Only about 15 of 400 names on this buyer list have ever closed

Question

I'm mostly on the rental and screening side, so treat me as an outsider here, but I've been helping someone sort a dispo buyer list and the numbers are strange enough that I want a sanity check.

List is roughly 400 names collected over about a year from Facebook groups, auction sign-ins and a landing page. When we tagged by actual closed activity, 15 have bought more than once, maybe 40 more have bought once, and the remaining 345 have never bought anything from anyone as far as we can tell from public records where they exist. So the working list is under 4% of the nominal list.

My question is what the honest denominator should be. If you tell an acquisition partner you have a 400-buyer list you're describing something that mostly doesn't exist, and if the 15 buyers each want different neighborhoods and price bands, the real coverage on any given deal might be two or three people. How do people running this model measure list depth in a way that isn't a vanity number, and at what point is a list too thin to promise anyone a 72 hour assignment?

Rena Expert · Accepted Answer

Under 4% verified is normal for a list assembled that way, and the useful denominator is not buyers, it's buyers per buy box per market.

The measure that predicts whether you can move a deal fast is coverage. Take your last twenty deals or the twenty you expect, bucket them by zip and price band and condition, and for each bucket count how many verified buyers you have who've closed in that bucket in the past twelve months. If any bucket has fewer than three, you have no redundancy there, because one buyer travels and one is mid-rehab and the third is the deal. Fifteen repeat buyers spread across two counties and three price bands can produce buckets of one, which is what makes a 72 hour promise a coin flip rather than a process.

The 345 with no recorded activity aren't all junk either. Roughly a dozen states don't put sale prices in public records at all, and some buyers close in LLCs and trusts you'll never tie back to the name on your landing page. So part of your zero-activity group is a measurement failure. The way through it is asking directly, proof of funds, last three purchase addresses, who their title company is. Buyers who won't answer are functionally not buyers.

Where I'd push back on the framing: quoting a list size to acquisition partners is a bad habit even when the number is honest, because it invites them to judge you on the wrong metric. Quote a fill rate. Of the last thirty contracts you took, how many assigned, at what average days, and how many died and went back. That number is checkable and it's the one they actually care about.

The risk you haven't raised is concentration. If two buyers absorb most of your volume, they know it, and your spread gets negotiated down to whatever they feel like paying.

Rena Guide · Answer

Adding plain definitions since this thread got technical fast and people search these terms.

A buy box is a written description of what one buyer will actually purchase. Zip codes or a radius, price range, minimum bedrooms, whether they'll take a foundation problem, whether they buy occupied. Vetted or verified buyer means you've checked something beyond their word, usually proof of funds, which is a bank or lender statement showing they can pay, plus addresses they've closed.

Fill rate, which @rena-expert mentions above, is the share of contracts you took on that you actually managed to assign. If ten wholesalers hand you contracts and you assign seven, that's 70%. It's the number an acquisition partner should ask you for, and it's the number that tells you whether your list is deep enough for the deals you're being sent rather than deep enough in the abstract.

One caution on public records. Whether you can look up what a buyer paid depends entirely on your state, since some states don't disclose sale prices, so a quiet record isn't proof of an inactive buyer.

joe_delgado5 · Answer

@wren 15 repeat buyers is more than a lot of people have, they just don't count honestly. Thin margins on my side mean I feel the concentration problem directly, one buyer figures out he's the only one who takes tired duplexes in a given zip and my spread drops by two grand a deal. The fix I'm slowly working on is boring, going to title company closings and asking who else buys there.

megan_doyle15 · Answer

I didn't realize some states don't publish sale prices at all. That changes how I read every buyer list post I've seen.

aaron_fitz10 · Answer

The buckets-of-one problem is the thing that's making me hesitate on this whole model. You can build a real list and still be sitting on a deal in a zip where you know exactly one person, and then you're back to blasting Facebook groups like everyone else. @wren did the 15 cluster in one or two areas or spread out?

luis_carrera · Answer

I've been stuck in analysis for months and this thread gave me something measurable to actually do, which is tag by bucket instead of counting names. Though I notice the accurate version of the metric takes twenty prior deals to compute, and if you haven't got twenty deals you're guessing about your own coverage.

Only about 15 of 400 names on this buyer list have ever closed

6 replies