the office when we’re done and I’m going to finalize.” We’ll completely pivot on it. We won’t even make that offer. We’ll try to set up a conference call, another appointment.
You really want to get there because they may tell you everything, and then I tell Brad everything, and then he tells Nicky. He’s not going to remember everything I said, and he’s going to say it the wrong way, little things like that.
Brad: If the other party has an objection over your price, you can now not overcome it because they’re not there.
Tom: Again, it’s just to go there, and if they say they’re not able to make a decision, find out why. Ask them what it is because you may have done something or someone is not there. It’s very powerful, these simple things.
You go through that, you do your analysis, however you do that. If you have to go back, there’s no problem with needing to go back if that’s what you need to do, if you need to rely on another party to help you analyze the number. I forgot one thing.
If you are trying to go there and get it done, try the comps. The properties that you’re comparing it to unless it’s Woodbridge and your hood and you know that single family house over here sells for 285 or whatever, figure it out. DC, it’s block by block. A lot of these places, things could be going on that really impact the value one way or another.
You’re not going to tell that on the computer until you get there. If it’s in DC, go walk the alley. Go walk around the back of the house. See what it’s like. Get there early. Be prepared and be ready. Again, you’re spending the time. You’re spending the energy.
We’re hearing that you’re not closing deals. Spend a little bit more time on preparation when you think you do have one so you can make better decisions and present better. Then we have our agreements.
Agreements are pretty simple. Walk it through. Where do you want me to go from here? I’m all over the place.
Brad: I think that’s good. We’ve hit all the appointment.
Tom: Never Split the Difference, I’ve listened to a ton of books last year. I was even talking to Brad about this the other day. I’m burned out. I don’t know if my brain still needs a break from all these books but Never Split the Difference is phenomenal. I’ll share a little tactic that we’ve been doing that has been working really well.
Brad mentioned at previous meet-ups, if that offer that you make to the seller doesn’t make you a little uncomfortable, then you haven’t offered low enough. When Brad writes a book, maybe that’s going to be one of the subtitles.
Participant: If you don’t split the difference, does that mean you don’t negotiate or you don’t go 50 percent? You start out a little lower.
Tom: He was asking about the title. Do you never split the difference? Chris Voss will say never split the difference. Don’t go 50/50; now, it depends on what kind of numbers you’re talking. It’s called the acronym system I believe is what we use.
If you want to buy the house for $100,000, you start at 60 percent. You start at $60,000. It’s pretty low. It’s a lot lower. It takes some practice to do it because what happens is you’ll give this low price. You want to feel them out.
They may get angry and mad. You need to pivot right away. I’m not going to mention anyone’s name but I’m going to throw someone under the bus in our office like he tried to do it in a different negotiation, and he just pressed on it three times, “No, it’s got to be this price.”
I talked to him after the fact, “Dude, you totally blew it. That’s not what it is. It’s just to feel it out to get it going because you never know.” Ray actually signed a deal today where he gave his low anchor, and what did they say? They said yes. He couldn’t believe it.
They just said yes. He’s like, “Man, I didn’t offer low enough. I couldn’t believe it. It was the easiest thing ever.” You start at this 60% and then you make two or three moves. You make a big move depending on how they react.
This is all about their reaction. It depends on where they’re at. If they’re at 120, you need to come up quite a bit but if they come down to 90 depending on where they started, again, this is hard to explain without seeing a specific number. Read the book, listen to the book.
You just make steps depending on how they react. I may step up to 80, and then they step up to 85. They may step up to 90, and if I have to, I may go up to 100. It’s a very systematic way. It’s not splitting the difference of where we’re at.
If I’m at 90 and you’re at 100, then yes, maybe I’ll be like, “Come on man, let’s just split the difference and get it done.”
Brad: Just to be clear, when Tom says 60%, we as investors have our model which is typically 65 to 75% of the after repair value minus renovations so if that number is $100,000, you’re taking 60% of that number. Does that make sense?
Tom: Yes, the desired number that you want to buy the property at, you start at 60% of this.
Brad: A guy leaves his house in the morning, and he thinks he should be wearing black shoes and his wife thinks he should be wearing brown shoes, so they split the difference and he walks out of the house with one brown shoe and one black shoe. Does that serve anyone’s needs? No. That’s kind of a funny way to say it doesn’t serve anyone when you say split the difference.
You’re at this, and you’re at this, let’s cut in the middle. It doesn’t really work for anybody. It’s just what people have done over time is foolish and senseless.
Tom: The book gets into a lot of matching labeling where you hear what they’re saying and then you throw it back on them. There are just different ways of building rapport. That’s how I would recommend it.
