Most people who are chasing a want, a need, or a dream are usually excited about finding a ?way?. It?s the number one draw, given, constant, call it what you like, that fuels the guru market, as an example. Being excited is a function of human nature, and you can certainly make it work for you. But that wasn?t what I was talking about.
The ?only in your mind? good natured dig referred to your statement that your customers would have a disconnect between being at your open house and being at somebody else?s and see yours in the magical light you see them in. It doesn?t work that way except in our minds. Yea they may be in love with the idea of being redeemed to the point of home ownership, but that is no guarantee they will settle for one less bedroom, one less bathroom, green shag carpet, a tiny back yard. (Watch that TV show ?Blind Date? and save me from typing a few more paragraphs here, thanks
Now to the also question?You are making a large assumption that you will be able to uniquely reap what you have sown with no competition considered. The truth is a buyer who is now given ?awareness?, for lack of a better term, may indeed use that awareness solely for their own benefit without compensation to you. Again, human nature, look around. Find a cheap gas station and tell your friends about it. Now, try to collect a fee on the savings for your efforts. Let me know how that goes. Better yet, just send me my cut
HTH
Ok, I was brainstorming last night and came up with an idea on marketing lease/options while finding Tenant/Buyers. I wanted to run it by you guys to make sure I’m not missing something or to find out if I am.
I would appreciate negative feedback on why you think it won’t work or the problems I may face and also positive feedback with ways to improve the idea and make it better.
Here it is:
I’m soon moving to a town with 60% of properties being investor owned. The main reason for this is a large military facility nearby.
I believe due to the larger number of rentals and larger number of military who generally seem to have poor credit and not a lot of cash that L/O’s would work pretty well here. This is not a bash on the military. I am a Marine. It’s just my observation.
Another high point was that in the daily paper, people were putting ads up looking for people that would provide lease options. I called them and they were actually small families that somehow heard about the lease/option plan and liked it and wanted to own their own house.
Clearly I could go the normal route of lease options but I wanted to be a little creative and come up with a more effective plan.
So my plan was to do a mass mailer to all the owners of properties that they do not live in, call some FSBO’s, call ads in the paper with properties for rent, etc. The usual way of finding owners that will lease/option to you. Once I talk to several of them and get them committed, no contracts yet, I create a very nice list of the homes available with color photos and all the details.
Next step is conducting a free seminar to learn how to “create equity in a house before you own it” or some catchy title that I will have to come up with. I will advertise this FREE seminar all over town, on the military base, etc.
I will hold the seminar in a hotel conference room and teach them what they need to know about lease options (basically sell them on it). I will show them the pros and cons, etc.
Then at the end I will present the list of houses available with the open house times for the next day. The seminar will be on Saturday, so the open houses will be all day on Sunday lasting until about 5 so the people that go to church can still come see.
I will solicit the help of local real estate agents to help out with open houses and give them direct instructions on getting everyone’s info. I need to work on this part of the plan to figure out how much the agents should actually do.
That’s the basic premise for filling the houses, then all the standard contracts, etc…comes next.
So there it is. It’s a work in progress. I just though about it last night so I haven’t put a ton of thought into it.
Any feedback would be appreciated - negative or positive. Ways to improve the idea would be great as well!
Thank all for you help.
Luke
Just want to correct some stats being thrown around here. Over 40 years will bear out the following.
1% of homes are sold directly from the for sale sign.
1% of homes are sold directly from an ad in the paper.
2% of homes are sold directly from an open house.
So 4% of homes are sold directly from using the above avenues of marketing. Note, I said directly.
I applaude you for coming up with your own ideas instead of just following the herd. But you did ask for “negative” feedback so here goes…
#1 NEVER market a house without a contract.
#2 Forget the agents. You’ll get a much better result for a lot less money and hassle by simply hiring people through a newspaper ad, offering some quick and easy part-time cash. These people will be trainable (unlike know-it-all agents) so as long as they’re reliable, you can expect to get the results you’re looking for (info gathering etc.)
#3 The seminar idea is interesting but you will probably enjoy better results by advertising the open house tour directly. That way you can do half the houses on Saturday and half on Sunday, cutting your requirement for open house employees by half.
If you have a lot of houses especially if they’re in the same area, an open house tour can be very effective as it creates a sense of competition.
Joe mentioned something about open houses that isn’t entirely true. Agent-run open houses sell less than 1% of listed houses according to NAR statistics. Joe suggested that this is the reason agents use open houses to look for clients for other houses. It’s actually the opposite. Open houses don’t sell houses BECAUSE agents use them to find other clients, instead of trying to sell the house.
