More than real estate agents, investors might have heard about driving for dollars to find (motivated) sellers.
However, before jumping into your car and driving into a particular geographic area, you may ask yourself if this is worthwhile.
It will work if you don’t have too high marketing costs for the subsequent campaign after gathering seller contact information.
This resulted from my analysis, which is included in this article.
Besides this, you will learn what driving for dollars is, how to drive for dollars, the success rates, and the three apps that can assist you in driving for dollars.
And contrary to popular belief, driving for dollars is not a marketing method. It is a data-gathering method to prepare for a real estate advertising campaign, usually via direct mailing.
What Is Driving for Dollars in Real Estate?
First, let’s find a good definition and explanation of what driving for dollars in real estate is and what it means.
Driving for dollars’ aim is mainly to acquire real estate seller contact information to convert them into leads.
It is done by driving through a particular neighborhood where potential deals are expected.
To convert the collected seller contacts into leads, often direct mail or cold-calling campaigns are run afterward.
You could say that driving for dollars is actually a preparation method for direct mail or a cold outreach campaign to collect targeted data of specific property owners.
It’s like a treasure hunt. Only the treasure here is distressed properties, vacant homes, and ‘For Sale by Owner signs.
So, strictly speaking, it’s not a marketing method but a precursor to a marketing or lead generation campaign afterward.
It may thus save direct mail costs and potentially increase the quality of the leads when doing cold prospecting. Why?
Because without driving for dollars, you may have to send many more direct mailers to a broad geographic area or cold call many more likely unqualified leads.
The costs would be higher because the number of these mailers would also be much higher.
Some say it is free, but it’s not.
For one, you will spend time in your car (think opportunity costs) and have to factor in costs for gas.
In this context, it might be worthwhile to make a cost comparison calculation factoring in average driving for-dollars success rates.
You could then compare the total costs (e.g., driving for dollars plus direct mailing costs) with only direct mailing costs at higher quantities to the same geographic area.
“Dollars “in the term “driving for dollars” means that by driving through a geographic area, you will find good deals that can make you money, hence “dollars.”
The method is more popular with real estate investors but is also an option for real estate agents to find potential seller clients for retail deals.
The 5 Benefits of Driving for Dollars
As an old-school approach, “driving for dollars” still has its place.
But why, you may ask, are these ‘treasures’ beneficial?
Let’s say, Kelly, a veteran real estate investor and realtor, has been in the game for 20 years.
She swears by driving for dollars, and one day, Kelly spotted an old house with overgrown weeds and a sagging porch.
It screamed, “distressed property!”
She reached out to the owner, struck a deal below market value, fixed it up, and flipped it for a handsome profit.
It was a win-win situation: the owner got rid of a property they couldn’t maintain, and Kelly made a good return on his investment.
With this exemplary story, I just described one of the benefits.
Let’s further break down the benefits of driving for dollars…
1) Discover Hidden Gems: Unlike popular online listings, these properties are often off the radar, reducing competition and giving you the upper hand in negotiations.
2) Local Market Knowledge: Driving for dollars helps you understand the local market in-depth. It’s like becoming a detective, uncovering the story behind each neighborhood.
3) Build Relationships: By engaging with local residents, you’re not just collecting data but also building relationships, which can lead to future opportunities and invaluable local insights, and sometimes even referrals.
4) Better Deals: Distressed or vacant properties often mean motivated sellers. With a compelling offer, you may secure properties below market value, increasing your profit potential when flipping or renting.
5) Flexibility and Control: You’re literally and figuratively in the driver’s seat. You decide where to go when to go, and which properties look promising.
So “driving for dollars” can be an adventure with potential financial rewards. This isn’t to say you should abandon digital strategies; far from it.
In today’s world, you want a balanced approach combining high-tech tools with this hands-on method.
By the way, if you are still unsure which real estate lead generation methods you should focus on based on your goals and constraints, you may want to have a look at my “Real Estate Lead Gen Strategy & Performance Suite,” which can help you increase your lead gen success rate.
How to Drive for Dollars
Driving for dollars is not just hopping into your car and driving to a random neighborhood.
Because if you did, you might as well just call random phone numbers and see if you can get a seller client.
To make sense of it, you might want to approach this strategically.