Brad: We’ve covered a lot tonight. We’ve covered the follow-up system, we’ve covered the main marketing, hit the most important. We’ve done a whole session on Internet marketing before. There is a lot around that, a lot about websites. We talked about how to value properties, how to renovate properties, what to do on the appointment, how to follow up on the appointment, make sure the decision makers are there.
That is the old 80/20 there. That’s 80% of what you need to succeed. If you just focused on those things, you would start seeing your bank account growing. What other things have we not touched on that when you walked in here with limiting beliefs or thoughts that you couldn’t do it because of this, this, or this that still remain? Let’s tackle some of those.
Then we’ll spend the last couple minutes going over our Facebook post about our new idea, system, venture that we’re kicking around.
Participant: Just to clarify (75:08 inaudible) is my biggest thing, that they are the times 60 or 70%, get that figure and offer 60% of that?
Brad: You subtract off the renovation costs first. This is a silly example because they’re easy numbers. Let’s say the ARV of a property is $100,000 and it needs $10,000 in work. You would take 65 to 75 percent. Let’s just take 70 to meet in the middle.
We’re going to need $70,000. You need to take off your $10,000 for repairs. Now you’re at $60,000. What Tom was talking about setting the low anchor, you would come in at $60,000 of 60% which is $36,000. I can offer you $36,000 for your house.
The person is either going to try to kick you out or say, “Wow, that’s way too low,” whatever. Then you have room to go up.
Participant: Then you’ve got to add your wholesale fee or are you not having that conversation?
Brad: I’m giving you numbers as a rehabber. Just because you get it at 70% doesn’t mean that you can’t sell it to someone else and make a $5000 or $10,000 fee. You can still do it. However, if you only have one buyer and they say it’s got to be at 65% or I’m not going to buy it, then you know you’ve got to take it down lower than that. It’s just who your buyer is.
Don’t get stuck on it’s got to be at this number, it’s got to be at this number. There are different buyers out there. We’re going to talk about that in a second about how we can help you guys make money that way.
Participant: (76:44 inaudible) standard wholesaling fee?
Brad: Her question was is there a standard percentage of wholesale fee we’re looking for?
Participant: When you’re wholesaling a property, is there, “I won’t wholesale it for less than making a profit of less than $20,000?”
Brad: Is there a minimum profit that we like to make to do a deal? That’s a whole different question.
Tom: It depends. People ask this. Maybe you guys are thinking this, and not to jump ahead, “Why are we wholesaling stuff?” We buy and sell properties. Any investor who is active, sometimes I wholesale. Sometimes I buy it and list it as is. Sometimes I rehab it.
Jeremy may be filled with a bunch of construction projects, he’s trying to get permits done, so timing may be something.
Brad: Jeremy is our construction guy.
Tom: For us, it’s looking at our pipeline. Is this going to stress the system? Would it be better to just take the money? Do we have low certainty on the ARV? For us, there’s a lot. We come to committee on it if it’s not obvious.
Brad: We recently wholesaled a property and made a $5000 fee, and then we’ve made fees much larger than that. It just depends on how complex we think it is. Is there a buyer ready to step in and buy that thing and we can make five? Or, and this particular property is a great example. This particular property, we have underwritten it that we could have made $40,000 or $50,000 as a renovation.
We went out and looked at the property. It was a funky property in a funky location. The house was all cut up. That screams disaster as a renovator. Believe me, we’ve lost more money than probably all of you put together when it comes to renovating houses.
Now we’ve learned our lesson. In that situation, we said, “You know what? We’re going to take $5000, be happy, and move on,” instead of in the past, we would have tried to renovate it, thinking we could have made 40, and a lot of times, we not only would not have made 40, we would have broken even or we would have lost $20,000 or $30,000.
Participant: Do you also try to prevent a double closing?
Tom: The question was do we try to prevent a double closing? We’ve hardly ever. I don’t think we’ve ever had to double close, no. Double close is when you close a property one second, and turn around and sell it. In Maryland, in DC, it’s prohibitive with the transfer tax. You do not want to do that.
You get an assignment on the HUD one, the assignment fee, and knock on wood, no one ever questions it.
Brad: Again, you’re fulfilling the terms of the contract that the seller signed. They get their money, they’re happy. No one has ever asked us, not once on anything that we’ve wholesaled. Questions?
Participant: What if there’s properties (79:46 inaudible), what’s wholesale?
Brad: He said if you get a property for $60,000 and it’s worth $250,000 what is your exact question?
Participant: Pretty much you can wholesale it for however much you want. Also, you mentioned something, you don’t want to double close. What if (80:13 inaudible) create more competition?
