Posted on: March 11, 2020
WI 381 | Dead Leads

 

Regardless if you’re a new wholesaler or a seasoned one, you’ve probably wondered if you’ve left money on the table at one point or another. Fortunately, today’s brilliant guest can help ensure no leads will ever go to waste again, even the seemingly “dead” ones.

Chris Craddock is a determined, creative, and exceptional real estate agent who has mastered the art of converting retail leads. Chris has been active in real estate since the early 2000s.

Chris started his real estate journey by flipping houses and made 12 times more than he made in year. It’s safe to assume he’s been hooked on real estate since then.

In today’s episode, Chris shared many helpful steps and insights on how you can successfully convert retail leads so you’d never leave money on the table again so make sure you tune in!

How To Make A Fortune From Dead Leads

Episode Transcription

Before we get going with this episode, I want to make sure you are aware of the contest that is going on for all of March 2020 where three lucky winners are going to have a wholesaling business experience of a lifetime. For the whole month of March 2020, we are doing a special ratings and reviews contest where we are going to select three lucky winners.

We are going to take care of all their accommodations, flights and hotels. They will spend two full days with the head rhino himself, Mr. Tom Krol. Imagine what this would be like for your wholesaling business, whether you are just beginning or have already done some deals. Think what it could do for you if you spent two full days with Tom Krol in sunny Florida and all the accommodations were taken care of. What would your year look like?

To enter this contest, we want you to go over to iTunes and give us a rating and review, five stars, please. Take a screenshot and send that screenshot of the review to Darrin@Wholesaling.com. If this is not enough, we are also going to feature the three of you on the show. While you are down there, Tom is going to put you in the hot seat. Get ready, head on over to iTunes, do the ratings and review and simply take a screenshot of the review. Send it over to Darrin@Wholesaling.com so that we can pick out 3 lucky winners to go head down and spend 2 full days with Mr. Tom Krol. Let’s get going with this episode.

We have got a topic that I am passionate about. We are talking about retail leads and the money that we, as investors, are leaving on the table when we throw these into the trash. If you are new to real estate, let me break this down. Every seller that comes to you will fall into 1 of 2 camps. Either they are going to want a cash offer because they are motivated, have equity and are ready to go. You want to tie those deals up but you are going to get leads. It does not matter if it is direct mail or radio, they are just not as motivated and do not have as much equity.

The best solution for them is to list the property on the MLS and for you to receive a commission or even outsource that to an agent if you are not. I will tell you three things that I have realized. Number one, if you are reading, you think that retail leads are trash. We are going to challenge you on that because my guest has cracked the code on how to convert these. These are leads coming in directly from everything that we do to get motivated sellers.

The second camp understands they are leaving money on the table but are struggling to convert these leads from coming in as cash and over to retail. Thirdly, which is far and few between are people that have mastered this. My guest, Chris Craddock is the go-to guy on retail and how to convert these leads. We are going to give you the practical steps you need to be able to do that. Chris Craddock, what’s up? Welcome to the show.

I am so excited to hang out with you. It is always fun. I love the energy you bring. It is great.

For people that might not know you, tell us about you in a nutshell. Where are you at? What do you do? What is your story?

I am right outside the DC area. I got into real estate. I worked for a ministry, making $20,000 a year, which I loved until my wife got pregnant. You cannot live in the DC area on $20,000 a year. I started flipping houses in the 2000s. I made twelve times what I made in a year. In four months, I was like, “This is sweet.” From off and on being involved in real estate, in 2012, I started investing stuff again. I then moved into more retail with a strong tie-in with investors. With the investor and retail marriage together, we found some ways to make a lot of money on leads that a lot of people have been thrown away.

You and I have that in common because I started on the retail brokerage agent side before I moved into the investment side. You and I look at real estate differently because we are in both worlds. I want to talk about the background of this model. You have cracked the code on how to convert cash offer leads that we generate when they want to go retail to make that transition. Give us a story. How did this model even come about? How did you start to crack the code on it?

