#25 Cold Calling, Losing Millions and Rebuilding with Deven Nemer
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Itunes – www.TonyJavier.com/itunes
Guest Bio: Deven Nemer is the founder of Real Estate Faster, which has set over 3 Billion dollars worth of listing appointments for Real Estate Agents all over the US. Deven has been in the business since he was 19 years old and is now a specialist, consultant, and investor. Join my conversation with Deven to learn more about cold-calling, psychology, and his outbound calling service.
More about him – https://tonyjavier.com/devennemer
All right. Welcome to today’s episode. We have Deven Nemer on the line here. He’s been in the business for 16 years, done hundreds of transactions. He’s actually scheduled $3 billion worth of appointments for Real Estate agents. So we’re going to talk a lot about cold calling a lot about psychology and a lot of good stuff that Deven does with his outbound calling service. So let’s jump right into it. How’s it going, Devie? Hey, how’s your day today? So far,
It’s going very well. It’s signed a couple contracts, took on some new clients and obviously, my team has done a ton of activity today. So, things are good.
Awesome, man. That’s the fun thing about the real estate business, always deals being done and you hear things happening and it’s all good stuff. And you’ve got a lot of people that are working on your team, doing a lot of stuff. So I guess we’ll start with your business. So you’re in the real estate business, you do a lot of cold calling for real estate agents. And you had shared earlier that you’re getting into other things. There’s a lot of real estate investors that are on the line now. So I’d like to maybe talk about maybe how we could potentially cater to real estate investors as well. But you also do some real estate investing yourself. So I guess go ahead and give us a quick background about yourself, how you got into cold calling, and anything else you would like to share with us today?
Yeah, well, knowing that the audience is primarily investors. I think this is the thing that, that people would actually like the most. So when I was 16, I read rich dad, poor dad. And so at that point, I knew I wanted to get into real estate investing, but I, you know, my parents didn’t have any money. I didn’t, I didn’t have any money. Right. And so I’m like, how am I going to do this? And then I read, think and grow rich. And I realized that those were more or less just excuses and being young and fairly naive. I didn’t have the limiting beliefs that a lot of other people have. And so I enrolled in, I spent about $30,000 on a series of uh in-person seminars and I really learned a lot. And so the very first deal that I ever did, I was 19 years old. Right. So keep in mind, I didn’t have two years credit history. It would be hard to recreate this today because back then in 2005, I bought the property. You, if you could fog a mirror, you can get, you can get along. Right. So I got, I bought a property, it was on an acre of land and this is Los Angeles price, right? So if you’re not in Los Angeles and I start telling you numbers, you’re going to think this is crazy, but this is the way that it works in Los Angeles. So I bought an acre of land on a flag lot at flag lot just in case anybody doesn’t know is where somebody did a previous lot split. And they did it where there’s a small narrow driveway that opens up to a lot in the back, right? So it was a 20 foot wide driveway driving back 200 feet. It opened to a square acre. And on that square acre was a house, a guest house and an 1800 square foot warehouse.
So the first thing is that I got a good amount of cashflow from the property. I ended up using is a film studio. I’m on IMDb as a locations manager because of the things that were filmed there. And so I did get some decent cashflow from the property, but the big thing is I bought it for no money down. I had raised some capital that was my down payment money. I got 80% seller financing. And then I refinanced with a new 80% loan and an additional 10% loan. So I pulled 90% out, but it was 90% of a higher appraised value than my purchase price. I bought it for 1,000,004 and or million 450, but I got my own commissions to net was close to 1,000,004.
And then when I refinanced it, it was based on a million, 650, so 90% of a million, 650. So basically pulled out all of the down payment money for the most part back out of it. Then within two months I got an offer. So I bought it for, yeah. So within two months I got an offer for $2 million on it. And the reason why is because when the seller sold it to me, it had an R-1 zoning, which is regular residential zoning. And from the seminars I had learned the concept of highest and best use. And so I looked at that and I said, well, the reason why he’s saying you can only get four lots is because the driveway, that Flag lot is only 20 feet wide. And so if you go to the city, which keep in mind that people that work in the city, or like the people that work at the DMV, right?