Brad: Is your question if you get the property under $60,000, what price you wholesale it if there’s a huge spread?
Participant: Right. (80:32 inaudible)
Brad: That’s going to be an individual, there’s no one in this room that can give you the right answer. That is who is your buyer, do you have a relationship with them? Is he or she your only buyer? If you don’t leave enough juice in it, then they’re not going to continue buying from you? That’s an individual thing.
It’s not really too important in the grand scheme of what we’re trying to do. Look, if you get a property under $60,000, great. That’s a great problem to have. Call me, and we’ll figure it out.
The second question was on the double close. If you have a buyer that you have a relationship with, if it’s a buyer you have a relationship with and it’s a bank or an institution and they don’t want to see you wholesale it, sure, you can take it down and do a double close.
Participant: What happens if you have a property that you want to put on your Web site to sell to members?
Brad: Hold that, we’re getting there. His question was what if you guys have a property you want to put it on our network? We’re going to touch on that. Any other questions, specifically questions you walked in this room, thinking, “I’m not successful because of this, this, and this, and I can’t do this because of this, this, and this?” Any questions?
Participant: The mail lists, you got from a specific?
Brad: List Source. If you walk out here tonight and you forget something, go to the Facebook group tonight or tomorrow. Go to Facebook. If you forget anything, go to Facebook tomorrow or the next day, “Hey Brad or Tom,” just type it in there. We answer every single question.
That doesn’t mean don’t be afraid to ask questions now.
Participant: Contractors, finding someone who understands wholesalers.
Brad: Join the club, problems with contractors, those three words go together, sorry. Contractors in general are a tough group of people to work with.
Participant: The biggest problem is the margins. The contractor doing a job to make a living, you’re doing a job to make a profit. The rule of thumb is when you work for a retail customer and you can do a 15 to 20, 25% markup. The investor wants that 15 to 25% so there’s always a disconnect there.
Brad: The question was she has difficulty working with contractors who don’t understand the difference between investment grade and retail grade, and George who is a contractor stated that as a retail contractor, you can generally add a lot of fees on. Those fees don’t work for us so it is a problem.
It’s a constant problem. Again, that’s why we’re wholesaling more properties because we have figured out after doing 1000 renovations just how difficult it is to do renovations that scale. I don’t have a great answer. That’s the one thing.
Again, we’re here to talk about wholesaling. If I had the answer, I’d tell you. Working with contractors is tough. There’s plenty of good ones out there and you just have to ask around. You have to ask people that you trust and get references, and then try them. If it works, keep working with them. If it doesn’t, move on quickly.
Have good contracts. Have scope of work defined up front on what you want to do written in no uncertain terms, and if you can pull it off, have penalties for going over and have incentives for finishing quickly, but dealing with contractors is really tough.
Participant: I was just going to say what you said, having your scope of work up front, because the biggest problem is everybody comes in and they start making changes. If you can say everything up front, you get better pricing. If everybody knows their job, it’s going to move faster and you’ll get better pricing.
Brad: George just reiterated how important it is if you’re going to rehab a house to have a really good scope of work up front. Tom?
Participant: What does CRM stand for?
Brad: Customer resource management I think, customer relationship management.
Participant: Do you do buy and holds at all if you get a property under contract that has a tenant with no problems?
Brad: The question is do we do buy and holds. We do. We own about 70 right now. We’re getting ready to put them all on the market to sell. We bought them in 2010 to 2012 and they’ve appreciated a lot. We just feel the timing is right but we did very well on them, so we would look at buy and holds.
With tenant properties in DC, it’s almost an absolute no. You guys talk about mistakes, again, we’ve got two properties in DC that we have tenants in, one for two years, and we held back $50,000 in the transaction to get the tenant out and she’s still in here. This was October of 2014.
She’s still in that property, and I can’t tell you how much money we’ve lost. If you buy a property with a tenant in DC, you’re a fool because I’m a fool so don’t do it. If it’s in DC, don’t buy it. There is so much stuff in DC that you could get in trouble.
Tom: They can extend the sale 12-18 months super easily.
Brad: Don’t think because it’s a good deal you’ll work it out because listen, we just had $50,000 and it didn’t work out. She’s still in there, so she’s laughing at us. Any others, two or three more questions and then we’re going to move on to talk a little bit about a pilot program that we’re thinking about. We want to get your feedback.
We’re going to switch to that. Who saw on the Facebook post, was it yesterday or the day before, Tom’s post about us possibly handling leads for other investors? For those who responded, we really appreciate it.
