Door Knocking is back! Tired of the poor results from “we buy houses” advertising, Real Estate Investors are tapping an old resource to generate higher profit deals.
Door knocking is a lead generation, qualification, and development tool used by real estate investor for years to gather information, build rapport, and negotiate with the seller. Historically this method takes the most work and is the most costly per lead. So why is it suddenly gaining popularity in the real estate investing industry? An influx of Investors and Investment sources in the real estate investment world, has caused a massive increases in “We Buy Houses” ad campaigns, direct mail campaigns, and internet lead sources that are accessible by virtually all investors with the click off a button. Homeowners in major metropolitan areas may see as many as 20 signs on one corner advertising “We Buy Houses” with different contact information on each sign. Get in trouble on a mortgage and your names lands on an “NOD” list that is available to every Investor on the planet resulting in the phone jammed and mailbox full of letters. If a homeowner is brave enough to get on the internet and look for a buyer or a way to solve their financial problems, their information is instantly put up for sale and they find themselves flooded with Investors inquiries. To stand out from the crowd, Investors are offering unreasonable amounts or making promises they can’t keep. Homeowners are just as frustrated trying to determine the good guys from the bad guys.
Door knocking gets you away from the crowd and gives you that chance to make an impression and build rapport that is becoming more and more difficult with most other systems. Investors are finding that the extra effort and hard work can result in big profits.
What is Door Knocking? For illustrative purposes, let’s break door knocking down into three steps or levels of involvement. 1. Birddog 2. Direct Field Contact 3. Negotiating the contract or “Getting the Dead”
Birddog. A birddog basically finds the lead and points at it. Just like hunting. The birddog sniffs out the lead and points at it for the Investor. A lead that looks and smells like what the investor has trained the birddog to look for. Maybe the investor is looking for pretty houses, ugly houses, vacant houses, foreclosures, single family, low income or whatever he wants. But the birddog has to be trained what to look for and how to point. The Birddog does not usually interact with the seller and provides very limited information to the Investor.
Direct Field Contact. The second level requires direct field contact in order to develop and qualify the lead. The birddog or another team member contacts the property owner directly at the property to gather information, build rapport and ultimately to determine if property owner is a motivated seller and has a need to sell. Sometimes we refer to this as “developing” or “qualifying” the lead.
Negotiating the Contract. The third level of negotiating the contract or “getting the dead”, consists of negotiating with the Seller, putting the property under contract and obtaining the necessary paperwork from the Seller. It is imperative that this be the job description of someone on the team that is skilled at understanding the Seller’s needs and formulating win-win offers that satisfy the Seller as well as meets the Investor’s investment criteria.
Some investors use one or a combination of these methods to help them acquire properties. We recommend whoever is responsible for the third level of negotiating the contract is not the same person who is responsible for the first two. Although there are many reasons, a few of the more prominent are: 1. The education and skill required to negotiate deals and generate appropriate legal documents would needlessly limit the pool of available doorknockers. 2. The time and cost associated with training someone to that level brings with it a high level of risk relative to the investment if the doorknocker drops out or becomes the Investor’s competition. 3. Having one person perform all three levels puts the Investor at a great risk of theft by the Doorknocker. Getting a good lead is one thing, but having it negotiated and under contract can be an overwhelming temptation for some people. Separation of duties is usually a very effective method to control theft in any business and this is no exception. How does a Door Knocking system work? Typically an Investor would place and ad for a door knocker in some media source such as the newspaper, magazine or online advertising. The ad will attract an extremely diverse group of interest people ranging from professionals with experience and education, to the unemployed and inexperienced looking for a new beginning. It then becomes the Investor’s responsibility to interview, train, organize and follow through with those who respond to the ad in an effort to build a team that generates leads. Depending on the system the Investor deploys or the resources available, the doorknockers are trained and managed until they can operate on their own or they drop out.
The results of this type of system can be incredible. Building rapport directly with the customer and getting a deep understanding of their needs helps to create a win-win situation. Finding those bigger profit margin deals from motivated sellers becomes more likely. With so much less competition and increased depth of information about the Seller’s situation, the Investor can create offers that meet the needs of the Seller in more ways than just the purchase price.
The Bad News. In a perfect world, the Investor would find a team of people that are attentive, receptive, and follow exactly the training and wisdom offered them from the investor, freeing up their time and talents to close more deals. But what can happen in the real world is strikingly different. The investor’s time becomes completely consumed interviewing, screening, training and keeping up with the paperwork and headaches. The training is inconsistent for each person. The Investor’s time becomes totally absorbed leaving them little time to capitalize on the leads that are being generating. The leads start pouring in, but the Investor simply does not have the time needed to close the deals.
The Investor usually reacts to that by shifting the focus to negotiating the deals, Leaving the door knocking team without the needed training and focus to keep going. Then the team starts to fall apart. Some leave from a lack of self motivation. Others drop out because they aren’t getting the support they need. And others drop out simply because they can’t connect the dots. Others were just wasting the Investor’s time from the beginning trying to get a free education. This forces the Investor to give up or start the cycle all over again of advertising, screening, training, etc. while buying and selling houses gets neglected.
The Good News. There is very little competition using a door knocking system compared to the conventional methods employed by the masses of real estate investors. Although the down side can seem a little daunting, there are solutions using today’s technologies and resources that virtually eliminate the training and time that the investor would normally need to commit to bring together a successful door knocking system. In the past the solutions available have fallen short of providing the real solutions needed for today’s fast paced and technologically advanced world. For more information visit www.MrDoorKnocker.com.
Copyright 2005 Stewart Knudson
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