Every Lead Has 3 Basic Components That Determine Overall Quality

Part 1 Informational Content: 1 to 10 points (These are facts that typically don’t change.)

This is the information section of each lead consisting of Beds, Baths, Square footage etc… This information is typically set in stone and seldom if ever changes.

Leads can have extremely high levels of information but very little motivational information. A lead with high levels of information is valuable to you as the end user for knowing what you can or cannot offer but by itself information does not always mean it’s a good or a bad deal. For example a lead you might get from an MLS would score really high on the information scale in that you would know everything there is to know about the property, whereas a FSBO (For sale by owner) lead out of the newspaper would score much lower on the same scale.


Part 2 Motivational Content:1 to 10 points (These facts that are constantly change.)

This section is for any information about the house that is non factual in relation to the statistics of the property for sale. i.e. Reason For selling. Mortgage Owed , when the house needs to sell by etc… These factors are constantly changing, the owner is continually paying down his mortgage, his reason for selling changes as he becomes more desperate. Maybe the owner said no to seller financing but 6 months of still making house payments has made him change his tune.

    Leads can also have extremely high levels of motivation, and very little information on the property. A lead with high levels of motivation does not always guarantee a good deal either as some properties can have zoning problems or may be too small or have some major defect that even with the highest level of motivation would still not be a good deal.

Let examine some lead sources to determine the overall quality.

1.                  Newspapers:                              3                 3               6
2.                  Real Estate Agents                    10                1              11
3.                  For Sale By Owner (FSBO)        5                2               7
4.                  Foreclosures                                7                0               7
5.                  Auctions                                      5                0               5
6.                  Estate Sales                                 5                0               5
7.                  Tax Sales                                     9                2              11
8.                  Bird Dogs                                    8                8              16    
9.                  Advertising                                   5                4              9
10.                Online Lead Service                     8               10            18

Part 3 Educational Component:         To infinity and beyond (Closes The Gap)

The educational part of every lead is what can make or break any deal.

I have personally seen the rarest of leads (20 Total Quality Points) be cast aside by people who said they were real estate investors, for the only reason that they were not educated or familiar with options to put the deal together.

Likewise I have seen deals myself that offered very little promise only 5 to 8 total quality points be turned into a deal that was extremely profitable.

The common denominator of both of these scenarios is education. I have heard many times I would have done that deal, or If I had known they would have accepted that kind of an offer then I would have bought the lead. It is very seldom that a property seller knows enough about real estate to solve their own problem.

Most sellers think there is only one way to sell their house and that is to put a sign out front then wait for someone to cash them out. Unfortunately for these sellers that solution does not always present itself quickly and in some cases at all. In fact I have seen but on rare occasion any example situation where there is not an immediate solution that can be done but it does not necessarily involve cashing them out.

Education is the very base of creative real estate. I hear it all the time in this business “Their aren’t any good deals in my area” or “How do you get your deals”. The biggest myth in this industry is that there is some kind of “Deal Fairy” that grants a good deal to some but not everyone. The fact is some of my best deals have been warmed over by a dozen or so investors that had not the education to understand the sellers problems more fully and offer a creative solution.

I can take 20 identical leads off of any investor, and give them to 3 different people. One with no skills or education, another with some skills and education, and one really experienced and well educated investor. The first man will expectedly get 20 rejected offers and walk away discouraged, the second will make 20 offers and buy 1 that make some decent money and give him enough motivation to do it again. The third man  walks away with 5 really good high income producing deals.

The only difference between the 1st man and the third is education. Each man started with 20 leads and made 20 offers. It wasn’t the “Deal Fairy” that liked one man more than the other it was that the 3rd man understood how to work with sellers directly and make offers that solved their problems.