Friday, February 15, 2019

Buying Leads Or Finding Great Deals?

Real estate agents and (unlicensed) real estate investors are all wanting to make money in real estate and are looking for their next transaction to be involved in. In my role of providing a variety of marketing services for both on a regular basis over the years, I continue to notice differences in how they each operate.

From a business standpoint, it might be more important to be aware of those differences, whether you decide to adjust them or not.

A large percentage of agents, based on my experience, talk about "getting leads", whereas a large percentage of real estate investors talk in terms of "getting properties".

To be perfectly honest, this is one aspect of marketing from which agents can learn from investors.

If you are an agent, you are confident that you can bring a buyer to a "good deal" and "have no problem selling a good deal". However, I have many agents, whether marketing clients of mine or not, ask me about "getting more leads". In this case, "leads" are people and not properties. People may or may not be considering buying or selling at any point in time, and may take months to act even if they are.

All day long, marketing companies are pitching agents with "leads" opportunities, with some making a big deal about "exclusive leads". What they really mean is "exclusive to you through our company".

Either way, you get names and contact info on people who may or may not actually have serious or immediate interest in pursuing a deal and become a part of your database.

Compare this to what a real estate investor does. They aren't spending hard earned dollars paying Zillow (or other "lead generation" sources) for a list of people who selected their zip code while browsing one of many web sites. Investors are looking for their next deal, if buying, or next buyer or investor if selling. Their time and effort is spent on research, whether on their own or by having an agent that knows their criteria and finds potential deals for them.

The point is that you do not have to rely on lead generation companies to find sellers and/or buyers. If you have the properties with the best deals, buyers and sellers will find you.

As an agent, you should never accept the "There is no inventory" claim. If investor groups know how and where to find distressed property owners, so should you. It takes some digging to come up with lists of properties facing foreclosure, under a tax lien, in a probate, or coming up for auction.

Investors find these, make offers when it makes sense for them, and are on their way toward rental income, a flip for profit, or toward rehabbing a property to increase its value to sell for a bigger profit.

Events happen in peoples' lives, such as job loss, medical emergencies, relocation for employment, divorce, and family concerns. The "flip"houses are not just in the crappy neighborhoods you don't work in.

Suppose you can uncover a distressed property for which the owner needs $100,000 and the comps show it would sell now for $175,000. That owner doesn't have time to wait for weeks. However, you know that you could sell it right away for significantly less while helping a satisfied seller.

That seller is not going to go on some web site and click for a brochure to become a lead for an agent. You would not find that seller if you didn't do your research. The more hidden "good" deals you can find, the more likely you are to attract buyers and sellers.

How does doing this attract sellers? As soon as you close on a great deal you found, especially one not found on the MLS, you have your local success story. By spreading the word through your marketing channels, you let others know that if they have, or know someone that has, a problem property, that you are the local agent who can get it sold before it ever reaches the MLS.

THAT is the best kind of lead you could develop, and it is all yours, truly exclusive.

Friday, February 1, 2019

Big Loss For The BIg Unit - Why Brag About It?

Randy Johnson, the Hall of Fame pitcher (known as The Big Unit), just had his mansion sell at auction for $7.3 million dollars. While commanding that much for a mansion of that magnitude normally commands media attention, this one actually got the attention for the wrong reason.

It seems that this 25,000 square foot home which sat on five acres at the base of Mummy Mountain in Paradise Valley, had no takers last fall when the price was reportedly reduced to $16.5 million. The auction of this property resulted in a purchase price which was less than half of the listing price following a price reduction of more than $3 million.

What does this have to do with real estate marketing?

Unfortunately, there is an answer to this question. Had this story appeared as a result of investigation by a reporter, that would be one thing. News which is not positive gets published, especially in the age of social media and fewer secrets.

However, this information got out because of a Press Release issued by the agent team of the real estate firm which had the listing. Say what?

While looking to make news to promote the sale of a multi-million dollar property is understandable, that is far from the case here.

In real estate marketing, the adage that "any publicity is good publicity" does not apply.

This agent just told owners of the mansions in this area that his firm couldn't even sell a listing they voluntarily took for half of the price. Worse yet, this additional publicity could wind up costing nearby property owners millions in lost revenue if they decide or need to sell in the near future because of how this damages local comps.

At the same time, it's hard to imagine a potential seller looking to work with this listing agent in the near future based on this result. There is more to it than getting less than half of the price. It shows a savvy seller that this agent team accepts listings which are not priced correctly.

Adding to the mix is that the sale of this mansion was the result of bidding at auction, and not even a negotiation involving the agent and/or his team.

How an agent (or agent team) markets their listings and how they market themselves are ideally tied together.

Bragging about a failed listing, especially one of this magnitude, is poor marketing.