We are the pawnshop of real estate.
Let me explain.
When you sell to a wholesaler, there is something going on in your world that makes you sell your property for less than full price. As the seller you know going into the sale you are not going to get full value for your item.
When people work with us they know we are in it to make money. They understand who we are. There is a transparency that we hold value as a middle man. When you go to the grocery store you are not buying eggs directly from the farmer, but the grocery store serves a purpose by transferring those eggs in volume to the public. Everyone plays a part in the ecosystem of an industry. Wholesaling is a part of the real estate ecosystem.
The problem is, people think of wholesaling with the same distrust they have for a pawnshop. They assume wholesalers are not acting in integrity and are ripping off the seller. I felt the same way when I started in real estate until I came across wholesalers with integrity. My goal now is to change this widespread misconception of wholesaling for all those wholesalers out there that do operate with integrity.
How can we do business and be honest and ethical?
Simply put, the people who we do business with know exactly what we are doing. They understand that we are negotiating the contract and selling it to a ‘larger seller.’ We are in essence the seller taking the eggs from the farmer and selling them to the grocery store. You operate with transparency in the part you are playing.
Now that we have cleared up the bad name of Wholesaling let’s talk about what you need to know to be a successful Wholesaler.
Marketing and Sales are the backbone of wholesaling as the major components of the The Wholesale Cycle.
The Wholesale Cycle
Step 1- Lead Generation = Marketing
If you're a flipper, you have to generate leads. If you're an apartment investor, you have to generate leads, if you’re raising money for a deal you have to generate leads. Every single thing we do is marketing and lead generation. In wholesaling, I have to generate leads for sellers and I have to generate leads for buyers.
Step 2- Lead Conversion = Sales
Quite simply, I have to be a good salesperson. I have to convert my leads into potential profit. This requires strategy and skill.
Step 3- Fulfillment = Marketing and Sales
The fulfillment side for us, is selling that contract to an end buyer.
As a wholesaler, I've got business to customer sales on the front end, and I've got business to business sales on the back end.
We have two different types of marketing and selling on the front and back end of these deals, but the bottom line is we're marketing and selling on a consistent basis.
Marketing and Sales operations drive all businesses and really all of life. People are always selling something. Everything you do is a negotiation and therefore Marketing and Sales. Have you ever seen kids negotiate? They are absolute beasts! Especially when they leverage tears!
Now that we have covered the backbone of wholesaling with Marketing and Sales, let’s talk pitfalls to avoid and pro tips on what to focus on in your early days of Wholesaling.
Customer Resource Management:
My biggest recommendation to you if you guys are just getting started, is a piece of paper and a pencil. You don't need to spend a ton of money on a team, or creating an official business when you aren’t making any revenue yet. Just get out there and do some deals. I did my first flips in my own name, I didn't go out and set up an LLC, create a fancy website, or make everything perfect before I went out and made a deal.
Taking action is the most important thing:
Making sure everything is perfect before you start can be a method of procrastination. You have to just go out there and make a deal. Make some money. It will feel great and motivate you to do it again and again. Before you do anything else, go take action, go do something.
Make the phone ring, and invest in expensive customer resource management only when you are so busy you can't keep track of all your leads! And of course to make money, you have to turn those leads into deals. I have 4 secrets to converting leads to deals.
The Secrets to Lead Conversion:
Secret #1: Answer Your Phone
The market is so competitive right now, you've got to answer your phone, don't send them to voicemail. You’re wasting marketing money if you're not answering your phone. Answer your phone live every time, and when you can’t handle the volume, it’s time to hire a team.
Secret #2: Follow Up, Follow Up, Follow Up
The money is in the follow up period in any business. If you allow a lead to go cold just find a way to become a direct response marketer again. Consistency and determination is key here.
Secret #3: How You Show Up
If you are going to an appointment, be on time, be professional. Put effort into making your best impression. Research and be prepared. You can Google this! This is the Advice I got from Google: Be 10 minutes early, be positive, relax, establish rapport quickly, be a great listener, reflect before answering, be enthusiastic, act confident not cocky. Take no longer than two minutes to answer questions. Take notes and send a personal thank you note by the US mail! Do all these things. When you show up at the appointment, mirror your seller. Ask yourself how do I become relatable? How can I ask sensitive questions in positive ways that will get answers? Listen to your sellers, find out their needs, put yourself in their shoes, and they'll tell you all their problems. Once you understand what they need, you are in the perfect position to offer them a solution within the deal.
Secret #4: Follow Up
I said this above, but I can't say this enough. It is the key to closing deals. No matter how you feel a meeting went, follow up. The last impression you leave is as impactful as the first.
Misconceptions about Wholesaling lead many people to steer away from it, and the truth is, it is a valuable part of the real estate ecosystem. Sellers who need to move property fast, need you to help them with the marketing and selling. If you decide you want to try your hand at being a wholesaling middleman, I hope these tips and strategies give you the extra information you need to start off strong as a wholesaler.
As always, look out for more articles, podcasts, and workshops on all things real estate!