They’re not exactly motivated to give, to give you the best information they’re motivated to get to the next person in line so they can go home and go and, you know, stop working, right. So they’re not going to give you the best information, but if you go there and you say, Hey, what can I do on this lot? They’re going to say, Oh, well that driveway is only 20 feet wide because it’s only 20 feet wide. You can only get a private road as opposed to we regular road. And on a private road, you are limited to a maximum of 4 lots, even though the zoning would support 7 lots. So what I figured out is there was a like 300 units, subdivision, not too far from there. And I say, subdivision to frame in mind is what it is. But the reality is it was townhome or condo zoning where it’s all 1 lot and each unit has its own APN number. But if you drove the neighborhood, it looks just like any other neighborhood. And the reason why they did that, and that neighborhood is because of the steep Hills and with the steep Hills, they were able to use the land on the steep Hills where they couldn’t build as part of the equation for the density of the, the unit. Right. So I knew that it could be done. I knew you could switch from R 1 to it was RD -6. And so RD 6 is one unit for every 6,000 square feet are one is a minimum lot size thousand square feet. The difference is that extra thousand square feet, you can count the street, right? Because street is just the driveway of the property. It’s one for every 6,000 units. So I knew that I can get 7 units when the previous person said, you can only get 4. So even though he spent a year on the market and didn’t get any offers, I was able to get a higher price than was asking because I turned around and changed it with marketing. Right.
So you’re, You were 19 at the time when you did this,
I was 19 at the time that I did this.
Wow. That’s An incredible first deal. I did my first deal at 21 years old and I did and no money down deal. And I actually, the first 10 deals I did were no money down. And actually I’ve done hundreds since then, but those were like $60,000 houses, a hundred thousand dollar houses. So to do a million plus dollar house for your first deal, no money down, that takes, that takes a lot. So, yeah. So tell us the numbers again, you bought it for, base. You can get it appraised for the bottom six, but you sold it for two so you made about four or $500,000 on that first property.
So I bought it for 1,000,004. I had it appraised at a million, 650 taking out a 90% loan. Right. And so but it’s still a million, 4 is the purchase. I had a $2 million offer and I turned it down. Now the reason
At 19, I think 99% of people would have said, gimme pet cat.
Yeah. Well, hindsight being 2020, I should have done that. Right. But here’s the way that I looked at it. I looked at it as I had already raised over half a million dollars in capital that by the time I got that offer, that wasn’t the only, that was just the first one I did. Right. I ended up by the time the market crashed in late 2007, I had about three and a half million dollar net worth from everything. So I own more than that in properties, but you know, you subtract out what the properties are worth. Uand so I was doing pretty well. And so when that offer and come in, I had already raised over half a million dollars. And my thought process was this, if I sell for that 2 million then, because it was only two months, that would be treated as earned income.
Right. So there there’s, you know, that was, I I’d have to pay the real estate commission to the buyer’s agent. Right. I’d have to pay other closing costs, then I’d have to pay nearly 50% taxes in California. Cause you know, federal plus the state, the state’s one of the highest. So I would’ve ended up with about 200 grand, which again, hindsight being 2020, I should have just done that. Right. But I looked at that and said, well, if I build these seven units, cause I was asking to four, right? So the $2 million offer that came in was a low ball offer compared to what I was asking, if I, if they’d offer the two for, I for sure would have sold it at the time. But I was looking at that and saying, you know, if I build these seven units, I’ll make 1,000,007 out of it.
And because it’ll take two years, LA takes forever to build that. I would be able to do a 10 31 exchange and buy another property with it. And so I looked at that and said, you know, I’ll make multiple times more and I won’t have to pay taxes on it. Let’s go that route. And I had a bunch of other deals. I, know I wouldn’t, you know, I figured since you’re mostly investors, I was talking about the investment deals that I’ve done. But there’s another deal that I think is even more impressive than that one. And so this one, I sent out letters to people. I had targeted that I knew I could use own changes on. And so somebody responded to the ad, he had almost 6,000 square foot lot. And but that’s not enough to really do anything on.
So I told him, Hey, I can’t buy your house, but I could buy you plus both of your neighbors, if you can convince them to sell. And so he did and he came to me and, and so each house again, LA prices. Okay. So each house was a tear down 1100 square foot houses, right. That if you comp them as 1100 square foot houses in Canoga park is the specific city. Then they would’ve appraised or they would’ve comped out at around 550. I settled with them at six 35. Okay. So if you do 550 times three, it’s a million, 650. I was paying 635, times three is 1,000,009. Okay. Now in the agreement that I actually had with them, I said, I’m because there’s licensed in California. At the time, I said, I’m a licensed real estate agent in business to make as large a profit as possible.
