More than real estate agents, real estate investors might have heard about driving for dollars as a method to find (motivated) sellers.
Before you jump into your car and drive into a particular geographic area, you may ask yourself if this is something worthwhile.
Provided you don’t have too high marketing costs of the subsequent campaign after gathering seller contact information, it will work.
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, and What Does It Mean?
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 leads, and it is done by driving through a particular neighborhood where potential deals are expected.
The goal is to find contact information to run a direct mail or cold calling campaign afterward.
You could say that driving for dollars is actually a preparation method for a direct mail (my article) or a cold outreach campaign to collect targeted data of specific property owners.
So strictly speaking, it’s not a marketing method on its own but a precursor to a marketing 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.
How to Drive for Dollars
Driving for dollars is not just hopping into your car and driving to a neighborhood you randomly choose.
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 ones:
- 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.
It is a bit easier when you aim for distressed properties to look out for obvious clues like overgrown grass and bushes, missing gutters, bad roofs, fallen trees, abandoned cars, and more.
For less motivated property owners or high-end homes, the clues are not that obvious and overall more subtle.
For example, if your aim is expired listings (retail), you could take note of 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 (my article).
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 it can quickly happen that you 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.
There are apps on the market for this use case that 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 then start running your prospecting and follow-up campaigns via direct mail, phone, or email.
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.
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 voicemail through slybroadcast to the sellers led to a 70% response rate
- Finding 200 properties and sending direct mail 3 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, in my opinion, this would be a utopic number. I rather 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 1 closed deal from 200 collected properties provided you send them direct mail 3 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 you will find a comparison table for driving for dollars based on the prospecting conversion rates I already analyzed in my article.
|Real Estate Prospecting Method||AVG Conversion Rates for Sales Appointments||AVG Closing Rate Across Industries (Sales)||Lead-to-Closing Rate|
|Calling Expired Listings||2%||27%||0.5%|
|Real Estate Direct Mailing||6.6%||27%||1.8%|
|Text Message Prospecting||16%||27%||4.3%|
|Push Notification Ads||15%||27%||4.1%|
|PPC Advertising Google Search Ads||3.9%||27%||1.1%|
|PPC Advertising Facebook Ads||10.68%||27%||2.9%|
|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 drive the overall costs up 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 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 in a disorganized way without a strategy on what type of properties and owners to focus on.
Bear in mind that this strategy’s actual aim is 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 when it comes to 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.
During my research, I found three that may interest you: Dealmachine, The Driving for Dollars App, and Propelio.
Dealmachine, which I already reviewed in this article, with it, you 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 that you can send direct mail to. 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 to 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.
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.