Any time we put something out there, if you guys can respond, it helps us a lot with different programs and stuff. I don’t know where we want to go from here, just open it up. Do you want to tell them the thinking behind it and how we think it would be a win/win, and the challenges that we see?
Tom: It really comes back to what Brad said in the beginning. We look at the group. We look at our data. We go on our CRM. We can see how many wholesale appointments we’ve set, how many we’ve closed, and we just look at the results. We look at the amount of time we’re spending away from our families and our kids to do this.
We enjoy this. It’s fun because this is what we do. We like teaching you guys but at the same time, there has to be a benefit for all of us. If we’re not doing deals, you guys aren’t benefitting. It’s not just we’re not. You guys aren’t either. We’ve spent a lot of money on building some internal infrastructure that we’re in the middle of deploying, testing, and debugging to where we have a better setup where we have our own in-house thing to manage our whole operations.
We have better insight. We can see our KPIs.
Brad: Key performance indicators, just the important things in the business, the two or three factors or ten factors that are really important to a business success.
Tom: We have some strategic relationships with some other folks in the IT space that they can do the most amazing things, and we’ve been working with them. We’ve seen it firsthand, their capabilities, and they’ve helped us with some stuff.
Brad’s brought it up and immediately when he said it a year ago, I’m like, “Brad, you’re crazy. We’re not doing this because we need to fix our stuff first because there’s no way we could take more leads and do more work if our stuff is not exactly tight A to Z.”
Yes, we have the lead follow-up and systems but there are a lot of other things. We’ve been working on those. We’re close to doing that. We’ve been working on our Web site. We’ve been doing a ton of split testing on everything that we do.
We have a possible strategic partnership with us internally to where we’re thinking, “All right, look, I hear a lot of you guys say you have jobs, you don’t know what to say, you don’t know how to negotiate, you don’t know the values, you’re afraid to pick up the phone, you don’t know repairs, you don’t know where to start, you don’t have buyers.”
But you’re spending time and energy. We do this all the time. We can’t sleep because we’re thinking about what we’re going to do next. This is what we do. We’re blessed that it’s not a job. We love what we do. I can go on a tangent on that so I’ll save that for later.
We’re extremely blessed to be in a position to do something that if we had full time jobs, this is what we would be doing. We would be sitting here listening to whoever was speaking. Nothing is built. Nothing is done. This is completely spit-balling thinking.
Brad and I were going back and forth on text, “Dude, I told you I wanted to do this.” I was like, “Yes, Brad but the timing wasn’t right,” and we went back and forth. I was like, “Are you okay with me posting this?” The post is basically if you guys have a Web site, we would start with web leads because handling incoming calls is another infrastructure.
If we’re going to test something, let’s test with the 80/20 that we can execute on more predictably because you can provide us some information, and we can do some analysis and figure out what our infrastructure needs to look like, where your Web site, we would have our tech guys create a little snippet of code or they would create your landing page. Or maybe even redo your site and put your content on a template that we have where it would be connected to our database.
When a lead comes in, we would build some sort of database structure that first, it would check to see have we already received that lead. Is that lead already in our system? Obviously if you are doing something like Google AdWords and other stuff that is similar to ours, there’s a good chance we’re going to run into the same people.
We need to figure that out. We’ll figure that out so there won’t be any questions of do we have this, who did it come from. You’ll have a unique tracking code so that if it comes into our system, I’ll know it’s John’s and I’ll know it’s John’s for the rest of eternity.
If we close a deal ten years later, hopefully John has the same phone number and email, and he’s still in the business and I can send him a check. Everything that you’ve heard us talk about from follow-up to – were any of you here when Matt and Ray did the awesome job of role playing everything?
They went through scenarios. We got on the phone with real sellers. It wasn’t staged. You guys get everything that we have. You just generate leads on your Web site, they come to us, we do everything with the idea that we’re going to wholesale everything.
Obviously, we can only do so much construction.
Brad: We don’t want to do construction.
Tom: Yes, everything would come to us. We do all the follow-up. We do everything. We sign up the deal and then wholesale it to our buyers. We have massive buyers’ lists. For some of you guys, you probably saw our properties being sold by third parties before.
We took it over and we knew we could do better but it was timing. It was like 80/20, what can we do to move the needle the most? I’ll tell you, since we took over, if I were to guess how much better we would do, it’s shocking. The market is there. People want, just like you guys.
You want properties. There is so much demand for property right now that we have executed on stuff that if we did the renovation perfectly and we sold it for the ARV, I would really question if we could make the same amount of money that we made on the wholesale fee because now we’re reaching a different buyer.
