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Everyone in the real estate space is talking about direct mailing when it comes to finding and marketing to motivated sellers, but does this attention have merit?

Actually, I wanted to write an article about how online marketing beats direct mailing campaigns easily, but when I looked at the statistics below, I got a nice slap in the face.

Why?

I was surprised to find that direct mailing is at least as effective as online marketing.

Here are some of the statistics I found:

  • “41% of Americans of all ages look forward to checking their mail each day.” (source)
  • “Direct Mail Outperforms All Digital Channels Combined By Nearly 600%” (source)
  • “40% of Consumers Have Made a Purchase In the Last 3 Months Because of Direct Mail: ” (source)
  • “92% of Millennials Are Influenced To Make a Purchasing Decision Because of Direct Mail:” (source)
  • You can find further statistics about direct mail in this and in this article.

Even though I don’t know how reliable or biased some of the statistics are, I needed to take these somewhat likely facts into consideration.

Much depends on your individual situation and business and unless you test online marketing channels against direct mailing, you won’t know for sure which one is the winner.

So in my today’s article, I won’t even start looking at which one beats the other, but will rather show you how you can apply the 80/20 principle and find the methods with the highest leverage to find highly motivated sellers.

What’s a “Motivated” Seller?

To a motivated seller, a property is similar to a mosquito around 2:30 a.m. in the bedroom. It’s a pain in the a***.

So this type of seller wants to get rid of it as soon as possible to be able to sleep well again. He is therefore likely to:

  • Accepting low ball offers and be willing to sell 10-30 percent below market value
  • Accept favorable terms, such as zero percent interest, financing or no money down
how to find motivated sellers real estate

What’s The 80/20 Principle or Pareto principle?

According to Wikipedia, the Pareto principle is the law of the vital few, or the principle of factor sparsity.

It states that for many events, roughly 80 percent of the effect comes from 20 percent of the causes.

It is also an axiom of business management that “80 percent of sales come from 20 percent of clients”.

In the field of mathematics, many natural phenomena have been shown empirically to exhibit such a distribution.

So, we can safely say that this principle is also applicable to marketing methods.

Finding Motivated Sellers – 22 Examples Of What You Usually Find on The Web

When looking for methods to find motivated sellers on the web, you usually get bombarded with long unordered lists and different methods, such as these 22 methods:

  • Network with hundreds of business cards (link) and let everybody know that you solve problems for motivated sellers
  • Driving for Dollars and look for For Sale By Owner (FBSO) signs or vacant houses, or occupied but messy homes
  • Go to unemployment offices and leave flyers there
  • Post one-page flyers on bulletin boards at large stores
  • Advertise “We Buy Houses” on craigslist
  • Do some guerrilla marketing by being a walking billboard
  • Direct mail to:
    • out-of-state landlords
    • absentee owners
    • vacant landowners
    • divorce attorneys
    • estate/probate attorneys
    • credit repair agencies and credit counselors
    • HUD/VA foreclosures
    • owners who have owned for 15 years or more
    • pre-foreclosures
    • properties purchased between 3k-20k within the last five years
    • specific zip codes
    • people arrested for violent crimes
    • realtors
    • laid off employees
    • owners of section 8 approved properties
    • owners of properties with liens: mechanics liens, tax liens, HOA liens
    • bankruptcy court listings
    • CPA firms
    • people getting their car repossessed
    • carpet cleaners
    • charitable groups/churches
    • city & county inspectors
    • people having garage sales
    • hair salons/barbers (because they are social hubs)
    • insurance brokers
    • owners of multiple properties
    • water, gas, and electric company shut off lists
  • Cold call FSBO sites
  • Cold email to craigslist rental property ads
  • With the help of a realtor partner making low ball offers on the MLS
  • Use bandit signs such as “We Buy Houses”
  • Network with other investors
  • Post Newspaper classified ads (“We buy houses”)
  • Make contact with sales reps for new home subdivisions
  • Reach out to mortgage companies
  • Contract a bird dog
  • Advertise on boards at nursing and retirement homes
  • Put door hangers on target properties
  • Have mail carriers notify you of vacant properties
  • Advertise in penny saver papers
  • Buy leads from:
    • DataTree (check out the video tutorial in this post)
    • AgentPro247
    • ListSource
    • MelissaData
    • Real Quest
  • Do a social or search ppc campaign

So, as you might have noticed you can up with a pretty large list very soon.

What’s The 80/20 In That?

Unless you already have a team of people in your business that can dedicate enough time to each of those methods, it becomes overwhelming pretty fast.

But even with a team at hand, it might be helpful to find the 80/20 principle in these methods, so it can focus on the 20 percent of methods that generate 80 percent of your leads.

You can find this by asking the question, what 20 percent of all these methods could bring me 80 percent of highly motivated sellers, as you can find in the book “The One Thing”.

