Learn How to Become a Successful Real Estate Investor by Pre-Screening Leads

Attracting motivated house sellers is one thing, knowing which leads are more likely to turn into deals is another.

You may get hundreds of leads coming across your desk every month. Obviously, not all of them are going to be worth your while. So it's imperative to have a quick system in place to evaluate whether or not the caller is truly serious about selling their house.

Remember: the goal is to spend 15 hours a week or less on this real estate business, and still be able to reap hundreds of thousands of dollars in profit within a year. That mission becomes more difficult when you don't have systems in place that allow you to maximize your time. So we want to be able to know which of the three piles these leads are going to go into:

a. This lead needs my immediate attention.

b. This lead doesn't need my attention, but I should send it to my realtor.

c. This lead is going into the trash and is not worthy of my time and focus.

The ability to quickly evaluate leads will determine if a phone call is even necessary. We're not going to waste any time on non-motivated sellers.

Three Questions:

While there are multiple variables that we can look at as to whether or not a profitable deal is possible on a lead, there are really only three essential questions to consider when evaluating the potential of a lead:

1. Is this lead on the "pretty" house side of the business, or the "ugly" side?

Even if you don't have a picture of the house in front of you, you can tell if the house is ugly or pretty, which will then determine what your buying and selling strategy will be. You roughly know the values of the houses in the area that you live in. If you live in an area where the average house price is $200,000, and you get a call for a house selling for $270,000, you know that's a pretty house. But if it's selling for, say, $125,000, then you know it's a fixer-upper.

2. Is there immediate equity built in the day I buy this property?

Equity is the difference between the value of the house and what the seller is asking for it. If we have a $200,000 house, and the seller wants $200,000 for it, there's no profit to be made. Even if they sell it for $180,000, that's not much equity given closing costs, taxes, fees, holding costs, marketing costs to sell, etc. You're worth more than that. You want to ask yourself, "How much equity are they willing to hand over to me?" That will tell you whether they are highly motivated, somewhat motivated, or unmotivated.

3. What is the degree of the seller's motivation?

While having an understanding of psychology helps to determine a house seller's motivation, we need only follow this simple acronym, what I call the WWOW:

* How much is the house Worth?
* How much does the seller Want for it?
* How much do they Owe?
* Why are they selling it?

If Kathy's home is worth $260,000, and she wants to sell it for $184,000 because her husband found a great job across the country, and they have to move by next month, you know you've got a motivated seller. She's willing to give up $76,000 in equity, if the deal can be done immediately. What she owes on it will, again, affect more of your buying and selling strategy than whether or not it's a good lead. In this case, the seller's motivation is strong, and the deal certainly worth pursuing.

A little bit of focus can go a long way. More than anything, what we all really want to focus on is enjoying life to the best of our abilities. A real estate business is a tool that can help you maximize your career, financial or life goals, but you need to have systems in place that allow you to quickly ascertain where you focus your time and energy, particularly in your career which is going to generate your income: leads. We want to spend as little time as possible figuring out a good lead from a dead lead, so we can maximize our business, work quickly and efficiently, then focus on the things that really matter to us in life.