Their parameters may be different. They may be okay making $30,000 on the $300,000 investment in six months because that’s a 20% return, and to them, sign me up, I’ll do that all day long. Would any of us in here do that? No way, it wouldn’t work for us.
Just throwing out an idea what the interest would be if we were to spend the time and resources, because it would cost us a lot of money to build this infrastructure to be able to handle it so we can see where things are coming in. We would have to scale up our sales team a little bit because Matt, Ray, and Alex couldn’t do it all.
You would have Matt, Ray, Alex, whoever else we could bring in our team and put through our system qualifying your leads, closing your deals, and then you get paid.
Brad: There would be some type of split. Essentially, we’re as good if not better than anyone in this country at following up and closing on motivated sellers. Again, I’m always constantly thinking, “How can we create win/wins in this community?” I’ve heard countless people in the 15 years I’ve been in business throw up all kinds of objections.
I’m not good on the phone, I don’t know how to value properties, I work a full time job. I was thinking, “Okay, we’re really great at that. Let’s start offering a service where we’ll handle your leads, everything is tagged. You’ll get to hear the phone conversation.”
At some point, we’re going to automate this so a lead comes in, you can see the lead on your system, you get an automatic email notification, text, whatever. A new lead is in the system, we make the phone call, it’s recorded. You guys get an email with the phone call.
We go to the first home visit. It’s recorded. You’re learning all of that. You’re seeing the contracts without actually doing the heavy lifting of the work. Then again, there would be some type of split. That’s what we’re thinking.
We haven’t figured out everything but we think that you guys can generate leads but you can’t be as good as closing them because we’ve spent millions of dollars on emails and copy, and systems, and everything. One thing, I’m getting all kinds of thoughts, even for remarketing, I’m sure not everyone in this room is doing retargeting.
As soon as that lead comes in, if you guys aren’t doing retargeting, we would automatically start doing retargeting and we’d spend the money. They would have in their Facebook feeds, “Need to sell your house?” On Google, Google would be following them around.
We would do all kinds of tech and innovative things to try to close these deals because now we’re trying to make money with you guys.
Tom: I think also one of the things that we have heard that quite honestly kind of bothers us a little bit and was one of the reasons why we started this is we’ve heard people spent $20,000, $30,000 at some other places. They got all this great stuff but then they don’t know what to do.
I don’t know because I haven’t seen it. I don’t know what’s there but obviously, there’s a disconnect. For us, we only want to do something if it’s going to create value and it’s going to be better than whatever else is out there because we’re not interested in doing the same thing as everyone else.
That’s not us. That’s not what we’re about. We want to be innovative and we want to continue to grow. Just like one aspect, the sales training and market, this is years of us spending hundreds of thousands of dollars to figure out these scripts.
We sit in sales meetings with Matt, Ray, and Alex and we will pick up on the littlest thing and be like, “Why didn’t you pick up on that? Why didn’t you say that?” We take it very seriously.
We’re not just here telling you, “Oh, you should do all these things.” We do it and we do it probably to a degree even higher than you can imagine when you hear some of the conversations and the way we hold each other accountable. We’re really all about growing.
Not to put anyone on spotlight but Ray was new to the business. We identified some weaknesses, and we honed in on it, and you heard what I said today. Ray closed two deals today. Ray is killing it just from our programs. That’s because we’re very methodical.
We have a system. We work. Maybe that’s why I was so disappointed that none of you guys replied to John Martinez’s sales training because you guys are missing out. He’s amazing. He’s taught us and we have a great relationship with him.
Brad: He have some clients who he has a $30,000 a month retainer. We’ll shut up. We don’t have all the answers but we’re always trying to provide value to you guys, and provide value to us.
Participant: I have a question where you said you’re at a point in the conversation, and you determined that the house or the buyer does not have what you want that someone else, say a realtor, might be able to offer them value. Do you have realtors that you refer those leads to?
Brad: We do.
Participant: What cost do they have?
Brad: Her question was what do you do with leads that we can’t buy, do you refer to realtors? We do refer to realtors and we get anywhere from 20% commission to we’ve had a size of 40% commission, but don’t get excited about that because of 13 years of trying it, we’ve had very low conversions on that.
Just for one reason or another, it’s very tough to convert those leads to listings.
Tom: We’ve worked really hard. I was convinced it was profitless. Questions?
Participant: What are you asking of us with this concept?
Brad: We’re not asking anything of you. We’re telling you that if you guys are in a situation where you feel like we can close the lead a lot better, a lot quicker for less money, that we’ll offer that as a service. Your lead will come into our follow-up empire.
