Knocking Doors is Back! Tired of the poor results of “we buy houses” advertising, real estate investors are tapping into an old standby to generate higher-profit deals.
Knocking is a lead generation, qualification and development tool used by real estate investors for years to gather information, establish a relationship and negotiate with the seller. Historically, this method requires the most work and is the most expensive per lead. So why is it suddenly gaining popularity in the real estate investing industry? An influx of investors and investment sources into the world of real estate investing has led to a massive increase in “We Buy Homes” ad campaigns, direct mail campaigns, and mainstream Internet sources that are accessible to virtually all investors. at the click of a button. Homeowners in major metropolitan areas may see as many as 20 signs on a street corner advertising “We Buy Homes” with different contact information on each sign. If you get into trouble with a mortgage, their names appear on a “NOD” list that is available to every investor on the planet, causing your phone to jam and your mailbox to fill up with letters. If a homeowner is brave enough to go online and search for a buyer or a way to solve their financial problems, their information is instantly up for sale and they are inundated with inquiries from investors. To stand out from the crowd, investors offer unreasonable amounts or make promises they can’t keep. Homeowners get just as frustrated trying to tell the good guys from the bad.
Knocking on the door sets you apart from the crowd and gives you an opportunity to make an impression and build a relationship that is becoming increasingly difficult with most other systems. Investors are discovering that the extra effort and hard work can yield big returns.
What is knocking on the door? For illustrative purposes, let’s break down doors down into three steps or levels of engagement. 1. Birddog 2. Direct Field Contact 3. Contract Negotiation or “Getting Dead”
AVE dog. A bird dog basically finds the leash and points to it. Like hunting. The bird dog sniffs the lead and points it out to the Investor. A clue that looks and smells like what the investor has trained the dog to look for. Maybe the investor is looking for nice houses, ugly houses, vacant houses, foreclosures, single family, low income or whatever he wants. But the bird dog has to be trained what to look for and how to point. Birddog does not normally interact with the seller and provides very limited information to the Investor.
Direct field contact. The second level requires direct field contact to develop and qualify the leader. The birddog or other team member contacts the property owner directly at the property to gather information, build rapport, and ultimately determine if the property owner is a motivated seller and has a need to sell . We sometimes refer to this as “developing” or “qualifying” the lead.
Contract negotiation. The third level of contract negotiation, or “getting the dead”, consists of negotiating with the Seller, putting the property under contract and obtaining the necessary documentation from the Seller. It is imperative that this be the job description of someone on the team who is trained to understand the Seller’s needs and formulate win-win offers that satisfy the Seller and meet the Investor’s investment criteria.
Some investors use one or a combination of these methods to help them purchase property. We recommend that the person responsible for the third level of contract negotiation is not the same person responsible for the first two. Although there are many reasons, some of the most prominent are: 1. The education and skill required to negotiate agreements and generate appropriate legal documents would unnecessarily limit the pool of available knockers. 2. The time and cost associated with training someone to that level brings with it a high level of risk in relation to the investment if the knocker is removed or becomes the Investor’s competition. 3. Having one person perform all three levels puts the investor at great risk of theft by Doorknocker. Getting a good prospect is one thing, but getting them traded up and under contract can be an overwhelming temptation for some people. The separation of duties is usually a very effective method to control theft in any business and this is no exception. How does a door strike system work? Typically, an investor would place and advertise a door knocker in some media, such as a newspaper, magazine, or online advertisement. The ad will appeal to an extremely diverse group of interested individuals ranging from experienced and educated professionals to the unemployed and inexperienced looking for a fresh start. It then becomes the responsibility of the Investor to interview, train, organize and follow up with those who respond to the ad in an effort to build a team that generates leads. Depending on the system the Investor implements or the resources available, the knockers are trained and managed until they can operate on their own or retire.
The results of this type of system can be incredible. Building a relationship directly with the customer and gaining a deep understanding of their needs helps create a win-win situation. Finding those higher markup deals from motivated sellers becomes more likely. With much less competition and a greater depth of information about the Seller’s situation, the Investor can create offers that meet the Seller’s needs in more ways than just the purchase price.
The bad news. In a perfect world, the investor would find a team of people who are caring, responsive, and who would follow exactly the training and wisdom the investor offers, freeing up their time and talents to close more deals. But what can happen in the real world is surprisingly different. The investor’s time is completely consumed interviewing, selecting, training, and keeping up with paperwork and headaches. 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 generated. Potential clients start pouring in, but the investor simply doesn’t have the time to close the deals.
The Investor usually reacts to that by shifting their focus to negotiating the deals, leaving the team knocking on the door without the necessary training and focus to move forward. Then the team begins to fall apart. Some leave due to lack of self-motivation. Others drop out because they don’t get the support they need. And others drop out simply because they can’t connect the dots. Others were just wasting the Investor’s time early on trying to get a free education. This forces the Investor to abandon or start the cycle of publicity, projection, training, etc. again. while the buying and selling of houses is 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 downside may seem a bit daunting, there are solutions that use today’s technologies and resources that virtually eliminate the training and time the investor would normally need to commit to putting together a successful door knocking system. In the past, available solutions have not provided the real solutions needed for today’s technologically advanced and fast-paced world. For more information, visit www.MrDoorKnocker.com [http://www.MrDoorKnocker.com].
Copyright 2005 Stewart Knudson