There are two separate sides. The first one was there was this guy who was charging a fortune to come into his program. He was going to market for agents that could either do cash deals or close the leads. A bunch of people came into his program. Nobody was converting or doing anything except for me. I was converting a lot of them. I ended up starting to run a lot of the meetings that they were having. Eventually, I was like, “I do not want to pay to be a part of this program anymore. I am the only one converting these.” Things slowed down there. There was this massive wholesaler, one of the bigger ones in that country. They are doing a lot of business. I kept calling them. I was like, “Give me your leads. Let me show you how this works.”

This wholesaler was not doing anything with their retail leads. They were generating a ton of leads and spending a lot of money but weren’t doing anything with those that wanted to list their properties.

They have been giving them to this person. She had a massive business herself, Top 200 Wall Street and top 250 for real estate agents. She closed 6 leads out of the 1,000 that they gave her. They did not care. They are like, “It is a distraction. We are not making any money.” They did not care about that. I kept calling. Anybody that knows me, I am relentless. I do not like to give up. Finally, one of the guys was like, “We will send you some leads.” He sent me 150 leads. 70 of them had already been listed with an agent and 30 of them were out of the area. I had less than 50 leads to deal with.

I am like, “She got 6 with a 1,000. I got to get six with these.” I went at it, got creative and refined some of the scripts, offers and ways we could land them. I called him up and was like, “I got six listings. They have all closed or are in the process of closing.” He was like, “You got six of them? I gave you those to shut you up and leave me alone because you kept calling me. You would not stop bugging me. Come in.” I came in and we started meeting. They started sending us a lot more and our conversion ratio has gone up. We have been working on refining the whole process, our script and offers. That is how we got here.

When finding retail leads, keep calling. Be relentless and don’t give up. There’s money everywhere just sitting there.

This wholesaler sending you all of these retail leads. Let’s talk about some numbers here. How many listings did you get from this wholesaler’s leads that you listed in 2019?

It’s between them and some smaller ones but it’s over 100 listings in 2019.

Let’s put that into the perspective of volume. How much volume is that roughly?

In 2019, we did under $120 million in volume. That was about over $20 million in volume.

If someone is reading and they are like, “Why should I consider this?” Hopefully, you bought onto the fact that there is money sitting on the table for wherever you at but what have you seen as the upside to this model?

This is the biggest win-win in the history of time. You look at it. I live in the investor world as well as the retail agent world. I talked to an investor after an investor who is like, “I have been giving agents this. I have started my brokerage and done everything. I have spent money and time on this. It is not worth my time anymore.”

They give it to agents that do not know how to approach it. They do not understand the marriage between them and their psychology. Somebody that calls an investor to buy their house is not the same person that wants some agent to walk over and crack out their listing presentation. They have all gotten their uncle’s brother who also cuts hair and is a real estate agent that will help them if they want to talk to a real estate agent.

They want a quick, easy and fast transaction. They want something that is not like the traditional real estate agent. We all know if we sell our car, we go to Craigslist. You are going to sell your car for more money than if you go to the dealership and trade it in. Why do people go to the dealership? They want ease, not the headache. That is why people call investors. We know the reasons why they are calling.

WI 381 | Dead Leads

Dead Leads: People don’t want to talk to a real estate agent. They want a quick, easy, fast transaction. They want something that is not the traditional real estate agent.

 

Let me ask you this. What percentage of these retail listings you are taking doing over the phone versus having to go out to the property?

As we are building out our system in 2019, I took most of them over the phone. All the ones that are short sales, I have taken over the phone because the bottom line is you can close over the phone. I was listening to a leadership thing talking about anticipating. The main thing is if you know every single objection they are going to have and all of a sudden, you have the answer to every objection that they have, you can close them over the phone. You know what they want so you give them what they want and say, “Let’s do it.”

Not only are you taking advantage of making more capital on the leads or revenue but you are not even having to leave your office to do it. There are a couple of people reading. The person that is reading as an investor or a wholesaler that has their license is going, “I get this.” What would you say to the wholesaler reading that is generating leads going, “I do not have an interest in getting licensed myself but I hear what you are saying. I am not doing anything with those retail leads?” What do you recommend for that investor to consider who is not a licensed real estate agent?

