Yellow letter "issues"

Starting Out
13yFollow

Yellow letter "issues"

Jessica H.Pro Member
Flipper/Rehabber · Easton, PA · Member since 2013 · 224 posts · 36 votes

We just sent out our first batch of yellow letters to absentee owners that i hand wrote, basically saying " we noticed you have a house at 123 Main street, if you would consider selling please call us, we pay cash". So far we have gotten 4 calls and I sent them out 2 days ago so i thought that was pretty good!! However 3 of the calls have been people asking how we got their info., and a little disgruntled once they found out we would not be paying retail. So is this par for the course for letters to absentee owners? Or should I somehow in the letter be letting them know that we are looking for distressed properties or looking to buy properties cheaply? I guess that is the hard thing with mailing to absentee owners you never know why they might be motivated to sell , it is not always because the property is in disrepair so that was why I didn't include anything along that line in my letter. So do we need to just let this roll off our backs and say "next" or is there something wrong with the wording that makes people think we are somehow looking to buy for retail??? Thanks for any insights!

0Reply
59 views

Most Popular Reply

Derek W.
Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
13y

When I get a call I start out with right away answering the most common questions people have before they even ask. It gives me a chance to immediately build repoir and let them know I will be easy and unthreatening to talk to. It sounds something like this:

"Hi, this is Derek"

"Uh, yea, I just got this post card in the mail..."

(Interrupting I say...)

"Oh, you're the one! Haha. Thank you for calling. Let me explain really quick why I sent you a post card. I am a local land lord and I am looking to buy another house. I drove around to my favorite areas and wrote down addresses of two types of houses; ones that I wish I could own, and ones that need me. So you either have a pretty house that I would be proud to be the owner of, or a house that's needs lots of work that I feel may need me. I then searched the public records at the tax assesses office to see who owns the house. Then I sent you a post card. Let me ask you, is your house one of the pretty ones I wrote down, or one that needs my love?"

Then I shut up and listen.

3Reply
See this reply in the discussion

22 Replies

Jump to latestLatest
  • Lamar Cannon
    Investor · Austin, TX · Member since 2012 · 205 posts · 112 votes
    13y

    How many did you send out?

    0Reply
  • Jessica H.Pro Member
    OP
    Flipper/Rehabber · Easton, PA · Member since 2013 · 224 posts · 36 votes
    13y

    I sent out 80 letters.

    0Reply
  • Jessica H.Pro Member
    OP
    Flipper/Rehabber · Easton, PA · Member since 2013 · 224 posts · 36 votes
    13y

    I guess maybe we need to just explain a little more what we buy on the phone? Anyone have good words they use when a absentee owner calls from a yellow letter, ie. how you explain you don't buy retail but at a wholesale cost???

    0Reply
  • Ellis San Jose
    Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
    13y

    Jessica, this is just par for the course. If your goal is to generate volume phone calls vs. targeted, then being brief in your yellow letter copy will accomplish that.

    If you want more targeted then put it in your letter that you are an investor. It may still tick some of them off that you won't pay retail. It also may cause some not to call you because they anticipate a low ball offer or have a negative opinion of selling to an investor.

    If you are sending out 80 or so at a time just go for volume of calls & make the offers anyway. I see a "No" response as part of the negotiation process.

    An all cash wholesale offer is only one solution of many to solve a sellers problem & make a profit.

    0Reply
  • Kelly P.
    Orlando, FL · Member since 2012 · 113 posts · 26 votes
    13y

    @Jessica H. this is a topic that has received tons of comments in other posts and it appears you are like other YL investors - getting owners calling wanting to know how you got their info along with the tire kickers, "I may sell depending on the price." Yellow letters are known to provide a high response rate but not a good motivated seller rate or conversion rate. I know that statement will cause a stir with some YL devotees, but I am not to first to make that observation here on BP. Because this is a numbers game, YL investors like the response rate, hoping to identify a motivated seller.

    I don't suggest discussing your desire to purchase at a discount in any pie of marketing. Get them to call then qualify them as motivated or not. If you find you are not getting motivated sellers calling, tweak your marketing strategies.

    1Reply
  • Kelly P.
    Orlando, FL · Member since 2012 · 113 posts · 26 votes
    13y

    sorry for mistype. "discount in any type of marketing"

    0Reply
  • Ellis San Jose
    Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
    13y

    @Kelly P. Great advice! I am so happy you brought up the folly of leaning too much on the Yellow Letter or any tool as the "Holy Grail" of direct marketing. You mentioned 3 very important elements to measure in marketing:

    1) Response

    2) Target Audience

    3) Conversion

    Which when most people implement the Yellow Letter it scores high in only 1 out of the 3 you mentioned.