I do not represent you in any way. And I here by advise you to seek any counsel you deem necessary, including, but not limited to an attorney, CPA, financial advisor, real estate agent, whatever you need. Right. So I had that all written out. And so they read that and they said, you know what? We should hire a real estate team. So they hired a real estate agent. The agent did a CMA on their house, said your house is worth 550. He’s paying you 635. This guy’s an idiot. Sell to them. What that agent didn’t do is figure out, Hey, he’s buying it for the land. What’s the land work, right. I have no obligation to tell them that, right. My only obligation was to make that disclosure so I don’t get in trouble. Right. So I made the disclosure, their agent didn’t know how to do their job.
Not my fault. The land was worth 200, sorry, 150,000 per buildable unit. And I could get 20 unit townhome project. So the land was worth 3 million bucks and I was buying it for 1,000,009. So on the purchase of the land, I was getting it for 1.1 million under what it was worth, but I could have just turned around and flipped it. Now that one combined with the other one, I told you and a few others is how I told you my net worth got to about three and a half million. And just cause I’m counting 1.1 just that I could have flipped there. Plus you know, every everything all included. And so it was on that deal that I bought the first one, I was in the process of buying the second one and the lender said, Hey, things have changed. You actually have to qualify for the loan now.
And I said, what do you mean after qualify? Like, look at all these loans I have, like, what do you mean I have to qualify for a loan? Like I’d never had to qualify for a loan. And and so when that happened, I did some math and I said, okay, what’s the median household income in this area? What’s the median home value and what, you know, what would it actually take to qualify? Because if I have to qualify, so does everybody else. Right? And so I figured out at the time I said the market’s going to drop by like 60% because interest rates were six, six and a half percent back then. And I kept that as, as a stable in my calculation saying, you know what, our mortgage payments based on where the interest rates were at the time and the market didn’t drop 60%. But if you count how interest rates drop, the payments did drop by more than 60%. So it was actually correct. It just, you know, I left out the interest rate.
And what year did you do this deal? And what year did you do the first deal that you did just to get it talking to them?
We are talking 2005 to 2007.
Okay. Gotcha. Okay. Yeah. So,
So when the market was, I got that early signals that the market was crashing, but I couldn’t get a single person to agree with me. And there I was 2007, I would have been 21. I couldn’t get a single person to agree with me. And I’m thinking, you know, all of these people that I’m going to for advice are 40, 50, 60 years old, many of them have 20 years experience in real estate. And they’re all looking at me like I’m crazy when I said the market’s going to drop 60%. And so I kept the course and I, ended up losing that property and a few others, I just ended up having to give back to the bank. So I don’t want to sound like mislead anybody. I had a bad strategy at the time.
And part of it was the investor, or, sorry, we’ll invest in you as an investor, but the guy leading the seminars was like, people would say, but what about cashflow? And his answer to what about cashflow was, if you’re concerned about cashflow, raise more capital and use the capital that you raise to pay your debt service, because who cares about cashflow when you’re making millions of dollars. And it was hard to argue against that because at the time I was making millions of dollars. And so I, at 19 20 years old would go stand up on the stage 200 people and tell them about all these deals I’m doing. And it made it hard for anybody to argue against, you know, what’s wrong with cashflow now, knowing what I know now, cashflow is pretty important, but you know, being fairly naive at the time I didn’t know that.
And so so my negative cashflow was, was pretty high with the idea, being that at any point, I can just sell any of these properties to pay off all my debt service, right.
Until the market crashes, of course, right.
Until the market crashed and you know, those houses that were worth 550 each became more 300 each more or less. And because the land value went to zero. So it wasn’t just that, that nobody was buying. You couldn’t get alone. That was my other issue. Right. So I couldn’t actually build on any of the properties, even though I was going through the permitting process and getting everything, going to build on these properties. I couldn’t get a construction though. And I never factored the loss of the ability to get a construction when I always thought that that would be possible. And then it went away.