Most of the investors that I work with have somebody licensed on their team. The other piece is to get together with somebody good at what they do. Just because they are good at what they do does not mean they know how to convert these types of leads. Find a creative solution. With the real estate rules and regulations, you are not allowed to give referrals to non-licensed agents but there are ways that you can buy marketing and do different things. There are creative solutions to everything where you are not giving a referral or a kickback to somebody for giving a lead.

There are three options for those that are reading. I can either get licensed myself. I might say, “I do not want to get licensed because I do not want to have a fiduciary duty and have to disclose that. I am not interested from a legal standpoint.” Number two, I could get someone on my team license that works for me and not have to carry that license myself. Thirdly, I could say, “I am going to stay away from licensing as a whole and as myself for my organization. I am going to find someone outside of me to partner with that is licensed to take these leads.” Those are the three options.

I had a good conversion ratio over the phone in 2019 but our conversion ratio went up when people got in front of the sellers. We had a good commercial ratio in 2019 but got in front of the seller. I have been training our agents to get in front of the sellers and do that. As their conversion ratios have gone up, we have been seeing that allowing the wholesalers and the investors to stay in their lane, let us stay in our lane.

You go in and offer somebody about $200,000, $150,000 or $50,000 under what they would get on the open market. It is hard to come back from that and then say, “I can list it for you too.” You’re going to be able to work together once you figure out where they are going to be. We all know that you do not want to walk into an appointment blind. You want to know what they are looking for. Rarely, you walk in and all of a sudden somebody wants a certain amount and then will go 50% less than what they are asking for.

I have a couple more questions around this and a bit more practically. If I do have a license or I get someone in my company licensed and we go out and list these properties ourselves, if you do not mind sharing, what is the range that we should be charging as a commission? Is it your traditional 6%?

You can close deals over the phone if you know every single objection they’re going to have and you have an answer.

I rarely get 6%. I get more on almost all of them. Here is why. If you understand how you are walking in, you understand that they have a problem. You are a doctor. I have had 3 shoulder surgeries on my left and 1 on my right. I had to go back in because I jacked up my shoulder again. The doctor starts doing all these tests on my arm like, “Does this hurt?” “No.” He does something called a crank test. I squealed like a little girl and he is like, “I guess that hurts.” He then does it again. He finds the pain and pushes on it several times. He is able to diagnose it and then provide a prescription. For me, sadly, it looks like another shoulder surgery.

That is what we do with these sellers. That is a good salesperson. You find the pain, push on it over and over again and then say, “I can solve that problem for you. Here is how.” You go through the whole process. You solve their problem. As long as they are getting the solution to their problem, I have charged a 9% commission. It does not matter. As long as they are getting a solution to their problem, you can win.

Most people are thinking, “I got charged 6% or discount this in this strategy to beat out an agent.” You have come up with a way, strategically, to get in and charge more than 6%. You said 7%, 8% and 9%. That is getting into more wholesale numbers in the sense of percentage because 9% of a $200,000 listing is not bad. That is equal to what we get on the wholesale side.

Here’s the second question for you. I am listening going, “I am not going to get licensed but I am all over this. I am going to go find an agent that I trust to JV with.” What should my split be if I am providing these retail leads that I am generating via direct mail or ringless voicemail? What should that split be that I should negotiate for?

It all depends. What are you doing? Are you setting appointments for them or are you giving them the leads?

Most people would say, “I am going to give them the lead.”

Part of the system that we have worked to build out and I have been perfecting is when you set the appointment, it ends up being better. You can also charge more when you set the appointment because you are on the phone, your VA, your specialist or whoever it is that is taking the calls. They are either going to set an appointment for themselves or pre-qualify themselves. If they are already on the phone, why would they just set an appointment for whoever you are partnering with? You can charge more money. If you give them the lead, 25% is what you are looking at.

You hand the lead over, do not set the appointment yourself and get a 25% referral back. Let me ask this question. If you do go ahead and set the appointment and not handle lead but an appointment to the agent, what could you get in that circumstance?

WI 381 | Dead Leads

Dead Leads: If you don’t want to get licensed, just get together with somebody who is as good at what they do. But just because they’re good at what they do, doesn’t mean they know how to convert these types of leads.