    Response rate doesn't pay the bills, conversion does.

    1Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y
    I listen to what they say. If I can tell they are not motivated, already have a listed property at retail, or are just calling around for free valuations, I say something like: if your house is in perfect condition, needing few repairs or updates, you're probably best served by listing with an agent. Buyers planning to live in the property and getting a home loan always pay more than I will, and agents are good and finding those buyers. I have an agent to recommend. That gets rid of just about everyone who was hoping for a miracle cash buyer paying over retail.

    I also push pretty hard to find out why people aren't listing their properties in my farms. All my farms are very active, with few DOMs and low inventory. Everything sells, including junk. So I'm trying to figure out what the motivation for selling is and why they are calling me. Sometimes it's a timing thing. Sometimes it's a privacy thing. Some people hate agents and would never use one (hard to imagine I know, but true). Some people need a one-call solution. Let it be known that listing your property is not a one-call solution. There are all kinds of motivations for selling, many of which are not price. Ask and listen. Ask and listen. Pretty much all there is to it. :)
    1Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y
    Originally posted by Kelly P.:
    @Jessica H. this is a topic that has received tons of comments in other posts and it appears you are like other YL investors - getting owners calling wanting to know how you got their info along with the tire kickers, "I may sell depending on the price." Yellow letters are known to provide a high response rate but not a good motivated seller rate or conversion rate. I know that statement will cause a stir with some YL devotees, but I am not to first to make that observation here on BP. Because this is a numbers game, YL investors like the response rate, hoping to identify a motivated seller.

    I don't suggest discussing your desire to purchase at a discount in any pie of marketing. Get them to call then qualify them as motivated or not. If you find you are not getting motivated sellers calling, tweak your marketing strategies.

    The numbers game theory in REI marketing seems to get the most support from those selling direct marketing. Surprise, surprise. One could probably really up the response rate on YLs by adding the line, "A neighbor told me you were going to be selling." But the response rate would really be mostly agitation rate. And probably wouldn't contribute much to the deal rate.

    I agree about not putting that you are seeking a discount in marketing pieces. I debated about this for years, especially after mailings that produced so many unmotivated callers. But I now see the value in all the calls. I have print advertising now, in addition to my mail marketing, and it generates a much broader range of sellers than my mail marketing. Taking those calls has taught me how to listen and filter sellers.

    0Reply
  • Ceasar Blackman
    Real Estate Agent · Orlando, FL · Member since 2013 · 270 posts · 40 votes
    13y

    great information in here @Jessica H. one small thing i think that might help would be something along the lines of "I can purchase your property in as-is condition".

    0Reply
  • Jackie Lange
    Investor · Central America, Panama · Member since 2010 · 423 posts · 293 votes
    13y

    If your only objective is to buy houses at wholesale prices, you're missing a lot of other opportunities with the few leads you get from yellow letters.

    You really need to have a conversation with the sellers to determine why they are selling and where they plan to go before you start making offers.

    If the house is in great condition, why make a wholesale offer anyway?

    You can:

    buy with seller financing at close to retail but with great terms so it will cashflow

    example, house is worth $200,000 and will rent for $1500 a month. You buy for $180,000 with payments of $1.000 per month no interest...

    master lease then sub lease

    example, forget about buying it. lease it for $1200, then sublease it for $1500

    lease option

    get an option then do the marketing to find a retail buyer. A Highest Bidder Sale is the ideal way to get buyers fighting over who will pay the most to buy the house. You make the spread.

    seller wants to downsize so you trade two of your smaller houses for this one. Seller moves in to one, and gets rent from the other.

    There many other ways to make solve the seller's problem and still make a profit!

    Real estate investing is not a cookie cutter game. You need to learn a variety of ways to solve real estate problems so you can customize solutions to fit the seller's situation.

    Look around your town. How many houses are pretty houses vs house many are ugly houses? There are probably more pretty houses. So you need to learn how to make a profit from the majority of the inventory in your town.... pretty houses.

    2Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    13y

    @Jackie Lange Jack Miller would be proud of that post!

    Pretty houses with no work is not a big topic here on BP.

    Wholesaling seems to be the majority hot topic, like the used car business: buy really low, sell quick to somebody.

    Purchase Option Investing with pretty hpouses is not talked alot here, as a Business Plan.

    "We Buy, Lease, and Sell Houses."

    "Cash Or Terms"

    "If you need to sell fast, we guarantee a written contract in 48 hours."

    Your tool box as a Transaction Engineer include leases, options, exchanges, sub2, wrap - aitds, land trusts, cfds, second mortgages, private 1st mortgages on free and clear houses, first right of refusals, etc.

    Learning how to negotiate and present these creative solutions to sellers is an art form.

