“Your book taught me how this business is just a numbers game.”
For years, when I met people at real estate investing conferences and masterminds, they would tell me how they appreciated my book, Flipping Houses Exposed. The reason was always because it showed them success hinged on making enough offers to get a deal. It was all a numbers game. If you could get enough leads, you could make enough offers to get deals.
In the book, I documented the 495 qualified motivated seller leads I generated over a 34 week period. The repeating theme in the book was how quickly after I analyzed each opportunity I would say “Next!”. I wanted the low hanging fruit. I wanted the motivated seller ready to sell right now.
Yes, I went on appointments even if the seller was asking too much as long as what was owed was low enough to still be able to make a deal possible. But, I was so busy trying to generate more and more leads that I was too busy to ever follow up with sellers. I made an assumption that unless they signed within a couple days, I wasn’t going to be able to land that deal and it was better to move on to the next lead.
The goal was to build up to 35 to 50 deals per year. It’s no wonder that, most of the way through the year, I was only at 11 deals…even after generating 495 qualified motivated seller leads!
1 Deal From Every 45 Qualified Motivated Seller Leads
Is that good or bad though?
Great question! Does anyone really know? Are there any industry standards?
Actually, there are some. I had the pleasure of interviewing Gary Boomershine on the Flipping Junkie Podcast. Click here to listen to the episode on iTunes – Click here to listen to the episode on Google Podcasts
During the episode Gary shared industry standards for different marketing channels like direct mail, pay per click, SEO, etc.
As most of these leads were from people finding my website on Google (Organic) and I wasn’t using Google Ads, I could consider the standard conversion rate for Organic motivated seller leads. Gary had mentioned (and Trevor Mauch from Carrot also confirmed) organic leads typically result in a deal for every 8 to 15 leads.
Based on that, I was doing HORRIBLE at 1 deal for every 45 leads!!!
If you’d like to get the breakdown of the typical industry wide conversion rates for real estate investor marketing channels, click here to get our Motivated Seller Journey Checklist. The cheatsheet contains those rates as well as a checklist of the things every real estate investor needs to focus on to meet a seller no matter where they are on their motivated seller journey.
With that conversion rate, we were wasting a ton of time, money, and energy doing so much marketing, taking so many calls, analyzing so many potential deals, going on so many appointments….you get the idea.
Huge Shift In Perspective
Many years later and lots of work resulted in us getting to where we were converting 1 out of every 5 leads into a deal.
Want to know what changed?
Of course, you do. Let’s dig into it!
I’m going to share what wasn’t obvious at the time but has become very clear with years of studying marketing.
We were focused on our goals, not the goals of the sellers.Danny Johnson
When we were running ourselves ragged having to generate 45 qualified leads for each deal, we were focused on our goals, not the goals of the sellers.
Motivated sellers from that perspective were simply numbers. They weren’t individuals with different needs and situations.
What we did was switched our focus to truly serving sellers. This was the game changer!
You can have everything you want in life you want, if you will just help other people get what they want.Zig Ziglar
Let’s unpack that and see exactly how this relates to real world numbers and strategies.
Many Real Estate Investors Are Missing Out on the 37% of Motivated Sellers That Would Possibly Sell To Them
To serve motivated sellers we have to understand where they are in their journey to sell their house.
You can see that based on the sales statistics in the image above, 3% of people are ready to buy. Of course, in our industry we are talking about sellers. So, it’s 3% of sellers we interact with through our marketing are pretty much ready to sell.
You might be wondering, “are those stats true for us and our industry though?”
Well, let’s do some calculations from real world data.
Remember when I told you after 495 leads we did 11 deals. That’s 1 deal for every 45 leads.
1 divided by 45 = 2.2%
I’d say that pretty close to 3%!
Looking at the data, we see that 7% more of the sellers actually intend to sell…but may not right away.
That’s huge!! Adding another 7% to 3% gives us 10%. If we had 10% of the leads becoming deals we would have landed 50 deals instead of 11!
How much extra profit would that be for your flipping or wholesaling business?
Yeah, it gets even better. Look below the line on the pyramid graphic above. There’s another whopping 30% that have a need to sell but won’t sell right away. I’m not saying it’s even remotely likely to get the majority of those over time, but it’s likely to get a portion.
