Building and Cultivating a Buyer List, Article by Chuck Smith

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Article by Chuck Smith

Building and Cultivating a Buyer List®

While I was still working a full time job as a police officer, I managed to wholesale no less than 5 houses per month with an average profit of $10,000 each. My average customer (Buyer) purchased not one but five houses from me during the course of our business relationship. If you listened to the interview where Ron LeGrand interviewed me last July, you would hear how Ron himself was stunned at how much profit I was able to generate. Part of the reason I was able to accomplish this was that I continuously Build and Cultivate a Buyer List. My system of Building/Cultivating a Buyers List is so effective that at the urging of my marketing mentor Dan Kennedy, I trademarked it and registered it with The United States Patent and Trade Mark Office.

I travel all over the country attending seminars, teaching seminars and speaking with others that teach real estate and it never ceases to amaze me how the surface is barely touched on this subject; that is by anyone other than me. If your intention is to become a successful real estate investor then you must first build your business on a solid foundation, not shaky sand. The majority of investors will find a good deal and then proceed to try and sell without having any idea who will buy it. Or they will buy in the wrong area only to find out nobody wants the house. In my “Quick Cash Ultimate Real Estate Investment System,” the very first thing I teach my students to do is Build and Cultivate a Buyers List. That’s right! Before you go out advertising and making offers on properties, build your list! Now I know every seminar you have been to you will hear the guru say “find a house then run an ad in the newspaper to find buyers.” This will work but only to a certain degree. Walt Disney said it best “You don’t build; for yourself. You know what people want and then build it for them.”

There Are Three Main Reasons For Building and Cultivating a Buyers List

#1. It determines in what area(s) of town where the greatest demand is and where you should focus your buying energy. For example: If several buyers want houses on the southeast side of Cleveland, then that is where I will do my target marketing. I will have my Realtors bring me listings from there. My street signs will go there as will my billboards, etc….. It is the law of supply and demand. If there is a demand Chuck Smith becomes the supply.

#2. It ensures your houses will be quickly sold. What good does it do to get a good deal and find out that nobody wants it? This is Basic Market Research 101. It is rare that I sit on a house more than a few weeks. When I pick up a deal, I already have several buyers in mind. Many of my houses are put under contract with my buyers before I even close on it with my seller. Now I know in guru land I am alone in my thinking. One guru told me that your credibility would be ruined if you attract buyers and don’t have a house to sell them. If this were true, then I would have been out of business 8 years ago because it is rare that I ever have inventory! As I mentioned, my houses are gone quickly. I consistently tell potential buyers that I have no houses. Contrary to conventional wisdom, it wets their appetites and makes them hungry, motivated buyers that are easy to do business with waiting my next house.

#3. Having a buyers list keeps the cash flow machine running. Even if you have a great real estate investment machine going, you will be forced to slow down or stop buying properties in the event your selling side of the business hits a glitch. Our business is no different than any other business in that excess inventory is a cash flow killer that is armed with holding costs.

METHODS OF BUILDING A BUYERS LIST

#1. If you open up any newspaper in any major city you will see certain types of ads. There are a few problems with these ads. First, they are old and overused. Second, these ads are designed to attract only cash buyers that want fixer up properties. When I run an ad, I want to attract as many types of buyers as possible. I also want the buyers that do not have the ability to buy to prescreen themselves out. I am going to give you an ad that I guarantee will make your phone ring off the hook with quality buyers. This ad is one of many ads included in my homestudy course:

“Investor relocating has 17 properties, single/multifamily. Must sell. No money down. Must have good credit. Possible cash-out at closing. Serious buyers only. Free 25” color TV with purchase. Call___________”

No you don’t have to be relocating, just considering it. Every winter in Cleveland, OH I consider moving to Florida but never actually do it. You don’t need to mention cash buyers because they will call anyway. Don’t question the ad, just run it! My students have experienced great success.

#2. Real Estate Investment Clubs The monthly meetings are filled with people that want to buy properties for investment but are afraid to do it. When you become a “Counselor Seller” and determine what they want and provide support i.e. landlording, you will rap handsome rewards. My people are looking to build a rental portfolio. If you cater to these people, you can become very wealthy. My goal is always to find houses for a buyer, not a buyer for a house.

I have been personally responsible for more investors being successful in my area than anyone else. I make money, my buyers call me for advice and it’s a win/win situation.

There Are Three Basic Types of Buyers

#1. Owner Occupants You will make your largest profit per deal but it’s a one shot deal

#2. Investor/Rehabbers They buy, renovate and sell. They need you because without houses they don’t make money.

#3. Investor/Landlords You will make the easiest and most money with these people. They are looking for the cash flow and long-term appreciation, not the quick profit. I cater to these people. I am a Counselor Seller. If they want a property rehabbed with tenants already in there paying, then I will accommodate them. But believe me, I will get paid well for my efforts. Would you rather sell 5 houses to 5 different people verses 5 houses to one person? I often have been seen taking my customers (buyers) to expensive restaurants or sporting events. I even took two of my best customers on a cruise. My point is that this is a business and should be treated as such. It’s Sales 101.

Buyers Impulse Window

The buyers’ impulse window is the point where they have seen the house but have yet to make a decision to buy. It is at this point that being a "Counselor Seller" pays off. I teach my students to build a business where the buyer seeks our counsel. Remember, the buyer is not just buying our houses but our reputation as well. I have actually been in situations where the buyer has asked me "Chuck, should I buy this house?"

Important Point When Dealing with Beginner Buyers: The person new to this business may be confused and unsure. I never push too hard to make the sale. I don’t want to sell them a house and later have them regret it. Remember, I want a customer that will buy several houses from me. The buyers’ impulse window can close as quickly as it opens. Your job is to keep it open.

So as you can now see Building/Cultivating a Buyers List is key to having a successful real estate business. Not only will you see a dramatic increase in your income by implementing this but also you will find this business enjoyable.

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