Another question that frequently pops up in conversation and on discussion forums is whether it's best to just schedule an appointment with the seller and jump in the car or spend more time prequalifying the lead on the phone. Like many real estate investing questions, the right answer is “it depends”.
There are a number of factors that can come into play when determining the best course of action. Is the investor new or experienced? What's the local market like? How much inventory does the investor currently have? Etc., etc.
For a brand new investor I would say that the appropriate amount of phone time depends on how badly the investor needs a deal. Obviously, getting belly to belly with a seller will dramatically increase the chances of inking a deal. Even a seller who is naturally shy and easily intimidated in person can be tough and gruff on the phone. If you're just an anonymous voice on the receiver with some “wild” scheme, it takes virtually no effort to be confrontational and/or hang up. However, if you're face-to-face with the same seller, chances are the seller will be much more accomodating, friendly, and trusting. It's just human nature.
If our new investor is not in dire need of a deal, then perhaps allocating a certain percentage of calls to “phone practice” is in order. Whether or not you want to admit it, real estate investing requires salesmanship. Presenting your offer whether in person or on the phone in an appealing manner is paramount and takes practice.
For me, these phone skills didn't come easily. I could not stand to talk on the phone and am naturally an introvert. Although some folks may argue that point because I get excited about real estate investing and the internet, I'm perfectly content sitting by myself in front of my pc.
I used the classified ads as my “trial by fire” methodology. I knew that if I could handle cold calling from the paper, I could certainly manage the folks who called me. My first two creative deals came from calling classified ads. I definitely don't recommend that as a way of finding motivated sellers, but I want to stress the point that developing good phone skills is critical.
Once your skills develop to the point that you can comprehensively explain every gory detail of a “subject to” (or whatever) purchase to the most analytical engineer who lives out of state and have him say, “Sure, that sounds good, please Fed-Ex me the docs, I'll sign them and get them back to you pronto”, then you can pick and choose your phone qualification time based on a whim if you wish.
So, back to our new investor. Does the investor work a full-time job? Does the investor have a family? Obviously, finding the right balance between the phone and appointments is a personal choice because not wasting time on unqualified leads leaves more time available for other activities.
Both phone and in-person presentation skills are essential to the success of any real estate investor. My preference is to screen highly on the phone. I know I can persuade most sellers around to my way of thinking on the phone, but just because I can do the deal doesn't mean it's a deal. So, for me, it's a time issue, but I also have greater success when I'm in front of the seller.
What if our investor is experienced? What sort of systems does the investor have in place to handle leads, vacancies, etc.? If an experienced investor is carrying five vacancies more than normal, does the investor need to rush out to meet each seller? I think not. What if the investor has no inventory? Well, then perhaps filling the appointment calendar is a good thing.
What if the local market is a buyer's market? Every seller in town is calling looking for help. Is it necessary to go meet each one? Absolutely not, unless it's a good deal you're afraid you'll miss. However, if it's a seller's market, it may make sense to decrease the phone time and meet the seller today. This seller isn't able to move their property quickly enough even in a hot market? There might be something there.
So, to summarize, determining the right amount of time to spend on the phone qualifying sellers is not black and white. Only you can really answer that question. Just keep in mind that developing both sets of skills is equally important as there will be many set of circumstances when you need one over the other.
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