So, what do you do when you hear that a friend-of-a-friend’s-friend is thinking of selling their home, or you spot the perfect flip that just happens to not be for sale– yet?
Write a letter. Yes, a letter.
Remember, your goal is to find undervalued properties and jump on it!
So… what should your letter say?
Simple. Explain that by selling directly to you, the homeowner can avoid the hassles of open houses and Realtor fees.
This can be particularly advantageous to sellers right now.
1) Most sellers would prefer not to have strangers in and out of their house with no COVID-19 vaccine available in our near future and…
2) Saving on Realtor fees can be substantial. (For example a 600K property could save the seller $36K!
Ok, back to the letter— Announce your interest and emphasize your qualifications (or whatever might be of interest to the seller).
However, if you are a flipper, I suggest you don’t broadcast your intent to immediately resell the property.
People get emotionally attached to their homes.
If the owner raised her family there, she may feel strongly that another young family should move in and repeat history.
If the seller built the back deck with his own two hands, he may not be enchanted with your idea of demolishing it for a pool.
My pathetic emotionally attachment story….
I owned a condo in Atlanta for about 13 years. My last 3 years of ownership, I used the property only sparingly. About for 4-8 weeks per year.
(Obviously, you see a little disfunction already.)
Eventually I decided to sell the property. I flew to Atlanta from Washington, DC for the closing.
I had everything moved out of the property, but the night before closing I slept in the property on a blanket on the floor.
The next morning I did a final cleaning of the property and headed to closing. I cried the entire drive to the attorney’s office. But, what was more shocking to me is that after closing, I felt the need to immediately leave Atlanta. The idea of no longer having my Atlanta home gave me severe anxiety.
I though this response was very unusual considering I’ve sold multiple properties for several years as an investor and Realtor. At the time, I had a primary residence in DC and a second residence in Florida, but this was the first time I ever sold a HOME that I lived in.
Yes, I cried over this little 650+/- sq ft condo. So the next time you are negotiating with a homeowner, imagine the possible anx and be tread carefully.
“Be cautious with your approach, but don’t lie to your potential seller.“Dana Ash-McGinty
Don’t forget, you are building a relationship here. Referrals can be a big part of your business.
On the flip side, don’t excessively complement the property to the point that the seller begins to wonder just how many other people would be dying to purchase their home.
Simply state the facts, cordially and professionally:
- You’re interested in the house.
- Here’s what you’re offering.
Here’s an example of a letter you might send…
July 23, 2020,
Dear Mr. and Mrs. Loving,
Greetings! You are receiving this letter today because I (or my spouse or partner and I) have been an admirer of your home for the past X years. I am interested in knowing if you would consider allowing me to purchase it. I realize it is not currently on the market; however, I am prepared to make an offer that I hope will convey my capacity to facilitate a speedy close of escrow.
If you would be open to selling your home, here are some specific components of my offer:
- No brokerage fees
- Buyer to purchase property in as-is condition with no requests for repairs
- No appraisal contingency necessary
- Seller to lease back property for 30 days at no cost
Please feel free to call me at your earliest convenience. I look forward to speaking with you!
“No appraisal contingency necessary”: Know your numbers or be sure to include enough time for an appraisal during your buyer contingency period.
“Seller to lease back property for 30 days at no cost”: You can get your ass handed to you if the seller, now your tenant doesn’t move out. This will create a landlord/tenant relationship and you will have to use landlord/tenant protocols to remove your new “tenant”. I would suggest you confirm a move-out date (two weeks or less if possible) and consider paying for, reimbursing and/or and booking the moving company to have a little more control. But, be sure not to give the seller any reimbursements for the moving company until after they have vacated the property.
You never know what will grab a homeowner.
In addition to the incentives listed in our letter above; Here are a few more things I’ve done to make an offer more attractive:
- A photo and personal letter may win over a sentimental seller.
- A pre-approval letter could be your in with a financially weary seller.
- An offer to pick up the closing costs and/or moving expenses can look very attractive.
- Arrange for a quick close– say a 14-day (or less if possible) escrow.
- Use a little humor. Offer an atypical price. In a bidding war, offer an atypical price of $623,456 instead of simply $620,000.
Think of what you can do to strengthen your offer; then put some of it in writing.
Even if you are willing to provide all the preceding incentives, don’t offer them all at one time.
Figure out the 3-4 things you would be willing to offer and start with 2-3. This will leave you some additional negotiating power.