A couple weeks back a reader sent me an email talking about his trials and tribulations in real estate investing and his lack of results from a mailing campaign he did to homeowners in default. I won’t use his name… but here’s a snippet of his email:

To tell you the truth, I’ve been majorly struggling with REI. I’ve been trying to get it off the ground for a couple of years and can’t seem to find that piece that apparently is missing.

I spent several hundreds of dollars on mailings for pre-foreclosures and didn’t get a thing out of it, even though I was usually the first mailing after the filing (I was pulling the list from the courthouse every day and getting my mailings out in the next day’s mail).

The market seems to be completely inundated with the mortgage companies telling people that they are willing to work with them (which we all know is complete BS, but you can’t seem to get home-owners to understand that) and then things go so long that the sale happens. And then the banks want 90% of what’s owed on the properties, I haven’t found a single deal where the bank was willing to work with me or my partner. All-in-all, very frustrating.

I can’t figure out how anyone else is managing to stay afloat, let alone make any decent money. But I keep looking, and that’s how I came across your site. Actually, I was looking for resources on how to find private funding. My credit is seriously in the tank right now, so if I’m going to do anything, it will be private money based on any deal I find rather than with any lending institution’s help.

This is the general complaint that I see from so many people trying to break into real estate investing. They try out one marketing campaign… see no immediate results… and chalk it up to things other than their marketing strategy and will to succeed.

So, How Do You Market To Pre-Foreclosures?

First off, people are doing very well right now in REI.

Many are doing much better than they have ever done.

One lesson in marketing (and REI) that I learned a couple years back is that marketing is of course about getting in front… and staying in front of your prospects face when they need your service the most.

If you are going after pre-foreclosures and sending out 1 mailing… especially being the 1st mailing out… can you imagine how much your mailing is getting drowned out by the crowd of others that came in behind you? Your mailing never had a chance.

In marketing it’s been proven that it usually takes between 4 and 7 "touches" with a prospect before they will pick up the phone and give you a call.

So, marketing for REI is no different … for a mailing to be effective… you need to send multiple mailings to the prospect at different times throughout their pre-foreclosure proceeding. Your logo, name, message will stick in their mind and hopefully rise your company to the top of the list when they finally do call.

Also, being the first one in sounds great… but put yourself in the mind of the homeowner.

They’re going through foreclosure, haven’t paid payments in several months, have other bills backed up, and are in the dumps. They have all of this debt and NEED to get out from underneath it.

When the pre-foreclosure process sets in most homeowners go through a phase of denial or they simply think it’ll go away if they wait long enough. So, when they see your mailing just days after they receive the notice of default from their bank… they aren’t ready to deal with it yet. They know they have several months to do something… so why "rush" into something now with some investor who they don’t have an ounce of trust for yet.

But, if you keep at them with different mailings aiming to educate them about the pre-foreclosure process and the different options they have (including but not limited to you buying their house)… these homeowners will open up.

Marketing is about staying in front of the prospect, being there when they NEED to take action, and taking an educational approach to sales rather than a pressure packed "I’ll Buy Your House Today" thing.

A Suggested Direct Mailing Sequence

Here’s the type of sequence you might use in your mailings to a homeowner in default:

1. Educational information on the foreclosure process and what to avoid during the process (or what to look out for). Don’t concentrate on pitching them to buy their house… educate them and build trust. Make the call to action a "Free Report On The 7 Mistakes You Don’t Want To Make During The Foreclosure Process"… or something like that. Make it easy for them to get some information that can truly help them out (and you’ll be collecting their info and qualifying them as someone who may be a ‘hot prospect’)
2. More educational info showing them different options they have (even ones you don’t offer… you just want them to call) and showing examples of other sellers in similar situations that were helped by you.
3. More educational info… w/ a bit more of a slant toward telling them to call you or go to your website for assistance.
4. Coming close to the sale date (like 30 days way)… education on what happens if the property goes to sale… and education on how you can purchase their house from them and assist them in keeping their credit clear of a foreclosure, etc.

Really, you need to take a logical conversational and educational approach with homeowners in default because they are in a very emotional state… and just want an honest way to get out of their situation in a way that leaves them in the best possible position.

A Short Note On Marketing In General… That MOST People NEED To Learn…

As you know, I’m not a full-time real estate investor (nor do I want to be). I invest very part-time in multi-unit rental properties because that’s what fits my lifestyle and my life goals. However, another company I own is a marketing consulting firm and I’ve been involved in many direct mail campaigns both online and off… and have seen what works and what doesn’t.