What is the one method or thing you can do that makes everything else easier or unnecessary?

What can we do to find that out?

We will need some more data about the different methods and criteria which we can base on which we can make further decisions about priorities.

Suitable criteria are scalability, the necessary time intensity for each method and the testability.

All three kind of influence each other proportionally.

Something that is easily scalable is usually not that time intensive, but has a nice leverage effect by using technology or freelancers by outsourcing or hiring employees.

And by being able to use technology, you can test it until you have a winner.

Knowing about the scalability is important because once a campaign is a winner, and assuming you want to grow, you might want to be able to extend the campaign somehow.

Knowing that you can test it easily, you can improve iterations of the campaign in the same time than less testable and more time intensive marketing methods.

Finding the 80/20 is also finding the place or point from where you can apply the best leverage.

So, let’s put some order in the messy list above by applying these categories.

Here is the ordered version by category of time and scalability.

Most time intensive, less scalable, and less testable:

  • Driving for Dollars and looking for For Sale By Owner (FBSO) signs or vacant houses, or occupied but messy homes
  • Do some guerrilla marketing by being a walking billboard
  • Go to unemployment offices and leave flyers there
  • Post one-page flyers on bulletin boards at large stores
  • Use bandit signs such as “We Buy Houses”
  • Network with other investors
  • Put door hangers on target properties

Less time intensive, better scalable and moderately testable:

  • Advertise “We Buy Houses” on craigslist Cold call FSBO Sites
  • Cold email to craigslist rental property ads
  • With the help of a realtor partner, making low ball offers on the MLS
  • Post Newspaper classified ads (“We buy houses”)
  • Make contact with sales reps for new home subdivisions
  • Reach out to mortgage companies
  • Contract a bird dog Advertise on boards at nursing and retirement homes
  • Have mail carriers notify you of vacant properties
  • Advertise in penny saver papers

Least time intensive, most scalable, and easier to test:

Buy leads from: DataTree (check out the video tutorial in this post) AgentPro247 ListSource MelissaData Real Quest

  • Do a social or search ppc campaign
  • Direct mail to:
    • out-of-state landlords
    • absentee owners
    • owners of vacant land
    • divorce attorneys
    • estate/probate attorneys
    • credit repair agencies and credit counselors
    • HUD/VA foreclosures
    • owners who have owned for 15 years or more
    • pre-foreclosures properties purchased between 3k-20k within the last five years
    • specific zip codes
    • people arrested for violent crimes
    • realtors
    • laid off employees
    • owners of section 8 approved propertiesowners of properties with liens: mechanics liens, tax liens, HOA liens
    • bankruptcy court listings
    • CPA firms
    • people getting their car repossessedcarpet cleaners
    • charitable groups/churches
    • city and county inspectors
    • people having garage sales
    • hair salons/barbers (because they are social hubs)
    • insurance brokers
    • owners of multiple properties
    • water, gas, and electric company shut off lists

So, we can agree that buying leads, doing a direct mailing campaign and/or doing a pay per click social media or search campaign are both less time intensive, more scalable and easier to test.

Why is that?

With paid advertising, you don’t need to drive somewhere or contract a freelancer using a walking billboard with your offer on it on the side of a street.

So, this makes it less time intensive. You could do it in your pajamas from home.

Then, you want to make several test iterations, let’s say doing an A/B test by using different ad creatives.

For the walking billboard, you would need two people with different ad creatives switching places, maybe on an hourly basis, to find out which billboard works best.

This is not the case with pay per click campaigns.

Here you can create different versions of an ad and let technology do the rest.

And once you have a winning campaign, how do you increase your exposure with a walking billboard and scale?

You would have to hire two walking billboard people, maybe 10, and use other places where they can stand on the roadside.

The problem with this is that your results might get skewed.

Because what works in one location might not work in another location.

So, you might have to do even more tests to get a winner for each specific location.

This is not the case with pay per click advertising, where you can just increase your daily budget and increase your reach with a winning ad or display the ad not only on Facebook mobile devices but also on desktop, or in case of Google AdWords, not only in the search results, but also via display ads on different relevant websites.

This situation is similar with direct mailing where you can just send out more winning mailers to the same zip codes or add more zip codes and extend your area of reach.

Conclusion

So, you can use the criteria of time intensity, scalability and testability to quantify different marketing methods to find motivated sellers and thus find the 80/20 in the different methods.

But, that’s not to say that the other two categories shouldn’t be done at all, but maybe not right from the beginning.

Once you can create winning campaigns in the least time intensive, most scalable and most testable category with all three separately or, ideally, complementing and synergizing with each other, you can move to the other more difficult categories.

Stay tuned for the next article because I will discuss how offline and online marketing methods can synergize with each other.

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