Today’s REI Classroom Lesson
In today’s lesson, Alex Pardo explains why giving a small window for cash buyers to view a property can help get it sold quickly and maximize profit.
REI Classroom Summary
Giving potential buyers the sense of urgency drives them to come prepared, act quickly, and not give a low ball offer, as Alex elaborates.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Alex: I’m excited I’m going to be your host for the REI Classroom today. Specifically what I want to cover today is how to create a cash buyer feeding frenzy for your wholesale deals. And this is a strategy that has made me a lot of money over the years, so I can’t wait to share this with you today.
Mike: This REI Classroom real estate lesson is sponsored by UglyOpportunities.com.
Alex: So the first thing you want to do to create a cash buyer feeding frenzy which is what I like to call it, is realize that whenever we get wholesale properties under contract from sellers, whether it be from a bank or an REO agent, understand that sometimes it’s an opportunity to slow down in order to maximize the profit and how quickly we can get this deal sold.
So one of the things that I’ve been guilty of in the past is whenever my team contracts a property I’m so anxious to get the marketing going, get this property out to our buyer’s list, and on the deals where I’ve executed this particular strategy I’ve realized that not only do I sell the property quicker, but we also make a lot more money in terms of our wholesale profit.
So the cash buyer feeding frenzy is basically doing a one-hour open house at these wholesale deals, opposed to sending out an email blast or a text or a slide broadcast. And the reason the strategy is so effective is because it creates a sense of urgency. Human nature is that people want what they can’t have.
So what I’m challenging you to do is, next time you pick up a wholesale property instead of just sending an email blast, and then if the property is on lockbox having buyers at their convenience go check out the property, have a 48 hour window where you can market a one hour or a two hour open house showing.
So say for example today is Tuesday. Let’s say we get this property under contract today. We’re going to market this out that we’re going to be showing the property on Thursday between 1 and 2 p.m. And I challenge you, it’s going to be tempting. There’s going to be buyers that are going to want to get into the property before the open house.
Don’t do it. Make sure that you create an invitation only type of atmosphere when you market these properties. Basically what you want to do is, you want to get everybody that is interested in seeing this property at the house on that Thursday between 1 and 2.
And basically when people show up, and you’re going to have, hopefully you have, typically when we do these open house showings we have upwards of 20, 25 people at a house. And when you have all these people circulating through the house and in front of the neighborhood, it creates this sense of urgency, like man this deal is going to move quickly.
And nine times out of ten, not only do we sell it quicker than we would have if we’d only just put it out on email, but often times we have people that offer us more just to get their hands in the deal that day.
And like I said the majority of the time we have a deposit and a contract in hand by the end of the day. And I’d probably say, 50 to 60% of the times it’s even for five, ten grand more than what we’re asking.
So again, this is how to create a cash buyer feeding frenzy and it’s a great opportunity to pre-sell your deals. So that’s a concept that I kind of stumbled upon when I first started doing this, is every time I do one of these open house showings, what I realize is that the next property that we would market we’d have these buyers beating down, calling our number, sending text messages saying, “Hey, before you do an open house give me a heads up when you’re going to have your next deal.”
And often times I’d pre-sell deals that we didn’t even have just by doing these open house showings, because buyers realize that when we get a deal it moves quick and there’s going to be a lot of interest in the property. And again it just goes back to my point of creating a sense of urgency when you get properties and when you market.
So hopefully you take this strategy and you run with it. I guarantee you, if you do it, it’s going to work for you more times than not. I think you’re going to find that you sell your properties a lot quicker, in some occasions you’re actually going to be able to make more than what you’re asking.
Again, this is Alex Pardo, I hope you’ve enjoyed this lesson with REI Classroom and I look forward to the next one.
Mike: HomeVestors, the We Buy Ugly Houses folks, is a franchise system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level, or whether you have no experience at all but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more.
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