In fact, we eventually were getting to where we were doing 1 out of every 5 leads becoming a deal. That’s 20%. That number obviously fluctuated but it was usually between 15 and 20%. So we were capturing some of those 30%.
Now we are going to dig into why these percentages even exist and how you can use them to help you greatly increase your chances of helping more motivated sellers sell a house they want to sell.
Stages of the Motivated Seller JourneyTM
When our focus is narrowed toward our business and how many leads we are generating we are usually doing it at the expense of understanding what our customers (motivated sellers) are experiencing.
When we shift our focus we see that all sellers go through a Seller Journey.
If we think in terms of sellers we interact with all falling within this spectrum we can see the 3% that are ready to sell fall within the Decision phase. They already passed through the other 2 stages.
The 7% is within the Consideration and moving into the Decision phase.
The next 30% are likely in the beginning stages of Consideration.
Let’s break down each of these stages to and show what we can do to meet the seller where they are within their own journey.
Meet the seller where they are within their own journey.Forefront CRM
Stage 1: Awareness
The Awareness stage is typically where a seller is when they receive your outbound marketing (i.e., direct mail, tv, radio, etc).
Many aren’t really focused on their house problem or even consider it a problem worth solving yet.
They might have a reason to want to sell but haven’t considered what the solution might be.
This is where the best thing we can do is understand the seller’s potential reasons for wanting to sell.
These are the questions you should be answering and communicating with sellers in this stage:
- What reasons would they want to sell and how would they put them in their own words?
- What would they experience if they don’t sell?
- Why can’t they do it themselves?
- Show how you can help them and what their situation would look like if you did
Stage 2: Consideration
The Consideration stage is typically where a seller is when they look for you online through Google.
Sellers are looking for solutions to their problem and are comparing those options.
This is where your focus should be on ensuring you’re the obvious choice to solve their problem.
Your focus for sellers that are in the Consideration stage should be on the following:
- Show them how it works – what is the process?
- Show them benefits of working with you
- Show them likelihood of success if they go with you
- Show them proof that what you are saying is true (testimonials, case studies)
- How are you different?
Stage 3: Decision
The Decision stage is typically where a seller is when they are considering whether to accept your offer and go with you or one of your competitors (whether that be another investor, an agent to list, or a relative to move into the house).
Your focus during the Decision stage should be on making it easy for them to proceed.
This is where you should be doing the following:
- Give options to close when it’s convenient for them
- Handling the paperwork and explaining everything
- Being available when it’s best for them to get contract signed
- Under promise and over deliver – handwritten thank you note
- Get Google / Facebook review
- Get video review
You see what is happening now?
When a motivated seller contacts us, we are typically treating them as if they are in the decision phase already. We likely haven’t done a great job of doing all the things recommended in the Consideration phase.
Can you see why they probably won’t decide and sign a contract at this point?
Only the most motivated of sellers will sign without much need for deliberation in the awareness and consideration stages.
Yeah, I know there is still the appointment where we can do some of the awareness phase items, but it’s not been my experience that most do a good job of meeting them where they are in their journey (which stage they are really in when you have the appointment).
Your marketing should handle the awareness phase items.
If you do a good job of that, this leaves us mainly in the consideration stage when they reach out to us.
How can we ensure we do as much as we can to ensure we take them properly through the consideration stage and into the decision stage?
That’s where our real work is. The best way to learn those steps is by attending the free workshop we are doing right now.
Join us for an online workshop where I show you the exact strategy we used to go from that pitiful 45 leads required for each deal to knocking it out of the park by turning 1 out of 5 leads into a deal. This is where I cover what the steps to take to ensure your processes are in place to build the relationship with sellers that continues through their journey until the decision stage…when they sell to you!
It costs far less to improve our business operations and follow up with sellers than it does to generate more new leads. Generating new leads is expensive!!!
It’s time to make this shift in your business to focus on meeting the seller where they are in their Seller Journey so that you become their first choice when they decide to sell.
Take the next step and join us for the free workshop. Register your spot now: https://forefrontcrm.com/workshopimproving lead to deal conversionmotivated seller journeymotivated sellers