    I learned from a 40 year REI vet when I was 28. That was in 1987 when interest reates were over 10%.

    The 5 steps in Negotiating with a Home Seller:

    1. Build Repore with the home seller.

    2. "We will only proceed if we are both happy with the deal" Avoid let me think it over excuse.

    3. Find the true motivation for selling. Take as long as needed for Step 3.

    4. Negotiate the money once the motivation is known.

    5. "What if" step, "What if I could get your sales price, but first lease the property for a while and then pay you off down the road, would that be worth talking over, or maybe not?

    Negative phrasing, staying the "reluctant buyer", using the "appeal to higher authority" ("I'd have to check it over with my business partner), all these tools are available to you.

    BPers, learn to be a Transaction Engineer and do something with most of your marketing leads! Cash or Terms!

    1Reply
  • Jackie Lange
    Investor · Central America, Panama · Member since 2010 · 423 posts · 293 votes
    13y

    Brian, Thanks...

    Lots of good leads getting wasted because BPers are anti-guru and won't spend money to learn how to turn those leads in to lots of cash and cash flow.

    What a shame.

    0Reply
  • Jessica H.Pro Member
    OP
    Flipper/Rehabber · Easton, PA · Member since 2013 · 224 posts · 36 votes
    13y

    Thanks everyone for your responses they are very helpful! I do think I will tweek my letter a tad. This is one stream of marketing we are beginning to implement not the only one. I think all the other options available to work out a deal are great once we get our feet wet a little here and I am able to learn more about them and how to implement them. Thanks again!

    1Reply
  • Derek W.
    Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
    13y

    When I get a call I start out with right away answering the most common questions people have before they even ask. It gives me a chance to immediately build repoir and let them know I will be easy and unthreatening to talk to. It sounds something like this:

    "Hi, this is Derek"

    "Uh, yea, I just got this post card in the mail..."

    (Interrupting I say...)

    "Oh, you're the one! Haha. Thank you for calling. Let me explain really quick why I sent you a post card. I am a local land lord and I am looking to buy another house. I drove around to my favorite areas and wrote down addresses of two types of houses; ones that I wish I could own, and ones that need me. So you either have a pretty house that I would be proud to be the owner of, or a house that's needs lots of work that I feel may need me. I then searched the public records at the tax assesses office to see who owns the house. Then I sent you a post card. Let me ask you, is your house one of the pretty ones I wrote down, or one that needs my love?"

    Then I shut up and listen.

    3Reply
  • Ellis San Jose
    Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
    13y

    @Derek W. , brilliant .

    0Reply
  • Jessica H.Pro Member
    OP
    Flipper/Rehabber · Easton, PA · Member since 2013 · 224 posts · 36 votes
    13y

    Thats great derek! Do you just do rentals?

    0Reply
  • Derek W.
    Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
    13y

    I flip or wholesale mostly and keep what I can.

    0Reply
  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    13y

    This conversation is like so many about YLs. Depending on the wording, of course, they often mislead the recipient, giving them the idea that you are just some average Joe who fell in love with their house. What does that translate to? I'LL PAY FULL RETAIL.

    In Marketing, messaging is everything. With poor messaging, you waste your time and the time of most the people who respond,

    As investors we are looking for people that are (1) motivated - time is of the essence, (2) owners of a distressed property, and (3) need CASH. So the messaging needs to SPEAK to THOSE people.

    Don't be afraid to tell people what you do and who you can help!

    2Reply
  • Shaun Reilly
    Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
    13y

    @Derek W.

    That is an amazing script you have there.

    Thank you for sharing.

    0Reply
  • Iraida Carrasquillo
    Carolina, Puerto Rico · Member since 2013 · 4 posts · 1 vote
    13y

    Derek W that was great! It's a little unnerving when receiving these phone calls. Your script sounds great. Thanks for the help!

    0Reply
  • Brian P.
    Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
    13y

    I'm with Jackie Lange on this one. When I was new at this we didn't have all this talking going on the net and when I tried absentee owners I was really the only one chasing them. My own personal goldmine.

    But one day it hit me after an owner contacted me that was a top retail price chaser that these people calling me did want to get rid of their property or some problem attached to it and were a business opportunity of some kind, so I got to thinking and came up with 7 ways to make some money off what I labeled wasted time contacts. And that led to me getting my real estate license but I found out there were many deals to be made without my license once I found out what they were thinking.

    You just need to have a fully stocked toolbox.

    One more thing is even back then I got the how did you get my info question. But I had a little fun with it and would answer I guess it's OK for me to tell you this now, my dad was a spy during the war and believe it or not the government keeps records on every one. You just need to know which government official to contact and what to say to them. I loved the long pause just after I said this.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free