Writing a Letter to the Seller
The real estate market has tightened over the last few years. Supply has shrunk, prices have increased, and new investors have flooded the market. Properties do not sit on the market long and discounts are hard to come by. Many properties will have multiple offers, all above the asking price. All of this combines to create a level of competition that can seem hard to overcome.
It can be to your advantage if your offer stands out above the others. There are the obvious ways to make your offer attractive -- a high offer price; remove contingencies; pay in cash; increase the earnest money. These are the typical ways we try to sweeten our offers and hopefully get the deal. There is another strategy to consider -- write a letter to the seller.
This approach may not work for all properties, so I wouldn't advise it for each of your offers. However, there are some clues in the listing (or information you have collected directly from the seller) that may indicate a personalized letter could work in your favor.
One clue is if the seller has owned the property for a number of years. I wrote a letter to a seller who had owned a duplex for nearly 30 years. After three decades, the seller certainly had an emotional connection to the property. I wanted to tap into that connection and use it to my advantage. Also, you may consider a letter if the sellers are a husband/wife team versus a business entity. You are trying to connect emotionally with the seller through the letter, so pick up on clues you can get from the listing description and other subtle details. For example, is the listing description written as a narrative history about the unit or simply the nuts and bolts of the physical structure?
Once you have decided that a letter might be to your advantage, you will want to craft it professionally, but with your own personal touch. You can download a template of a letter under the Resources tab, or by clicking here. Be sure to include a short description on why the property fits within your investing strategy and portfolio. Compliment the seller on the aspects of the property you find appealing. Give the seller a sense of the improvements you intend to complete. This helps the sellers realize that you are a professional investor with a long-term strategy and a solid plan for the property.
Some key things to leave out: don't lie about your plans; don't over do it on the improvement list to make the seller feel like the property is a piece of garbage; no need to over compliment on the property either. Just say your piece and be done with it.
I used this strategy on a recent purchase. The property was priced competitively and there were many offers submitted; some higher than mine. I offered above asking price, put down a hefty earnest deposit, and had few standard contingencies. I submitted a letter to the seller along with my offer and it was accepted over higher all cash offers.
There is no guarantee this strategy will work for you. Heck it may never work for me again, but I figure if I spend 10 minutes writing a letter, it is worth a shot!