 

The sky is the limit. It’s anywhere from 35% if you are doing enough and giving one here and there but if you are giving several leads, you can even go up to a partner in 50/50 if you are doing a value.

That range could be 35% to 50% depending on how far you take that lead down the road before you pass the baton to the agent. Each person can consider that. I would imagine the wholesaler that you are working with, the main ones, are happy with the return that they are getting.

They are going to get well over $250,000 in return in 2020.

They are going to get over $250,000 in additional revenue from leads they pass to you that were retailed. Otherwise, they might have been throwing in the trash or fumbling themselves. That is huge. That is what I see, Chris. That is my deal when I talk to someone and they go, “I do not like those retail leads.” I am going, “You are leaving money on the table. Do you realize that? Take a different look at it because there is a lot of money to be made around this.” Let’s get into how you convert these practically. Give some tips and tricks on what is the process and a little bit of the magic behind how you are doing what you are doing.

I have created seventeen steps that we go through. I will go through a handful of them. Here is the biggest key. If you can get your head around this, this is why everybody is so shocked about the commission statement because everybody thinks you are coming in as an agent. As soon as you come in as an agent, you have lost. You are going to get what everybody else gets like a small conversion ratio. When you come in as the person, they are calling a cash buyer or somebody in that can make stuff happen.

For whatever reason, their pain or perceived pain, when you walk in as the solution or the doctor with the prescription, you can get them what they want and charge whatever you want. That is the whole thing. The second you walk in as an agent, everybody had got 14,000 friends that are agents. They do not need you.

If you are not walking in as the agent, how are you presenting yourself to them? You are going, “Cash offer is not going to work.” How do you make that jump? What do you call yourself?

You are a value specialist. You are coming in and partnered with the investor. You were familiar with the law of edification technique in sales where you could say, “I am the best at this.” Everybody would be like, “You sound like a douche,” but if I say, “Chris Arnold is the best at this,” everybody is like, “Chris is the best of this.” That is that whole thing where somebody else can speak highly of you. They called in because they wanted to meet with somebody. You are already walking in as the expert with permission to walk in and do that. If you are an agent and ten other agents have walked in, you are coming to solve the problem that they have agreed they want to solve.

Understand that the seller has a problem. As long as you can solve their problem, you can charge way more than 6% in commission.

Number one, do not identify yourself as the agent. Identify yourself as a value specialist to separate yourself from all the other agents they might be talking to potentially. What is number two?

A licensed agent has to identify by their brokerage but you can say it in passing like, “I am also licensed with whatever.” You are not coming in as the agent.

You are not identifying yourself but you are disclosing the fact that you do have a license. Those are two different things. A lot of investors have licenses and are not even agents. What is the second thing that we should understand about making this conversion?

The second thing is you got to understand their pain. Everybody on this show that is closing at a high level understands a real reason and the smokescreen. They are going to give you ten reasons why they want to sell. Here is an example for me. When my shoulder was hurting, my lower back started hurting. I go to the doctor and get my shoulder looked at but I mentioned my lower back. He does not care about my lower back because the reason my lower back was hurting is that I am holding my shoulder a little bit off. The real pain is my shoulder. If you fix the shoulder, all the other stuff falls into place.

When you are there, you got to be able to identify what their pain is. “I want a quick sale. I do not want people coming in, my neighbor’s note or clean up.” You find out what their pain is and then solve that pain. They are going to give you ten reasons why they are selling. Maybe their pain is they want to move to Florida with family and want to be there fast. You got to figure that out and be able to identify that.

Let me throw an example here. I am going to throw you a curveball. You are talking with someone and they go, “The listing route is the route I want to go but, 1) I do not want to come in and fix up my house for the MLS and, 2) I do not want people tromping through my house either.” How do you solve that if you go the agent route?

One of the guys that I trained was in an appointment where she worked for a brokerage for fifteen years. Most of her best friends are agents. She is like, “If I am going to list it, I have to work with one of them or they will hate me.” He is like, “Here is the difference. We can list it like every other agent but we have our model. Our model is separate. You do not want people coming in. We will do our open house and our investor open.”

