A buyers list in real estate investing is like having the key to a treasure chest whose contents change every time you open it. The buyers list is an accumulation of names of other investors who are looking to buy properties or have already bought properties in the past. The size of a typical list ranges from 300 to 500 individuals of which only about 5% to 10% are really perspective buyers.
The power of the list is in the fact that the owner of the list can count on selling wholesale properties to someone on the list. This method of accumulating the list of buyers first is in stark contrast to a realtor whose buyers are generally one time only and where he relies on some advertising and the Multiple Listing Service (“MLS”) to find properties for his buyers. The realtor could take months or years to sell a property because of market conditions, unrealistic seller’s price expectations, and a myriad of other issues that are out of the realtors control.
With an investor, he can use his buyers list as frequently as he has a property for sale and is showing it to other like-minded investors who realize they have to be cash buyers and are looking for a bargain at the same time. These investors can make a decision in minutes and often without seeing the property more than for a few minutes. Not like a regular buyer who has to see 10 – 25 homes to make up their mind.
Investors are buyers of properties, realtors are sellers of properties. The ideal sale price for a realtor is the maximum possible which also correlates into a higher commission. An investor must get the lowest possible price to make a profit or he should not buy it at all. These views of the same properties are diametrically opposed and that’s why there is often conflict between realtors and investors.
To overcome this different thinking, an investor can not rely on a realtor to find deals for him and, likewise, the investor must be able to sell his own properties to save the 5% – 6% commissions on every deal he would be paying the real estate agent. Investors use advanced marketing techniques to sell to other investors such as the accumulation of email and contact information of like-minded wholesale buyers into their automated buyers list.
While our local buyers list is slightly over 10,000 individuals, it pales in comparison to some national real estate gurus who have been aggressively collecting email addresses for years. However, our list is actually local buyers and allows us to sell wholesale properties that are “good” deals in 36 to 48 hours. This is not uncommon in our industry and does not require such an extensive list if you are selective when you build your list originally and if you keep it “active” by contacting the list members at least once every two weeks.
In summary, the power of an investor’s buyers list is in his ability to sell properties very quickly, and have minimum subscription costs using online autoresponder services. The value of the list can be estimated at between $5 and $50 per email address per month depending on a great number of variables including the viability and integrity of the list. I have often said to mentor students that their success is hugely dependent on their list building capabilities. “The money is in the list” so to speak as you will find out as you progress in your investing career.
By Martin Fisher