We’ll work it to death and there will be some split on the end. We’ll handle everything, and you can walk alongside of us. It’s not like we’re just going to take the lead and then you’ll be calling us two months later saying, “Did you get that lead? What happened to it?”
There will be constant communication of where it is. It probably can be built that every time we send them a text or call them, if that’s the level you want, we’ll do it every single time so there will be no, “Are they following up properly?” and you’ll get to hear everything.
You’ll learn so much because you’re going to hear the actual conversations, how we valued the properties, all of that.
Participant: My question on this concept, are you asking us for feedback?
Participant: What type of split would you be open to? Is there a continued conversation? What do you want us to do?
Brad: I don’t think this is a forum for talking about splits. That’s down the road. We’ll probably just say, “Here’s what we’re going to do,” and you guys either say yes or no because it’s got to make sense to us, and it’s got to make sense to you.
Outside of that, yes, we’d love to hear any ideas, any, “Hey, this sucks because of this. Have you thought of this?” Look, we’re here as a group. We’re spending our money. Let’s make money together. Let’s figure out a way to be successful together.
Tom: The idea would be again, for us, the Web site is low hanging fruit in terms of integration standpoint. If we’re talking now we have another 100,000 mail pieces going out, that is more infrastructure internally and from the technology. Let’s test that.
If it works, then we can iterate. We wouldn’t go do everything to begin with.
Brad: We could do direct mail with you guys, bandit signs, whatever. There is a lot to figure out. We’ll come back to you. She had her hand up first.
Participant: You would be following up with these leads using our company name?
Brad: No, that would be impossible. If we had 20 different companies, no, it wouldn’t be your company name. This is just a, “Hey, we’ll provide this service. If you want it, great. If not, I understand.” I don’t know that I would have done that 12 years ago because I wanted to build this huge business.
If you’re not trying to build a huge business and it’s all about, “Look, I want freedom. I want to take my family on another vacation to Greece, the islands once a year,” something, maybe it’s better for that person. If you’re an empire builder and you want to build a business like ours, it might be good to start out to generate some cash.
I guarantee you that for most people in this room, again, I don’t know. I just know that with our success and how much money we put into it, there’s a good chance that even after the splits that you pay us, you’re going to probably end up making more money because we’re going to close these things like crazy.
Tom: We’re going to close stuff that you probably can’t close.
Brad: We spend over a million dollars a year targeting motivated sellers. Now we’re going to take that incredible machine that we have for marketing and getting motivated sellers, and we’re going to find cash buyers. We’re going to find cash buyers who are going to buy at numbers higher than what we’re going to buy at.
Participant: How different is it from JV? I thought JV was we bring the deal, and you take it over from there, or is it one integrated system? Is it more (101:47 inaudible)?
Brad: Absolutely, it’s two different programs. We’ve never done one JV. We did one JV and it didn’t go so well. Again, I try stuff. Sometimes it works, sometimes it doesn’t. The JV was you guys go out and get a property under contract, bring it to us, and we do the renovation, and then we JV.
From the lead to the time you get it under contract, we’re going to be picking up that whole thing plus all the selling. It’s like apples and oranges to the JV program, completely different. George?
Participant: You wanted to know who was interested. What I’m interested in the program that you’re saying (102:29 inaudible) take it, what you want to do with it so I completely (102:40 inaudible) in addition to whatever else you’re doing, different pools that you pull from.
Brad: Okay. Before the next question, who has some level of interest in the program? Please raise your hand. Okay.
Participant: Basically, we bring you the lead and then we would take it over at renovation if we choose to do that?
Brad: Let’s think about this. There are certain circumstances where you guys will bring us a deal and we will look at it. We’re trying to maximize the value of the property. We’re trying to get the most money out of it because we get a split, you guys get a split.
There’s probably going to be some properties that we look at and say, “You know what? We can probably wholesale it and make $30,000 or we can do a $50,000 renovation and make $110,000. We’re going to make a decision. Let’s do that.”
Participant: You’re going to be the lead person who is deciding where we’re going with it possibly.
Brad: I don’t know. I can’t answer that right now. I’m going to tell you though, a majority of them, 80-90% of them are going to be wholesale deals because again, we’re going to go out, we’re going to spend a fortune to find new buyers.
Every day, there are new people. There’s a doctor, a lawyer, a dentist that’s going to see the commercial and be like, “I’d love to do this but I can’t find properties,” because they’re not out spending millions of dollars. We’re going to find that guy or gal, and they’re going to buy the property at 78 cents, 82 cents, 83 cents on the dollar and we’re going to make just as much money wholesaling as we ever would have renovated.