You are willing to go about whatever their need is and adjust the backend on how you treat them. Whereas the agent is going to throw them on a centralized showing, put a lockbox and assign them because that is what the agent is trained to do and the system is built. You come in with a system that is customized to go around whatever pain point or preference they have. I love that. That is a great point. If you do not mind, give us one more technique on how you convert these.

WI 381 | Dead Leads

Dead Leads: If you’re coming in as an agent, you’ve lost. You’re going to get what everybody else gets. You have to come in as the solution. You can get them what they want and you can charge whatever you want.

 

Here is a big one. A lot of times, people have so much junk and they are like, “I do not have time to fix all of this. I need an investor to buy it because I need to sell it as is.” The third technique is this. We have got a couple of contractors that if we cannot sell it as is or there is something that needs to be done, everybody is so scared of moisture. If the roof leaks, we call our homeowner help program where the contractor will come in, fix the roof leak and the things that are going to cause $5,000, $10,000 worth of damage that will cost us $400 to do. We will get the contractor to do it and get paid at closing. If we are getting a big enough commission, I will pay for it up front and get paid back at closing.

You will come in and handle some of those repairs because you feel like the juice is worth the squeeze and you are minimizing the risks.

I have one where she was going to work with an agent friend of hers. She was going through a divorce and several different things but her house was a disaster. She is like, “I cannot sell it like this.” I took a massive commission on it. I was like, “Here is what I am willing to do. We are going to sell it as is. If it does not sell as is, then I will come in and you move out.” I do not want to do big, massive fixes unless people have moved out because it will get back like what it was. “If it does not sell as is, then we will come in, do all the stuff and get paid back at closing, plus 10% of whatever we have to spend on and also some piece of that to the contractor.”

What is interesting that I observe is you look at these deals, not like an agent does but as an investor. You are doing creative options based on whatever situation they are in, which the typical agent is not going to do. You are coming in and providing a listing service but you are doing it coming in thinking like a creative investor. How can I structure this deal? You might charge more commission or negotiate this to do some repairs upfront to protect yourself. It almost sounds like there are some creative techniques that you come across in each deal in a particular way that a solution is needed.

If you are reading, the big conversation that you will continue to see happening is, “How are you identifying yourself as an investor and as a company? Are you just a wholesaler or are you a solution-oriented person that comes in and says, ‘Regardless of what the outcome is, I am here to provide the best solution for you,’ rather than getting locked into the fact that, ‘The only solution I have in my pocket is to do a cash offer?’” The more diverse you can make yourself in being solution-oriented, the more likely your conversions are going to go up and the more money you are going to make because you can look at it differently.

Let me ask you this question then. You gave us three great techniques to consider. People reading are in 1 of 2 camps at this point either, “I am going to do this in-house and figure out a way to build a system for me to list these or I am going to outsource this to someone else.” Let’s start with outsourcing. “I want to go find a partner to do this.” How do you find and know that you have got a good licensed person? How do you find and identify that person even though they are going to do a great job and not drop the ball on these leads if we give it to them?

That has been the problem because everybody that has spent money on marketing has thought about this or tried it. It has not been successful, which is why people throw it away. The system has not been proven well. One, you have got to find somebody who is creative and is going to work hard with it. Second, this is part of the school. We are teaching agents how to do the product that we have so that the agents can learn the steps and the process with it. It does not take much. One deal can start changing the whole trajectory of your year, especially if you get even a 3X ROI on your marketing. Think about what happens if you get $200,000 back into your company.

You zero-base your marketing based on the retail leads coming in and what you make on the investment side is pure profit. The ultimate goal is the way you think, “How can I zero-base my marketing spend via retail and allow the wholesale fix and flip side to being straight revenue?” That is a great way to look at it. If someone is looking for an agent and does not want to do this themselves, make sure that the agent is creative. What would be two more characteristics about that agent to look at?

WI 381 | Dead Leads

Dead Leads: Find an agent who’s creative, hungry, and someone you can trust. Make sure they won’t take no for an answer. And they also have to have a high EQ as well.

