Be the investor that picks up the phone and consistently follows up because that's what it takes to win those home run deals.
The full effects of COVID-19 on the real estate market are not yet known. If you are buying houses to flip or for long-term investment, do you really know what the value will be in the coming months and years? All we have are trends, and we know the real estate market is cyclical, so it’s not a question of whether we will see a drop in values, it’s a matter of when. So, what does this mean for buyers?
Cash Buyers Likely to Decrease
Sellers are aware that houses have been selling rather quickly in most markets for years. Many will have a hard time believing people will not pay what they would have three months ago. With this uncertainty there are a lot of hard money lenders across the nation putting a freeze on their lending. They hear about the upcoming opportunities and want to be as liquid as possible.
This also means many real estate investors who rely on hard money will not be able to get loans to buy houses.
Without buyers paying top dollars, wholesalers are likely to suffer. This could result in a big number of wholesalers dropping out of the market. Wholesalers rely on deals and do a ton of marketing, which costs money. If they aren’t doing volume, they may not last.
This leaves sellers with fewer options when it comes to getting an investor buyer for their house, which means big opportunities for the savvy investor who knows how to make the most of the situation!
But remember, sellers might lag in their belief they will need to sell for less, so how to we address this problem?
Opportunity Is Already Here to Buy Lower
I don’t want to wait for sellers to adjust their mindset on the state of the market. Because I do not know where values will be, I want to buy cheap enough to have several options.
For instance, if I’m picking up a house that needs a full rehab and might not be on the market for several months, I will want to make sure I buy cheap enough to be able to rent it. This way if the market shifts, I can put a tenant in to cover my costs.
If I offer less, I can get better deals!
But, wait a minute…
Didn’t I just say sellers likely won’t accept these lower offers right away? Yes, that’s why follow up is paramount! You should be following up anyway! But now, in a time of more uncertainty than usual, following up is even more important.
Be There When Motivation Changes
From years of marketing directly to potentially motivated sellers, I’ve learned a huge lesson. Not everybody is motivated to sell…yet!
What changes motivation is time because situations change. When a seller receives your first letters and postcards, they may be receiving rent like clockwork from their tenant. They have no desire to sell that cash cow right now. But what happens when the tenant stops paying or destroys the house? Do you think they might think about wanting to just be done with that nightmare? Of course!
Direct mail works if you send a series of letters and postcards over a period of months and even years because ONE of those letters will arrive precisely when they decided maybe they should sell the house.
I once bought a house after eight years of follow up. I had stopped following up around year five. Why do you think the seller called me after so many years had gone by? Because I was top of mind for the seller when situation caused motivation to move. I bought that house and sold it as-is for a $50,000 wholesale fee!
Follow Up Isn’t Just for Generating Leads
When you get a lead, you likely spent quite a bit of money in marketing to get it. If you don’t land the deal from the first visit with the seller, YOU MUST FOLLOW UP!
Even if they seemed unmotivated by your “low-ball” offer, that doesn’t mean they won’t change their mind.
Some of the top-level real estate investors in the country have told me as much as 80% of their deals come from follow up. Meaning if they did not do their follow up, they would only have ⅕ the deals they currently do!
Don’t send messages frequently for highly unmotivated sellers. There is a fine balance between being top of mind and being aggravating. If the seller was not motivated in the least, don’t send them a message a day for several weeks. Space out texts, calls, postcards, and letters with at least a week in between and, after a couple weeks, make it a month or several months in between.
If you are being friendly and simply reminding them you are still interested in buying their house, they usually don’t mind it and appreciate that you are professional enough to follow up with them.
Make Automation Not Seem Automated
Messages that seem canned and not personalized can harm your chances. If you are using an automated platform for follow up, you have the option to create automated drip campaigns that have short codes. This way the automated texts and emails you create will be sent with information like the seller’s name and the address of the house they are selling.
Don’t create follow sequences that rely solely on automation. There should be some reminders for you to physically pick up the phone and call or review the lead notes and send a special text related to their very specific situation. I call these “scheduled contacts,” and they work!
It’s best not to use 100% automated follow up. Too many investors are trying to cut corners. Be the investor that picks up the phone from time to time and win those home run deals!
Buy Houses Cheaper Now
Don’t wait, be smart and buy lower now. This way, if the real estate market does weather the storm, you have awesome equity in your investments!
Follow up will play a crucial role in being able to buy these houses at lower prices. Don’t think you can’t buy lower—you can. It just takes persistence and follow up.
Danny Johnson has been investing in real estate since 2003 and has bought and sold hundreds of houses. He is the host of the popular FlippingJunkie podcast and the founder of FlipPilot, a lead/deal management software system for real estate investor