So first, you want to determine which geographic area you are aiming for.
Depending on the type of property you are specialized in, you select the geographic area.
If you are a realtor for high-end homes, you may select a different area than a real estate investor looking for fixer-uppers.
And if you are looking for buy-and-hold properties either as an investment or to put under contract as a real estate agent, you might prefer neighborhoods with good rent-to-value ratios.
There are already numerous tools that you could use to decide which geographic area to focus on.
With that, you can get pretty creative and combine different tools and data to find the ideal focus area.
In this context, you might want to take a look at these:
- Statistical Atlas
- Buro of Labor Statistics
- Heatmap from Mashvisor
- Automatic investment reports from Zilculator using data from Zillow, MLS, and Rentometer
Your result should be a defined area in a particular neighborhood according to your criteria.
Based on this information, you can then plan an economic driving route.
The next step is to do the actual driving, take notes, and take photos of the property candidates you find.
This part is a bit of an art. Why?
Because you need to make good guesses whether the properties you find may have owners that could be interested in selling.
It’s a bit like detective work, where every detail you find could be an important clue.
When you aim for distressed properties, looking for obvious clues like overgrown grass and bushes, missing gutters, bad roofs, fallen trees, abandoned cars, and more is a bit easier.
For less motivated property owners or high-end homes, the clues are not obvious and more subtle overall.
For example, if your aim is expired listings (retail), you could note properties with ‘for sale’ signs and contact the seller once the listing contract expires.
Or you take note of for sale by owner signs. Garage sales could also be good clues.
Once you find a potential candidate, you have two options: you could try to knock on the door at once and see if you can speak with the owner in person.
In that case, you would basically combine driving for dollars with door-knocking.
Or you document each property you find well enough to do further research afterward.
Driving for dollars can get messy since you need to do several things simultaneously.
You navigate, check for clues, document, and sometimes knock on doors.
So you can quickly drive through a specific area twice without knowing because of similar appearances.
The research to find the contact information afterward can also become time-consuming.
Some apps for this use case can assist you in this phase and reduce potential time-wasters. You will learn about them later in this article.
Once back in the office again or still on the street, you can then find the owner’s contact information and additional property details (e.g., building date, tax value, etc.) with these tools:
This can also be called skip tracing.
Depending on the contact information you find through the different tools, you can start running your prospecting and follow-up campaigns via direct mail, phone, or email.
9 Driving for Dollars Challenges
Unfortunately, like a road trip, ‘driving for dollars’ may have a few bumps.
Knowing what challenges might arise is essential so you’re prepared to navigate them.
So, let’s dive into some of the common challenges…
1) Time-Consuming: Finding the right property takes time and patience.
You’ll need to dedicate significant hours to drive around, research properties, and engage with owners.
2) Fuel Costs: I wish we could ride on enthusiasm, but unfortunately, your car runs on gas.
Regular drives can add up to quite a sum, especially if covering large areas.
3) Persistence is Key: You might drive past hundreds of properties before finding the right one. It’s not a sprint but a marathon.
The key is to persist even when the rewards seem distant.
4) Finding the Owner Can Be Tricky: You’ve found the perfect property, but tracking down the owner isn’t always straightforward.
Public records, online research, and even knocking on a neighbor’s door might be necessary.
5) Weather Conditions: Seems a bit trivial? Not quite.
Inclement weather can disrupt your plans, making some days unproductive.
Rain, snow, and fog – can limit visibility and road safety. And honestly, who wants to scout properties in a downpour?
6) Data Management: Keeping track of all the data can become challenging as you find potential properties.
Addresses, owner information, property conditions – it’s a lot to handle. Without an effective system, crucial details can slip through the cracks.
7) Inaccessibility: Some properties, especially in rural areas, may be hard to reach or inaccessible by road.
This could make scouting them in person difficult, if not impossible.
8) Misinterpretation of Property Condition: You only get an exterior view of the property when driving.
The real problems might be lurking indoors. This could lead to misjudgments about the property’s actual value and the cost of renovations.
9) Competing with Online Listings: While ‘Driving for Dollars’ offers a chance to find off-market properties, it can be tough to compete with online listings’ sheer volume and speed.
In the time it takes to scout one neighborhood, an investor could potentially analyze dozens of properties online.
