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4 Key Areas In Qualifying Prospects
A lot of entrepreneurs will agree that the most critical soft skill towards success is selling. But what many don’t add onto that nugget of wisdom is that selling is most effective when conducted on qualified prospects.
Salespeople typically go about prospecting in two ways.
- A numbers game determined by the notion of “the more the merrier”
- Focus to hot qualified leads
While there is no right or wrong answer to which approach will reap the most sales, I don’t think that it’s a coincidence to see that the best performing salesperson in a corporate office is often the one who looks like he/she is working the least.
You know what I’m talking about.
The top sales person walks into the office at noon. Leisurely walks to the desk and starts keying in the sales brought in for the day. It is as if they are make the most money from doing as little as possible.
But the secret to their success is that they only focus on qualified prospects. They don’t run around like a headless chicken for every potential prospect as they can. By spending their time on qualified prospects, they get to work less and have a higher closing rate.
There are various types of prospects when it comes to real estate.
For investors, prospects can be tenants, buyers, sellers, other investors, etc.
And for property agents for example, prospects can be landlords, buyers, homeowners, etc.
The list never ends.
If you believe that prospect qualification is a process that you should focus on to get more efficient and effective in what you do, here are 4 key areas that will determine how hot a prospect really is.
1) Source of motivation
There’s a reason why seasoned landlords, and agents especially, like to start casual chats with prospects.
This is to understand more about what they are currently going through. This can hopefully paint a picture of how motivated or desperate they are to solve their real estate issues.
From bits and pieces of information, your goal should be to judge:
- What type of location they wish for
- Where is their ideal location
- When they need to move
- Their projected time frame to solve their problems
- Key feature they want or will not want
Among all of these information, the most critical one is the time frame.
A tenant for example, would run into all sorts of problems should they miss their deadlines.
They could be looking at hotel stays, the hassle of moving personal belonging about, lethargy at work, etc. And even worse… being homeless for a few days or weeks.
The lesser time a prospect has at his disposal, the hotter the buying temperature. He could even be becoming desperate.
Some people like to serve and work with newbies with little experience.
For example, a flipper might find a young couple buying their first house as easy prey to pass on their fixer-upper to.
While an agent might sometimes prefer to work with more experienced buyers so that they have an easier time not having to explain every little detail to them.
Be mindful that people form their perceptions of how the real estate markets work from their own experience, lack of experience, or from stories passed around by friends.
Knowing their level of experience can help you determine how best to approach your selling strategy and even your tone of voice.
What you should be particularly interested in would be:
- How many room have they been a tenant of previously or how many properties have they sold
- When was the most recent experience in renting a room or selling a house
- Was that previous experience a good or bad one
- How did they select the house to buy or room to rent
- What did they like best about their previous landlord, buyer or seller
Some people can be very sensitive. And talking jokingly about rental can turn off experienced tenants. While being firm to a rookie can make them feel being taken advantage of even when you are not.
This is one of those catch 22 type of things.
On one hand, you want to discover the budget of a prospect so that you can decide whether to accept a lower price.
On the hand, tenants and buyers can feel that you are digging out their budget so that you can charge them the maximum that you can get away with.
Unless you are a gifted salesperson, there is little chance that a prospect would reveal his or her budget directly.
But that doesn’t mean that the situation is hopeless.
Asking indirect questions about finances can help you judge the range of the budget your prospects have to work within.
For example, if the prospect reveals an occupation, you can determine from market rates that his salary is around the range of $3,000. If this is a young chap in his twenties, there is every chance that he would take on a mortgage at 25 or or 30 year term. At current mortgage rates, you might be able to calculate his maximum loan quantum that a bank would lend.
By working these numbers backwards, you should be able to judge the price range of the house he can reasonably afford. Thus, the budget perimeter he is working within.
Sometimes, prospects even test their luck by mouthing off ridiculous prices. This can help you determine how realistic they are and how well they really know the real estate market.
These information should help you conceptualize an approach conducive to close.
Unless you run a major operation with staff doing all the work, accepting a higher paying customer with obscene expectations is seldom a good idea.
I would take on a lower paying customer with much lower expectations any day.
Yet you cannot fault a prospect having high expectations when he becomes a full-fledged client. He is paying the money, so there’s nothing wrong with expecting the best.
But a lot of times, troublesome customers can leave you wondering why you took him up in the first place. It’s definitely not worth the extra price when you need to spend an extra 5 hours a week just to appease him.
To help you learn more about a prospect’s expectations, just ask them directly.
A lot of times, people will be dumbstruck at being asked such a question because it never crossed their minds before.
In this case, you need to feel it out during your interactions to judge how demanding this potential customer would be in both the short and long term.