Right. And so then, you know, and nobody’s willing to buy it. And so that said, if I would have just gone to other investors and said, Hey, look, this is what’s happening right now. I’ll pay you 20% interest, right? If that was which I wasn’t paying investors at the time, 20% interest. But if I was willing to pay 20% interest and said, look, I just need to float these until the market turns around. And we’re able to do construction loans, every single deal that I let go would have turned a profit paying 20% interest to keep them going. So, but again, hindsight is 2020, right. But instead I looked at that and said, okay, you know, I’m negative equity on all of these deals. And so a couple of them, I just like go back to the bank.
So it’s like you have a lot of experience with real estate investing in those kinds of deals in creative financing and all that. Those that’s awesome. So how did you get into, so just a background and you can maybe explain it better than I can, but you have a service that will cold call and set appointments for real estate agents. And like I’d mentioned, you’re starting to do that for other industries, potentially real estate investing as we talked about. So how did you get into that and tell us about that service and in what you do.
Okay. So it started, I read a book called the four hour workweek and it talks about outsourcing and all of that. And I hired probably a dozen people before I found, I call them now my co-founder, but at the time he was just one of the many contractors that I hired. His name is Amir is there’s, if you’ve ever hired anybody, there’s people that you can say, here’s every step that you need A through Z and they still screw it up. And then there’s other people where you say, here’s the basic idea of what I’m going for, figure out a way to make it happen. And then they come back and what they did is better than you would have even given instructions. All right. So this guy was clearly that guy, right? And that’s why I call him a co-founder now, because he really, he built the business.
Like, I, I want to make sure I give him full credit. He really built this business. And so what happened is first year is working directly for me. I was making a ton of offers. I was doing a lot of things. So he was doing so well that I said, can you hire a couple people underneath you? And so he had a team of about five people. And one of the investors that I work with who’s, we’ll just say his netwroth in the 50 to a 100 million range wanted me to work on a technology project. And I can go off on a tangent forever on what happened with that project. But long story short, it ended up not working out. And mostly for reasons that I don’t want to get into slant because I don’t want to slander him because it was bad choices that he made along the way.
And so and so at the time that I went from being an investor in real estate with primarily, this was when the market crashed, right. I lost everything that I had. And so I found I’ll call him a whale who was willing to fund my deals. So the first deal I did with this guy, I met him. And three days later, he wired 600 grand into escrow to buy the property. And we flipped it. 45 days later, I made 185 grand. Right. But he was the kind of guy to write a $600,000 check after just meeting me. Right. And so and I did a number of deals with them after that, but I was mostly doing deals with his money for the most part. And so when he asked me to do the tech project, I, said, okay. And so I went to that, but this guy had built a team of about five people.
And I said, look, you built something good. Don’t let this go. And I said, what you need to do is go after REO agents because they take on 40, 50, 60 homes at a time, and it’s an overwhelming amount of work. So target the agents who are doing that and start doing outsource for them, like you’re doing outsource work for me. Well, he built the business more or less without me. I just consulted with him every now and then to about half a million dollars a year in gross revenue for 2013, by 2014, that market was really starting to die. And during the course of 2014, kept reaching out to me saying, Hey, I need you to come back and be the face of this company. I need your help. That you know, here’s having full clients who are, who would have 40 new homes every at a time coming into them that were just dropping off and not as clients anymore.
And the ones that stayed, went from saying, here’s my 40 new homes to here’s my 3 new homes, right? Like, so the ones that were staying, their order sizes were decreasing. And he’s like, I don’t know what to do. So we started so the tech project came to an end and I started talking to Amir again and found out what he’d actually built with, with my recommendations. And I was really, really impressed with what he did. And I said, okay, well, let’s just ask the clients what they want us to do for them. Right. Like we can come up with our own ideas, but let’s just ask them. And so the number one response is them saying, Hey, my business is dying. Can you help me with lead generation? And we said, okay, what do you want us to do? And they said, well, can you cold call expireds?
And at the time 2014, we’re like, sure, why not? Let’s try it. And so flash forward to today, just to jump real quick, we’ve now said, well, in excess of $3 billion, but the listing appointments primarily from expireds. And, but at that time it was new. Right? And so we said, Oh, well, let’s just, we’ll try it. And so we had a lot of learning to do for example, the, the first batch of appointments that we were setting about 15% of those would get reported back to us saying, I thought you were bringing a buyer and we never lied to people. We never said that we’re previewing, which I understand that that’s a technique that agents use. I’m not a fan of that technique at all. But I think it’s bait and switch. And I just, I don’t like bait and switch. So we’ve never tried to say that, but that’s what was getting reported back to us.