How to Combine Driving for Dollars With Other Real Estate Lead Generation and Marketing Methods
Driving for dollars is one tool in your real estate marketing toolkit, but the magic happens when combined with other methods.
Let’s dive into how to intertwine this method with other strategies for maximum effectiveness.
1) Use Direct Mail Campaigns: Once you identify potential properties, you can run direct mail campaigns to potential sellers.
A good message with the proper sales copy could be the first step in starting negotiations.
2) PPC Campaigns on Social and Search: Use the data gathered from your drives to create targeted online ad campaigns.
Services like Facebook or Google Ads allow you to zero in on specific demographics/ target audiences and geographical areas, increasing your chances of reaching potential sellers.
For instance, once you have enough contact data collected, you could run a Facebook Ad campaign with a custom and lookalike audience.
3) Social Media Engagement: You could share your driving for dollars journey on social media.
A snapshot of a potential property, a fun anecdote from the neighborhood—such content can engage your audience and potentially lead to valuable connections.
4) SEO and Content Marketing: Share your driving experiences on your blog or website. Such content can help establish you as a local real estate authority, improve your site’s SEO, and attract potential leads.
5) Cold Calling: If direct mail isn’t getting a response, why not pick up the phone?
You could use public records to find contact information and contact property owners directly.
Driving for Dollars Success Rate [A Performance-Based Take]
Finding the success rate for driving for dollars is a tough one. Why?
Because it’s not an internet-based method to generate leads, and thus more challenging to access reliable marketing performance data than PPC advertising or SEO (content marketing).
And as I’ve already established, it’s not a marketing method per se but a data-gathering method to prepare for a direct mailing or outreach campaign via phone and/ or email.
That being said, I came across some performance data in different forums (here and here ) and from the app provider for driving for dollars, Dealsmachine.
This data is more like a puzzle I will put together for you to get some value out of it.
From the three sources, it is reported that…
- The closing rate was well over 25%
- 28 houses were needed to close one deal
- 40 vacant houses lead to one deal
- Sending voicemails to the sellers through slybroadcast led to a 70% response rate.
- Finding 200 properties and sending direct mail three times to those sellers leads to 1 deal on average across the U.S.
How can we break this data puzzle down?
First, we can categorize the data. We have data about the closing rate, house-to-deal rate, and the response rate of voicemails.
We, unfortunately, can’t use the first information regarding a closing rate of 25%.
We can’t use it because the source doesn’t reveal if this rate refers to the houses collected or the qualified property owners that could be reached.
If 25% of collected properties lead to a deal, I think this would be a utopic number. I instead see that this refers to the owners that could be contacted.
The next one is 28 houses led to one deal. This sounds better, and we can deduce a house-to-deal rate of 3.57%.
The next information in the same context was 40 vacant houses leading to one deal, and this would be a house-to-deal rate of 2.5%.
The information from Dealmachine across the U.S. is a bit more pessimistic in this regard.
Here you can expect one closed deal from 200 collected properties, provided you send them direct mail three times (600 mailers total) afterward.
This would be a house-to-deal rate of 0.5%.
So based on my calculation, we can assume an average house-to-deal rate of 2.20% (3.57% plus 2.5% plus 0.5% divided by 3).
Remember that this house-to-deal rate is not the lead-to-appointment conversion rate I calculated in my article about real estate prospecting conversion rates.
It basically includes the lead-to-appointment conversion rate and the closing rate.
To have some sort of comparison, we could apply the average closing rate across industries of 27% which I covered in this article, to the lead-to-appointment conversion rates from my conversion rate article, and then compare the different methods with driving for dollars.
Why are we doing this again?
Because the house-to-deal rate calculated above includes basically the lead-to-appointment conversion rate (when you contact the different owners and some of them agree to a phone call or a personal appointment) and the closing rate (when you close the owner with your sales skills).
I couldn’t find information about the closing rates of leads acquired by driving for dollars.
Therefore, we need to assume the average 27% closing rate across different industries.
This specific information would have been quite helpful because we could have learned more about the quality of leads of driving for dollars by ignoring the respective real estate professional’s individual sales and persuasion skills.