For those who haven’t heard the spiel, when I was sitting in the room in your chair 14 years ago, and I was like, “Holy shit, this is overwhelming. How do you do this business?” I thought that wholesaling was for the less sophisticated person, the not-so-smart person.
I thought once you were smart and you had your degrees, blah, blah, blah, you became a rehabber. It’s come full circle now. I’ve now learned that the guy who rehabs the house is probably the bigger fool than the wholesaler. The wholesaling business is highly scalable with virtually zero risk.
Has the wholesaler ever been sued in the history of the universe? Probably, but it hasn’t been many times. We’ve been sued for stuff after renovating houses years later that we did nothing wrong. We went through the whole permitting process. The DC inspector came, and then some lady starts bashing us on social media.
I could have fought her and spent $50,000, $60,000, $70,000 and won. I guarantee it. What did I do? I wrote her a $4500 check. I didn’t do anything wrong. That never happens when you wholesale. Now, the market is good. It’s right for it.
I think the market is going to continue to be good the next two, three, four years. Make hay while the sun is shining.
Participant: You’re looking at getting the lead for the property and basically sell it through the wholesale market without having to lift a hammer or have anybody.
Brad: That’s what we’re doing right now with great success.
Participant: Would this be more like an affiliate program type of thing where we generate the leads for you, you take over the leads from there?
Brad: His question, is it an affiliate program? I don’t think it’s important what you classify it as but yes, what you just explained, you generate the leads and we do everything because we’re really freaking good at it, and then some type of split.
Participant: I was just wondering which (106:25 inaudible).
Brad: She asked how long it’s going to take to implement. The bane of my existence is being told an IT project is going to be done on X and then it happens on X times three, so a couple months.
Tom: Best case, two months, worst case six months.
Brad: Yes, we have some stuff that we need to dial in on our side. We’re not going to go do this if we don’t have our stuff completely dialed in with everything that we’re working. We’re going to be coming out with a seller site very soon that you guys will see. It blows every, I guarantee you, every single other site out of the water that we’re going to have.
You can piggyback on that. It’s where we’re going to be able to have our product. The same marketing that we do to find sellers, we’re going to do that for buyers. We’re going to take everything that we know. To us, the buyers are easier to find than sellers because there are things that you can look at but we’re going to be adding to that funnel.
One thing that has been interesting for us is our brand recognition in the market, we don’t even realize. I guess that’s why you guys are here is part of it. There’s just this recognition that we noticed immediately when we started sending deals from Express Homebuyers versus who we were using before. It was immediate.
Tom: They must be deals. There’s a perception that Express Homebuyers has been around for so long and does so much marketing, that I’m going to buy their deals because they’re good deals.
Brad: Yes, and then you can go on BBB and you can look up reviews, and you can see the only negative reviews are people that are mad because we follow up too much.
Tom: That’s the majority of our negative reviews. George?
Participant: I was going to say since you’re getting all this feedback, you probably should take some notes as to what people like and a component of your programming fee.
Brad: Facebook group.
Participant: For instance, first right of refusal, if we have $10,000 or $20,000 fee that Express Homebuyers wants to make, if you get a property under contract, if we want to take that property to you guys, we need to piggy back purchase price plus that fee so you realize your investment that you make and take it. That might be good.
Brad: Any comments, just throw up on the Facebook page because then they’ll be there forever. You can put them in that thread that Tom started on Saturday. That would be awesome.
Tom: I will tell you we’re wholesaling stuff at 85% ARV. Do your math. I don’t see why you’re going to want to do the rehab. I’m not sitting here pitching you or selling you.
Participant: What I’m saying is that when it’s under contract and you guys get it under contract, if a person wants to take a project.
Brad: You may want to buy it yourself. There may be other circumstances. It may be a family member or something. Again, we feel like the market is good. The buyers that you were talking about when you first came in and you raised your hand, you told us we’re reaching them but we’re going to put our marketing machine onto the buyer side.
We’re going to be doing Facebook ads. We’re going to be doing direct mail to buyers.
Tom: Retargeting, SEO, you name it, we’re going to throw the whole load.
Brad: Also providing better sites. Anyone that’s interested, do you guys have carrot sites?
Tom: Sites that actually show your product to sell it, there’s not many good sites on that. There are some good seller sites but on the buy side to try to sell your product, there’s nothing out there. We’re developing something that’s awesome, that you want people to come and look at because it’s like wow, it’s great.
Participant: (1:50:33 inaudible) inventory that you have that you want to hand off. Now all of a sudden, your focus will be on the wholesale level. Now all of a sudden, you move the dial versus where a rehabber might need extra work.
Participant: That’s what I talked about earlier, the 20% problem. You can’t afford that 20% but a homebuyer can.