And we said, okay, well, 15% of the appointments is bad. We’ve got to fix this. And so we tested trying a bunch of different things, but what ultimately worked is saying, if you like, Tony’s marketing plan, you think he’s the right guy to sell your home. Will you sign a listing agreement? And 95% of the time, it’s some version of, maybe it depends, we’ll see, right. It doesn’t matter. The fact that we ask them, will you sign a listing agreement mean, and they have to respond. It means they acknowledge the fact that our agent’s going to go there and try to get the list. Right. And so just by doing that, we cut down from 15% to 0.3%. Right. So a massive decrease, and we’ve gone through build, measure, learn if you know, the tech world this idea of a build measure, learn cycle.
We’ve gone through so many of those where we’ve had massive improvements. So another good example of that is we would we would hear back from our agents that either the appointment went bad or meaning that they, the cause we’re dealing with expireds, right? So they would say that, Oh, this guy’s overpriced. This guy is unrealistic. It’s not worth my time. Right. So we’d get those responses, but we’d also get responses. And obviously, Oh, it went well, I signed the listing, right? Like that’s an obvious response, but people would say, Oh, went great. I expect to get the listing. So we started doing is tracking every single time somebody told us it went great. I expect to get the listing. And then we track it in our system and we’d get notified when the listing came up and we’d say, okay, did our client get the listing or did somebody else?
And so every time it went to somebody else, we’d get on the phone and call them and say, Hey, you met with Tony, but you signed with Joe, just curious, what was wrong with Tony? And from there, the number one response was who’s Tony. And we realized our clients, aren’t doing the followup that they should be doing. Post-Appointment follow-up is extremely important. And so we figured that out. And so our median date from the date, we set an appointment to the date that a listing gets signed, meaning 50% before 50% after it’s 13 days, that two weeks, that timeframe is extremely crucial. And so we figured out we have to do that up on own. And so we do it through calling them. We do it through retargeting ads. We do, it through a number of different mediums, but the point is for every two hours that we spend on post-appointment follow-up we get one signed listing, not an appointment.
They already did that one sign listing for every two hours, post followup. So massive, massive boom for our business. The third thing that we did, which, which is massive to us, because on this model, we get paid a 30% broker referral fee is we it’s client it’s client selection. Client selection is massive for us, and we’re getting paid on the backend. Uin Atlanta, we had a client who we said, I want to say 123 total appointments out of that. There’s, always appointments to get canceled, right? So you’re getting 20 calls a day. Sometimes you shut off your phone or don’t answer to anybody. So sometimes we set an appointment, but the person who we set the appointment with doesn’t attend because they’re getting phone calls and they just, they don’t, you know, and so out of that, we had 88 confirmed face-to-face appointments, where we went inside their house and made a,umade a listing presentation out of those 88. He only signed seven listings, which has terrible, terrible conversion rates. Right. But it gets worse. Three of those seven expired only four sold. So that means it’s actual conversion rate was one out of 22. Okay. Now we have clients,uwe’re working with the Northrop group up in Maryland to give you an idea of how big this company is. They sold over a billion dollars for the real estate last year alone. Okay. Massive. So they have TV, radio billboards, you name it, they have it. We call on expireds and we say, Hey, we’re calling on behalf of the Northrop group. And they know who we’re talking about, right. That doesn’t happen in most markets. So,uso this client, or put as like an outlier, but he’s closing over 70%. Right. And, but the greater majority of our clients are in the 30 to 40% range.
So if you close 30% on 88 appointments, I just ran up to 90 appointments. That would be 27 closings at 30%, right. That’s not even on the upper range of the 40%. So as good as it was to decrease the 15% down to 0.3% for the people who say, I thought you were bringing a buyer and as good as it was to get all the bumps, because the bumps for the post appointment follow-up was it was a lot of things, decreased cancellation rate increased either way it improved multiple metrics. The biggest thing is actually client selection, because client A converts client B doesn’t convert. If we, if the client converts, we make money, if they don’t convert, we don’t make money.