Below is a comparison table for driving for dollars based on the prospecting conversion rates I analyzed in my article.
| Real Estate Prospecting Method | AVG Conversion Rates for Sales Appointments | AVG Closing Rate Across Industries (Sales) | Lead-to-Closing Rate |
|---|---|---|---|
| Cold Calling | 2% | 27% | 0.5% |
| Calling Expired Listings | 2% | 27% | 0.5% |
| Calling FSBOs | 2% | 27% | 0.5% |
| Real Estate Direct Mailing | 6.6% | 27% | 1.8% |
| Text Message Prospecting | 16% | 27% | 4.3% |
| Radio Ads | 16% | 27% | 4.3% |
| Push Notification Ads | 15% | 27% | 4.1% |
| Email Advertising | 1.4% | 27% | 0.4% |
| PPC Advertising Google Search Ads | 3.9% | 27% | 1.1% |
| PPC Advertising Facebook Ads | 10.68% | 27% | 2.9% |
| Native Ads | 11.15% | 27% | 3% |
| Driving for Dollars (combined with direct mail, voice mail or phone outreach) | 8.14% | 27% | 2.2% |
As you can see in the table, I did some simple math calculations to get the potential average lead-to-sales appointment conversion rate.
Since we can use the same average closing rate of 27% and have the average house-to-deal rate or lead to a closing rate of 2.20%, we just need to divide 2.2% by 27% and get the approximate number of 8.14% (lead-to-sales appointment conversion rate).
Suppose my calculated approximation or estimation is halfway correct.
In that case, driving for dollars, at least from a lead-to-sales appointment conversion rate and lead-to-closing rate perspective, can perform better than cold calling, calling expired listings, calling FSBOs, and broad direct mailing (without driving for dollars beforehand).
But you may want to keep an eye on the cost per sale. Why that?
Since driving for dollars is often combined with direct mail, the costs per piece of mail may increase the overall costs and thus increase your cost per sale.
This cost may end up higher than the methods I compared driving for dollars against.
Does Driving for Dollars Work?
Based on the calculated estimation of the current marketing performance data, driving for dollars does work, provided you don’t have the high marketing costs of a following reach-out campaign.
Additional costs that can be a risk to this property owner gathering method is doing it disorganizedly without a strategy on what type of properties and owners to focus on.
Bear in mind that this strategy aims to get more granular on the target audience (certain types of property owners) for the advertising campaign that is run afterward.
The reason for a better-targeted audience is to drive marketing and advertising costs down and increase the quality of leads.
Driving for Dollars Apps (free and paid) – How They Work
You may also wonder if there are driving-for-dollar apps that could increase your efficiency and/or effectiveness regarding this method.
There are not many apps on the market exclusively for the use case of driving for dollars, but they exist.
But first, how do they work in general?
In terms of development, it is not rocket science.
Driving for-dollar apps, all use different application programming interfaces to use map data (Google Maps or other maps), then they use another programming interface to access property data.
Both are then combined with your GPS location once you are on the road and layered with each other.
The apps that feature direct mail will also have access to direct mail providers via another application programming interface.
Since none of the providers will hand out the secret sauce of how the apps work in detail, that is my estimated guess in terms of development.
Now let’s get back to the available driving-for-dollar apps.
I found three that may interest you during my research: Dealmachine, The Driving for Dollars App, and Propelio.
1) Dealmachine
Dealmachine, which I reviewed in this article, can track your driving routes, find out addresses and the seller contact information, contact sellers by sending direct mail, and following-up with sellers.
You can learn more about them here.
2) The Driving for Dollars App
This app is available on the Google Play store and has similar features as a Dealmachine.
It helps identify sellers or homeowners you can send direct mail. So it also finds contact information for you.
It uses an application programming interface to access data from a major data provider, so you can learn about current public information about a particular property.
You can then export this information into an Excel sheet which you can later use for your direct mail campaigns.
The difference with Dealmachine is that you can’t send direct mail directly from the app.
You need to do this extra step separately when using this app.
You can check out this app here.
3) propelio
In comparison to Dealmachine, it basically has the same functionality.
It is slightly cheaper and has a higher limit for seller leads (5000 lead downloads per day).
So this one may be an option because Dealmachine may not work perfectly in your specific area.
You can learn more about propelio here.
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.
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