Brad: And still have juice left in the deal. It’s just a different buyer.
Participant: Saying 20% and only 65, they can sell to somebody for 85, and that makes sense.
Brad: His question was are you pricing out the renovators when you’re selling a property. We don’t sell them all at 85. They’re closer to 78, 80% but are we pricing people out? We may be pricing out the people in this room but we’re not pricing out the end buyer or a cash buyer who wants to buy and hold it.
It’s still less than they can go. Where are they going to find it? They can’t go on the MLS and buy it at 82 cents, 83 cents so they’re happy. Linda is asking what the Facebook page is. It’s a closed Facebook group for only people who attend this meet-up.
We have about 100 people on it right now. If you go to Facebook and just Google Express Homebuyer’s Wholesaling Meet-up and click join the group, we’ll accept your invitation because you have been in this room. There is some great stuff on there.
If you’re new to it, I would spend a couple hours going through all the threads, going all the way to the bottom because we have contracts in there, we have repair estimates. There’s some really good stuff.
Tom: You can search too. If you want to see if there’s something specific, put in a search.
Brad: Again, I said this earlier, ExpressHomeBuyers.com, and if you can’t remember this, you can ask me on Facebook, ExpressHomeBuyers.com/category/wholesalers. There is so much information on that thread if you go down there with old videos, hour long presentation on how to run comps, how to value, how to talk to sellers.
We recorded all of that stuff.
Participant: All of the past ones are available?
Brad: Most of the past ones are available on that page, yes. We’re going to wrap up, maybe two more questions because we have family to get home to.
Participant: (1:53:06 inaudible)
Brad: His question is in the meantime, if they have a lead, should they submit it to us? We don’t want to do this when all of our systems aren’t set up and no one really benefits from it so at this time we’re going to say no but if you get it under contract, we’ll certainly help you out in any way we can.
Tom: Or if you have something and you’ve done your due diligence, and you’re about to go on an appointment, give us a call. I know people have posted on the Facebook group about a question, and I’ve just said, “Call Alex or Matt and talk to them about the deal, and they’ll be happy to talk to you about it.”
We just don’t have the bandwidth for, “Hey, I have 123 Maple Street, what’s it worth? What would you offer?” but if you’re like, “Hey, I talked to Jim at 123 Maple Street. It looks like it’s a deal. Here’s the numbers. What would you pay? Here’s some information,” we can handle that sort of thing.
Participant: Would you look at a property if we rehabbed it? What do you figure out for your closing cost on it?
Brad: When we’re valuing, doing the analysis, it’s typically 13 to 15% of the after repair value is what it costs us. When you watch those fix and flip shows and they say they buy for 100 and put in 50, and sell it for 200, and they make a $50,000 profit, they don’t make a $50,000 profit.
Take $26,000 off of the $200,000 number so your profit is $24,000, not $50,000. Somewhere between I’d say 12 and 15% is safe. You said closing costs. That’s all of your costs.
Participant: I’m not talking realtor fees but still.
Brad: I would say to be safe 13 percent. That’s interest, that’s utilities, that’s real estate taxes, all of that, not renovation but just the cost.
Participant: Something I wanted to talk about was (1:55:10 inaudible). A lot of those never get sold. They just hold them because they can’t make as much money.
Brad: Yes, he said a lot of those flipping shows, the property hasn’t even sold. I don’t know if you know this. Some of them are so fake, some of those shows. The guy in Atlanta years ago, he never even owned the house. He was a scam artist but they didn’t figure it out until halfway through.
They literally would go into a vacant house and put plants. It’s so much of that is staged. There are people in our group, in our mastermind group. They’re from LA and they’re like movie star type. They look like movie stars. They showed me their reel.
I’m like, “You don’t do this.” They go, “I know, we told them we didn’t but they put it in there.” They’re like, “We flip houses all over the United States.” So much of it, it actually fueled the run-up. It fueled people going out and buying properties because it was, “Look how easy this is.”
You guys are here for a reason. It’s not easy. We’re not standing up here saying it’s easy. It’s hard. It’s really hard.
Participant: They rent some and they flip some. Renting isn’t as exciting as flipping. They want to make them so pretty they can’t make the money for it.
Brad: Yes, that’s a problem, over-improvement. I’ll take one last question, then you can ask thousands of questions on Facebook tonight, tomorrow, any time you want. Anyone have one last great question to end the night?
I hope this was helpful. It was different. It sounded to me like it was helpful. Guys, there’s nothing that is stopping you but yourself. Get out there and do the things that I say, and it will work. Thank you for coming.