When you say client selection, you’re talking about the client is the realtor. So the have making sure that the realtor is credible. Uand I’m sure you have some kind of checklist of things that you want from a client. So what are those things that you want from a client that you,uthat you bring on?
So it’s interesting cause we’ve had multiple theories. And so if you go back to 2016, Trump just got elected. And at that time, my thought process is there’s a disc personality profile. Are you familiar with that?
Yeah, I use it all the time for people I hire. Yep.
Okay, perfect. So I, my theory, my working theory at the time at 2016 was that the strong D’s would be the best performers. And that, again, Trump had just been elected. He’s obviously a strong D. And what actually is the case is it’s a strong eye with D characteristics that you’ve got, you know, that influencer personality does a much better job. And so that’s been good for us. One statistic that I’m somewhat hesitant to share, but I’ll share with you anyways, is that women don’t perform very well on expireds. Not saying that they can’t do other parts of the business well but on expireds, you’re dealing with, they’re interviewing five to seven other realtors. There is a degree of like pushiness that you need to have, and maybe there’s sexism involved in and the homeowners making their decision. Maybe there’s not, maybe it’s something else.
I don’t know, but we have not had a single client work. Expireds that’s been profitable for us. We’ve had female agents that closed, but we’ve also had agents strike out, right? Like where they get zero out of all the appointments that we send to them. And so out of the female agents who have closed one of them, she paid us on the first two closings. Then the second and third one, she did not pay us. And she started avoiding our phone calls and, you know, and finally got her on the phone and she started crying to me telling me, you know, her husband lost her job and she’s going to go into foreclosure. And I’m not the type. Like, I don’t want her to commit suicide because I’m pressuring her. So I just let that one go. And I just, I think she owes us, I think it was like $4,800.
And so I could still Sue her like, and try to get, but I’m not going to like, it’s just not worth my time. And so she actually had a good conversion rate. She just didn’t pay us. And there’s been that had 0% conversion rates or conversion rates that are subpar, meaning. I, even though they’re paying us, it’s actually lose money on servicing them. And so I haven’t had a single female agent that has been profitable for us with expireds now on the prepaid service, which is we can get into on the prepaid service. I have several female agents that are getting listings and getting buyers, but they’re different lead sources. They’re not expireds, right. Expireds are very, very tough business to crack. And that’s actually one of the things that we’re realizing. I, almost feel dumb for not figuring this out sooner, but expires is the hardest thing we could have done and so
It’s so comperative where everybody else is doing it.
Absolutely. Yeah. It would have been much smarter for us to pick any other lead source, but it’s sort of like being a professional, any athlete, right. Professional football player. And then you go and play against the junior high team. It’s like, it’s just, it’s so much easier to go after these other lead sources that I feel dumb for choosing the hardest one, but it is what it is, but it’s forced us to be stronger and better at what we do because we went after the hardest lead source we could have.
Yeah. Well, a couple things you said that I’ll just kind of expand on a little bit before we wrap it up here, but one of, you know, a lot of people think that success is just kind of like this. Right. And you had, you had success early on you, it seems like you were crushing it. Like at 19 years old, I couldn’t have imagined doing a million to $2 million property and that’s not typical. But that’s yeah, absolutely. And that’s amazing. Right. And just like that, it kind of was, you know, it sounds like it was kind of taken away and I’m sure there was some kind of mental like, Oh crap, what did I do? And, you know, you had to, you know, find yourself again. I’ve had that happen to me. I’ve had multiple people happen that happened to, and I think a lot of the guests actually on the show have talked about something of that nature. So so I’ll expand on that again, if you guys haven’t heard that in another episode we’ve done is that, you know, success, isn’t always up, it’s, you’re going to do something you’re gonna have success and then you’re going to get knocked down and then you just have to get back up. And actually some of the most successful companies out there didn’t start with what they started with. Right. Like they may, you know, I think it was like Sony. They started with like, I think it was like toasters or something like random. And then eventually they realized that electronics and you know, that kind of thing was a better industry and they, and they shifted to it. So they had good people, they had a good, like they had a good, you know, whatever they were doing, they just have to shift it into something different. Right.
