Postcards - A Power Lead Generation Tool For Pre-Foreclosures
There is gold in mining pre-foreclosure real estate. But like real gold, it can be quite difficult to shake a nugget loose from the ground.
Let’s begin by examining what a pre-foreclosure property is. In its simplest sense, it is any piece of real estate where the owner has stopped making payments on the loan. An owner may miss a payment from time to time and then catch up. This is not a pre-foreclosure. A pre-foreclosure exists only when the owner has missed several payments in a row and the lender has started the foreclosure process to acquire the property or their funds.
Once a lis-pendens is filed, the foreclosure clock starts ticking. Depending on the state and the situation, it can be very short or drag out for a year or more. Things that can cause it to drag out are bankruptcy of the homeowner, the homeowner working out a repayment play with the bank and later sliding on the repayment plan, a lenient judge who gives the homeowner more time to catch up and many other factors. So while a home could possibly be heading towards a foreclosure (court house) sale after more than a year, it is more likely that the problem will either be cured or that it will be for sale to the highest bidder a few months after the lis-pendens is filed.
The two things that will "cure" a foreclosure is the homeowner working out a deal with the lender or the house being sold prior to the foreclosure - either in a straight sale or through a short sale.
Like all real estate investments, only a percentage of foreclosure deals will be good. Some of the homes have no equity and are not worth pursuing. Others are so damaged that they are generally not worth pursuing unless you know your fixup costs real well and can work a deal with the bank (in effect doing a short sale.) And then there is that sweet spot in the middle - solid equity properties that if acquired would leave sufficient equity to make a profit when it is repackaged and resold.
As with any type of cold lead, there are a variety of ways you can attempt to interact with people in this situation. Some are "hard" marketing methods like phone calls or knocking on the door. Some are softer methods like letters and postcards. I personally prefer the postcard approach for a variety of reasons that are explained below.
To understand why a correctly crafted postcard is good you must first understand the mindset of the homeowner. If the homeowner is going through a foreclosure, it is very likely that he had other financial problems. He is probably not paying his credit cards and maybe his car loan. The electric and water may be in danger of being shut off. And he is constantly being barraged by bill collectors - both on the telephone and through letter writing campaigns.
The person is living with a great deal of stress and fear. If he picks up the phone, it is with trepidation and dread. If someone knocks on the door, chances are he will be peeking out the curtain to see if he knows who it is. Mail gets sorted and thrown into the trash very quickly. Anything that looks official is thrown out (or put in a dresser drawer) after just a second’s glance.
So how do you penetrate this wall of fear? How can you get your message of a solution across? And do so in a dignified manner that will net noticed and read?
The answer lies in creating a property crafted postcard campaign.
Postcards are a great way to get a message out to targeted markets because even while they are sorting their mail over the trash bin, a postcard is already "opened." The viewer will very frequently glance at both sides of a postcard even when it is poised over the trash bin. So if you have a message that resonates, it will probably be read. After all, a postcard is short copy - maybe 50-100 words. All in all, it is just one minute of reading.
Because of the characteristics of a postcard as described above, they slip through the wall of fear. Just by evaluating the pile of mail, the person is forced to at least read the headline before making a keep/toss decision. It is a very stealthy way to get a message into the hands of the homeowner.
But that is not the only step to make postcard marketing to pre-foreclosure prospects a viable solution. The dignity factor comes in.
Imagine for a minute that you sent a postcard that said something like:
"Foreclosure sucks! We can help!!! Call today and we will fix your problem!"
The message is quite accurate and certainly resonates with what the person is feeling. But is is public. You just announced to the world that this person is in financial trouble. Ouch! You just lost a potential deal.
Suppose instead that you sent a different message. Something like this.
"We are buying three houses in XYZ neighborhood this month and need your help. If you know anyone who is interested in selling their house quickly, we have a variety of solutions. We buy houses in all conditions from people with all sort of situations - people who have to relocate for a new job, people who haven’t been able to sell their house for months, people in financial trouble looking for a solution and people who just need to sell their house this month. If you know of someone in XYZ neighborhood that we can help this month, please pass this message on to us. The sooner we can get together, the sooner we can help that person move on."
This message is generic. It reads like it is going to lots of people in the neighborhood. It doesn’t announce to the world that this person is in financial trouble. It doesn’t suggest you are going in to do a hard negotiation and "steal" their house. And it is written in a helpful and dignified manner.
Think about the two approaches a bit and think about which one you would be inclined to respond to if you were in a foreclosure situation. I think you will agree that it would be the latter situation.
Like all marketing campaigns, you will want to do repeat mailings for best effect. Depending on the amount of time an average foreclosure takes in your city, you might be able to mail out 3, 4, 5 or more postcards during the process - one every few weeks. Just change the message a little bit on each one and you will maximize the number of potential deals that you can explore in this lucrative market.
As every good door to door salesman knows, getting your foot in the door is 90% of the battle and this method really helps to get that door open. Give it a try next time you decide to work the pre-foreclosure market. You will be pleasantly surprised with the positive results you achieve.
One Comment
A wealth of information in one article. I guess you do have to pay particular attention to the words you place on your advertising materials.
Thanks.
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