Real Estate Lead Conversion 101

Chances are, if you are new, that you are having a bit of trouble converting the leads you get from your mailer, or your bandit sign to an actual contract.  Am I right?  I don’t mean to belittle  your situation, I think we’ve all been there at one time or another.

Lead Conversion 101
Lead Conversion 101

However, if you are learning “How to Wholesale Houses Ethically”; you must be able to make effective use of the leads you get.  No matter how you are currently getting your leads; without signed contracts at the end of the day… you’re out of business!

Prospects Versus Leads

One of the hardest things to accept as a newer Realtor® or Investor is that not every prospect is a lead, and not every lead is a deal. 

So often, in our haste to get a deal, we make mistakes.  We forget to calculate costs, or get overly optimistic in our assertions about the home’s value.  This can easily be stopped, and your time saved with a few time saving thoughts ahead of time.

Understand that a Prospect is simply a person who has stated that they have a real estate need.  A Lead however, is someone who is willing to sign a contract in the next 7 days or less.

Let me ask you, which do you think will pay you faster?

The Three Question Test

One of the easiest methods I know to help determine a prospects proper placement on the “Customer Life Cycle” is to simply administer what I like to call the “Three Question Test.”

  1. Where are you moving to?
  2. When did you want to close?
  3. What happens if it doesn’t sell?

If you work the three of these questions into the conversation that you are having with your prospect, you will discover a wealth of information, as well as establish rapport quickly and easily!

Where Are You Moving To?

Even the newest Seller knows that if asked the question “Why are you Selling?” that answer can sometimes put them at a disadvantageous position on the negotiation table.

If you have faced a potentially defiant Seller (“I just want to get your offer, I’ve got other people to call”) then you know the pressure you face.  Sometimes they may be honest, other times, maybe not 100%.

The uniqueness of this question is that; when asked in a non threatening way, it allows the customer to open up and be honest about where they are moving to, (if at all) and allows them the comfort of sharing more information to come without feeling like they are being interrogated.

A critical part of questioning a prospect is to ensure that you repeat and approve of their answers.  (Tuscaloosa?  Wow!! That’s great!)

Tuscaloosa Alabama? Yay!
Tuscaloosa Alabama? Yay!

When Did You Want To Close?

When determining a Seller’s true motivations, it is critical to get a handle on their proposed timeline.  A successful wholesale deal is unlike a listing.

There needs to be a high degree of motivation on the part of the Seller as well as some sort of time constraint.

With both items in place (high motivation and time constraint) the easier it will be to get the Seller what they need to meet their needs.

Notice that I said “needs.”  Not “Wants.”

Oftentimes, you will learn that when they want to close is inextricably linked to the amount that they want.  They always want the quickest close, with the most money.  What they do not understand is that it is they are worlds apart!

What Happens If It Doesn’t Sell? 

Depending on their answers to this question alone you can determine what you need to do. This should become the “Litmus Test” for your actions!  If “How am I going to get paid on this?” is your current thought, then consider this!

If they have few options, then they will do what is necessary to sell the home.  You will have a easier time persuading them of the logic of your approach then you will if nothing happens at all.

This question is so important, that I included it in my Script Book.  It is critically important that you know the answer to this question.  As people operate in a world filled with fear and hope, a person will move heaven and earth to avoid pain, but won’t cross the street for pleasure!

In short, if you know the answer to this question; you will know what the Seller’s true motivations are.

How To Get Your Questions Answered!

Don't buy into their apparent lack of motivation!
Don’t buy into their apparent lack of motivation!

In order to get your questions answered, you have to ask with sincerity, honesty, as well as a healthy dose of skepticism.

A “Real Buyer”  would be curious about the motivations of the Seller.  Why?  Because they don’t want to invest time, money, and especially emotional energy in a home if the Seller isn’t truly interested in selling.

By enthusiastically repeating and approving their answers; you respect them by demonstrating you are paying attention to what they are saying.

What To Do With The Information

Be sure to get the standard questions answered.  Items like Bedrooms, Baths, Square footage, and other items that are of importance to you as a buyer should be written down.

Now that you have that information, you are better capable to determine what you would do with the property, or if you should go at all.

Remember, sales is a process, not an event.  Each stage must be followed, and by setting the appointment first, you are then able to evaluate it further.

In closing, understand that selling is not telling, selling is asking skillful questions.  If you want to qualify more of your leads, and close more of your transactions, you must learn how to convert the leads you have been getting into powerful appointments!

Until next time!

Have a Powerful Sales Day!

2 thoughts on “Real Estate Lead Conversion 101

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