That’s happening, that’s happening right now. Right. So like, I, you know, I wish I could say that, Oh, once we figured out expire it’s it was just straight up from there. It wasn’t it even this year. Right. So COVID all the things that are going on. Right. And so if you would ask me in March, if I thought there would be more or less expireds at this time of the year, I would have guessed more because I would have thought that lots of people losing their jobs would affect the market. I would have thought there’d be a lot of probates. Right. And unfortunately, and instead we’re seeing exactly the opposite. I have clients with two weeks worth of inventory. And the math on inventory is you take the total number of homes that are for sale in the market right now. And, and you divide that by how much they’re selling.
And you see if not a single house went on the market, how many months would it take to run out of inventory? If you have a six month inventory, that’s considered a neutral market, we have clients with two weeks of inventory, right? Like that’s an extreme sellers market. And so along with that is there’s way less expireds, like way less expired. We’re talking about 60%, less expireds than there was a year ago. Right. And then there’s the quality problem. So the lower in quantity of expireds, you have the lower, the quality is. And the reason for that is the people who are fairly realistic, just they chose the wrong agent or whatever. The reason is that their home didn’t sell the reasonable people there. They’re getting multiple offers. Right? Like I read in a, in a Facebook group that there, and this is in Seattle, they had 50 offers in a weekend and went for 130 over asking like crazy what’s going on.
Right. And so those homes are selling and the ones that aren’t selling are the people with a $700,000 home that says, Oh, if you give me a million dollars also, right. Like it’s lower quality. So we’re down by a lot. And to talking about that, going up, and then it dropped massively. And it didn’t just like straight down, because it was a slower down because we were getting less listings, but we already had an inventory of listings. Right. Because we were getting paid broker to broker referral piece on this. Right. So we’re just watching our inventory shrink and we’re still getting paid, but the inventory is shrinking and not growing. And so we knew that that meant in the future, we would have less money. And in fact, we actually did make less money this year than we did last year.
And that’s, again, as part of that. But early on in the year, we were watching our inventory shrink. And so we said, okay, we have to do something. And so in September of this year, we launched a new service that is on a prepaid basis with the idea of being, we didn’t know what leads agents would get. So it was, you know, we want to know whatever leads you give us will work. Right. But we didn’t know what leads they gave us. And if they gave us like absolute crap leads then, and if it was based on a referral fee, then the mindset would be, Oh, well just give them the worst leads I have. And if it turns into something, it turns into something. Right. And we didn’t want that. So we said, okay, it has to be on a prepaid basis. They have to prepay us in advance to make sure they’re doing a return on investment calculation so that they determined on their own that the leads they give us are worth paying us to follow up with.
Right. And so we launched that program in September. We, we didn’t know how it would go. So when I start any type of experiment, I always start real small. We took on one client spend a week on just the one client. I was heavily involved in it, making sure that you know, that we can actually deliver on, what we can. And then now flash forward to today, we took on four clients, just Friday. I signed an agreement right before you. And I actually started the interview. I saw an agreement come in. That’s the second one I signed today. And so with that service, it’s free for the first two weeks. And then it’s $197 every two weeks. Right? So it’s about five grand a year, whatever leads that they give us, we will work those leads. And then they don’t pay us anything on the backend, right?
So it’s about five grand over the course of a year, which is half of one real estate agent’s commission. Right. And the expectation is that they’ll get multiple, you know, many, many times that and commissions aren’t. And so it’s well worth it for them. The, the framing of it is based on hours. So some agents will say, Hey, I want you to do all of these extra activities that don’t directly put money in their pocket, but it helps them for whatever reason, an example of that would be manually going into their specific CRM and updating each contact one by one on all the activities that we did on their behalf. Right. So it’s time consuming for our end. And if they’re willing to pay us for it, we’ll do it. But that is not an activity that puts money in their pocket. Right. And so so knowing that agents would want things like that, we did do it based on hours, so they can direct us in what to do with those hours.
Right? And so for that one 97, they get 10 hours every two weeks and they could be an hour a day. If the leads are coming in in real time, it could be 10 hours in one day. It could be however we want to spread it out. And then we have larger packages from there. And the hourly costs I have to amortize the cost of getting the client to begin with. And I have to amortize the cost of the free trial that people go through, including the fact that some people will do a free trial and then never sign up. Right. So I have to just take that collective cost and amortize that over the package of hours. So if somebody wanted to do like two full-time people, so 80 hours a week, then I can get it down to under 10 bucks an hour.