FSBO open houses are much more effective at about 15-20% of sales.
And rent to own open houses can be even more effective if run properly. Of the investors I know who use open houses regularly for RTO homes, they typically account for 50-100% of sales.
You said, “I will solicit the help of local real estate agents to help out with open houses and give them direct instructions on getting everyone’s info. I need to work on this part of the plan to figure out how much the agents should actually do.”
I don’t think this will work out according to your plan. First off you should be aware that historically only about 5% of open houses (1 in 20) produce a sale. The REAs know this and as a whloe look at open houses they sit as an opportunity to find clients.
Using your model as stated may have the exact opposite outcome from what you hope to accomplish. In all reality, if a REA is sitting in on your open house they will treat it as they would any other property. That is if you can get them to go for it. Might be an uphill battle with the broker on this one.
On top of that, if a qualified buyer shows up and the REA can turn them on to a property that will produce a better commission such as one listed by their broker, guess what the outcome of that will be…
Additionally, you will come under fire if you are not a principle in each and every one of the properties you will be representing. Read breaking the law on this one. If you contract to buy all these properties your exposure would be unwise to say the least.
I applaud your creativity but you have a lot of tweaking yet to go on this one. HTH
Posted by Luke Hoppel on May 19, 2006 at 08:34:12:
Thanks for your response DP.
Here are a couple comments.
In regards to your #1: Do you think it would be possible to have the owner of the house sign a contract with me, basically I’m putting a 30 day option to get a L/O from him and for that 30 days, I find T/B’s? What are your thoughts on that?
#2 Yeah, great point, I agree with you there. Also KJ made a great point about the agents trying to steal business.
#3 The purpose of the seminar is to create hype. This is done by a good sales approach and explaining to them how it works. This way, they go home and talk to their wives or husbands about it and they get excited together and the next day they go look at the houses.
Posted by Luke Hoppel on May 18, 2006 at 17:25:22:
Good point on the agent side. What if they signed a contract with me beforehand that they are not acting as an agent and are entitled only to the set ammount I agreed to pay them.
There would still be an issue with them trying to get the buyers to look at one of their properties though.
I’ll think more about that.
Also I think this is a little different than a regular open house. For one, I hyped it all up the night before and have these people loving the idea of finally owning a home and 2. They really can’t just pic any home they want, like a normal homebuyer looking at open houses.
As far as the legality to it, I suppose I could sign a contract with the seller stating that I agree to sign a lease/option form if a T/B was found in the next 15-30 day or something along that line.
Great points KJ, that’s exactly what I was looking for!
Yes that’s exactly what I do. I know it can be a little intimating at first because you may be afraid that asking for a contract will scare sellers away. It’s true that it will but it only scares away the sellers who would cause problems later on.
I don’t know your area so you may be right. In my area there is no need to “hype” the rent to own/owner finance concept, there are thousands upon thousands of buyers eagerly seeking such opportunities, all I have to do is let them know I have a house ready to go.
“What if they signed a contract with me beforehand that they are not acting as an agent and are entitled only to the set ammount I agreed to pay them.”
A. They have a ‘contract’ with the licensing authority that precludes this. They will also have an agreement with their broker that will supercede any such agreement.
“Also I think this is a little different than a regular open house. For one, I hyped it all up the night before and have these people loving the idea of finally owning a home.”
A. Only in your mind
“They really can’t just pic any home they want, like a normal homebuyer looking at open houses.”
A. See above answer
“As far as the legality to it, I suppose I could sign a contract with the seller stating that I agree to sign a lease/option form if a T/B was found in the next 15-30 day or something along that line.”
A. You, as an unlicensed individual, are not allowed that luxury. If you were dealing one on one with prospective sellers you might get away with it if they don’t complain. However, when you are doing this ‘out in the open’ as your plan states, you will be in clear violation if someone complains they didn’t like the straw they drew.
Good points KJ. I’ll work on it some more. It at least gives me something to work on.
One questions though: You wrote:
. “Also I think this is a little different than a regular open house. For one, I hyped it all up the night before and have these people loving the idea of finally owning a home.”
A. Only in your mind
“They really can’t just pic any home they want, like a normal homebuyer looking at open houses.”
A. See above answer
You don’t think that someone who wants to be a homeowner but can’t afford the downpayment or doesn’t have the credit and all of a sudden realizes their is a way wouldn’t be excited?
Also why do you disagree that they just can’t go and pick any house?
Thanks KJ,
Luke