 

Make sure that they are creative, hungry and will not take no for an answer. It has got to be somebody that has got a high EQ as well. What I have found is on the DISC profile, a lot of times, you see a lot of agents that are closing at a high level are high Ds. A high D personality is important but a lot of these people are hurting. There is stuff there. If you are able to walk in, hear them and relate with them so they feel like they can trust you, you can walk in and close time after time because you are there to give them a solution to their problem.

If you are like, “What is a high D personality,” that comes from the DISC profile, which is simply a profile that lets you understand how someone behaves. If you hear high D, that usually means that person is very motivated, driven and aggressive. If I could bottom line that, they are a bulldog and a closer.

Chris, to the other people that are reading going, “I feel like I should do this in-house. Either I need to get licensed or get someone on my team licensed but I do not know how to train them. This sounds fantastic.” You got seventeen steps. You gave me three. I would love to know the rest. If someone is reading going, “Do you provide any training, help, assistance or coaching on this,” what does that look like? Where could they go to potentially find out more?

My website is my name, ChrisCraddock.com. They can go and register. I have got an agent training program where they can sign up to get in. They will get all of the steps to close and understand all of the sales techniques for closing these types of deals. It should also help them in their business to close other deals as well because if you can identify problems, you can sell. Create a great matchup between the investor and the agent that can help everybody monetize. Whether it is in your organization or if you are getting paired up with another agent as well, you can put them down.

Tell the other agent to go through your course. For people reading, this is a course I understand that you are providing that not only trains the investor on the other side but trains the agent as well. It does not matter who you are. It is the same seventeen steps that you need to follow. Chris, this is fantastic. Is there any last thing you would like to leave with the audience to consider, maybe the last nugget or thought on this whole concept about not throwing these retail leads into the trash?

Hundreds of millions of dollars of investors across the country that I talk to are throwing these leads away all the time. You can zero-base your marketing and win at a high level. It is like going to a good doctor because they are a good agent. I am not going to go to my physician if I need to have heart surgery. You need to go to somebody that understands these deals and sales. I am sure tons of people that are reading this have tried this, failed and said, “I do not want to put any more time and money into it.” That is why we have created this process that we have proven. I have done it and taught other people to do it. We have proven it so that people can monetize it. Know that this is going to work if you follow this process and walk in like, “This is how I have to frame the argument and set it up.”

You have identified a pain point that is out there but underneath that pain is a huge opportunity for additional revenue for all of us. Also if you are reading, you know that we are teaching people also how to refine distressed properties and utilize radio. Chris, that is something that you want to be able to launch. You and I have talked about that.

If you are processing going, “What am I going to do in 2020 to find more discounted properties? I am a little nervous about ringless voicemail regulations and my direct mail is getting saturated,” when we advertise on radio, we get cash offers and retail. We have equipped ourselves to make money either way. If you want to cash offer, we will give it to you. If you want to list it, then we will list it for you. It does not matter what you are doing. You want to be able to be bivocal on that. What I mean by that is bi-vocational in the sense of being able to wear either hat.

If you are interested in radio, book a call and ask more questions at WholesalingInc.com/REIRadio. Chris Craddock, thanks so much for coming on and addressing a huge problem in our entire market. I cannot believe how many times I have had this conversation with people. More importantly, congrats on cracking the code on this thing. Somebody had to do it. We are glad you did it.

Thanks for having me. You are a stud. Anybody is blessed to be in business with you. I am glad that you are doing the radio piece. I love hanging out with you.

Thanks so much for joining the show. We will catch you next time.

 

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About Chris Arnold

Chris Arnold is a 15 year Real Estate veteran who has closed over 2500 single family real estate transactions in the DFW metroplex. Chris is the founder of multiple companies that are managed by a US virtual team, which allows Chris to run his organizations while living in Tulum, Mexico full time. His passion for leaders has led to the creation of Multipliers brotherhood which serves the top 5% of real estate entrepreneurs out of the US. Most recently Chris has launched his REI Radio coaching program. This program is designed to teach real estate investors the marketing stream that everyone knows about but NO ONE is doing!

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