Right. So it all depends on, you know, what kind of package somebody gets, but the advantage isn’t just a straight compare us at an hourly rate versus other people at an hourly rate, because we are much better at delivering results. So if you hired they’re in real estate, there’s a term called an ISA inside sales agent. And so if you hired an ISA, you’d have to find the person you’d have to train the person, manage the person, right. They’re probably not just going to work five hours a week. Otherwise it’s not worth any of that. Right? So your total costs will be higher. And then there’s things like we use an autodialer right. And an autodialer if you use it as one person on an autodialer, it’s actually illegal. People don’t realize this, right? It’s like a Corvette Chevy can make the Corvette. They can market the Corvette. They could sell you the Corvette. You can buy it, you can drive it. Everything’s fine. You drive that thing the way that it was meant to be driven, you’re breaking the law. Your car can be impounded. You can go to jail, major problems, right? Auto dealers are exactly that same way. They could make it, they could market it, they could sell it and you can use it, all of those things. But if you actually use it, you’re breaking the wall. And what I mean by that is you call three people. Two people answer, you cannot talk to two people. You’re one person, right? So one of those two calls is going to get hung up on it. Your dropped call rates over 300, sorry, over 3%. It’s a $250,000. Fine. And that’s not the only thing to be aware of. And owning calls like I’s are dotted T’s are crossed in my company, like things are done properly, but we might call as many as seven people while keeping it an under that 3%. And the way that we do that is we never have less than a dozen people on the floor at one time, usually much more than that, but never less than a dozen. And we use the same kind of call center software that like Verizon will use kind of thing. And so it’s intelligent enough to know this person’s wrapping up a call. This person is on a call for six minutes, but their average call is seven minutes. So in one minute, it’s likely that there there’ll be free. Right? So it just takes all of these things in it calculation to determine how many calls to make at one time. And it makes us super efficient. And we’re only billing for the time that we’re actually on the phone, not the ending of that idle time.
Right. So, and that’s not the only thing. Right. I talked about a couple of things that we did to figure out better conversion rates. And so it’s not an apples to apples comparison with, with an ISA it’s similar. Like if you think of an ISA, like an individual mechanic, and you said to that mechanic, Hey, I want you to build me a car. It’s going to be really expensive. It’s going to be very unreliable. You’re going to be heavily involved, right? Like there’s a lot involved in that. Or you can just go to the Lexus dealership and buy a car that was on, off the assembly line. Right? Like we’re like the assembly line. Right. It’s, it’s more efficient. It’s better. Everything about it is better. Yeah.
Well, cool man. Well, we’ll drop a link below. Did you guys get into good? Can, you can get in touch with Deven if you’re a real estate agent if you’re a real estate investor, maybe go check it out as well. I may talk to Deven about getting one together for real estate investors as well or a service. So in 30 seconds or less, we gotta wrap it up. What is one thing? And I know that you provide the service. So it’s, it may be tough to give this a little bit tougher to give this to the audience. But what is one thing that you would give to people if they are doing outbound calling that you would recommend to increase their success rate dramatically.
People don’t make, people do that. Make decisions with logic. They make it with emotion. And so you have to deal with the emotional animal. Who’s on the other side of the phone. If the person answers and you try to just go straight into logic, you’re wasting your time. Some it’s like going to the, to the bar and asking girl, Oh, let’s go home. Right? Like sometimes that works right. And so you can say, Oh, well you could point to the times when it works, but you have to do that a lot of times for it to not work. And so your success rate on each approach is going to decrease, right? And so we’re looking at the highest conversion rates that we can. So just keep in mind, you told me 36, I could break that down to a 10 minute answer on what that actually means, but you have to deal with the emotional person that you’re talking to. And I replaced the word emotion with subconscious parts of the brain. And so you need to, you need to deal with those subconscious parts of the brain where people actually make decisions, not the logical part where you think they make decisions.
Yeah, totally. Well, cool, man. Well, I appreciate your time Deven. You’ve done some great things I can tell you’re a mover and shaker and you’ve helped a lot of people. So appreciate your time, man. And we’ll catch up soon.
Sounds good. Thanks, Tony.
All right. Thanks man.