From my experience, people fail in their marketing efforts (in all types of businesses… including real estate investing) simply because they give up too easily and don’t take into account human psychology.

Like I mentioned before, us humans usually don’t act on an ad or a call to action until we’re exposed to something for about 7 times. Think about it. How often do you see a TV ad once and immediately go out and buy the product?

But, what if you see the TV ad one day… then the next day you see a billboard for the same company… see another TV ad… get a piece of junk mail from the company for the same product… hear about it from a friend the next week… see another TV ad (you get the point). That brand and the message they are relaying to you is now in your brain and you feel like you kind of know the company… which will heavily increase the odds that you’ll go out and buy the thing.

But… too many people create a post card or letter, send it out to 500 people… sit back and complain that their ad didn’t produce any results… then they NEVER try it again. Heck, I’ve done that before (before I learned what I’m going to tell you).

Here’s the problem:

1. The ad isn’t sent to enough targeted people. Normal direct mail response rates are usually between .25 and 2%. So, if you send out 500 mailings in a normal market (other than REI) and your ad doesn’t completely suck… you can expect between 1.25 and 10 people to respond. Of those people how many can you close? Who knows… that depends on your salesmanship and your offer.So, by sending out just 500 mailings you better be a damn good salesman if you want to see profitable results.The REI market is a bit tougher sometimes simply because of the mass of other people sending a similar message to the same people.
2. You aren’t getting your message in front of them enough. Like I explained earlier with the TV commercial thing… how often are you going to see an ad once and buy the thing based on that one ad? Probably nearly never. But, 95% of people sending out mailings in any industry including real estate investing just send out the one mailing… and think that it’s going to magically compel the prospect to pick up the phone right then and there to call. I’ll tell you from experience… 99.9% of the time they WON’T.But, if you take the multi-touch approach and get your message in front of the prospect between 5 and 8 times… your odds of closing a deal skyrocket something like 400% (I made that % up… but it’s probably actually much higher).

Think about this for a second.

If you:

• Have 2 "touches" with the prospect you already did more than 50% of your competitors
• Have 3 "touches" with the prospect you already did more than 70% of your competitors
• Have 5 "touches" with the prospect you already did more than 85% of your competitors
• Have 6 "touches" with the prospect you already did more than 90% of your competitors
• Have 7 "touches" with the prospect you already did more than 95% of your competitors
• Have 9 "touches" with the prospect you already did more than 99% of your competitors

By "touches" I mean any message that gets in front of your prospect including:

• A mailing
• A phone call
• A business card
• A radio ad
• A TV ad
• A knock on their front door
• A flyer or door hanger
• … anything

So, by simply sticking with the prospect and setting them up in an automatic marketing sequence, you are weeding out the fakers in the real estate world and setting yourself up as the expert to the prospect.

Ya, this will cost a bit more money… but in my opinion the biggest waste of money is mailing just one, two, or three mailings to a prospect. Get at least 5 touches with your prospect and your response rates and conversion rate will go through the roof.

Set A Budget And Try It Out

You can read all of my stats and suggestions all you want… but you’ll never know what works unless you try it out.

Set a budget, create a multi-touch campaign for a decent list of prospects (at least 500 to 1000… I would suggest more), and get it going… AND PLEASE DON’T STOP UNTIL THE ENTIRE SEQUENCE HAS GONE THROUGH.

I’ve had marketing campaigns that didn’t produce any results at all (I mean ZERO) until the 7th or 8th mailing. Then, after that the response rates kept going up and the campaigns were huge successes.

One last note before I go.

Most new real estate investors have a somewhat twisted mindset when it comes to real estate. They see these "no money down" ads (these deals are out there… but you still have to market) and think that the "no money" thing applies to the entire business of real estate investing .

They think that they don’t need to run it like a real business, don’t need a marketing budget (at least $500 a month to get started), and will just do everything for free. THAT’S THE HARD WAY. You need to get out of that mindset and remember that EVERY business is in the business of MARKETING no matter what you think.

You’re a marketer… you just happen to market to homeowners so you can help them solve their problems. Your business is marketing… your product is the results you provide for the property owner.

Simple as that. Get out of the "opportunist" mindset and into the real estate entrepreneur mindset. Believe me, you’re wasting your time if you don’t.

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Categories: "How to" tutorials, Marketing Tips, building your business, foreclosure, making money, real estate investing, real estate psychology, real estate success
Tags: direct marketing, how to invest in real estate, pre-foreclosure marketing, pre-foreclosures, real estate investing, real estate marketing