Seller Marketing: The Direct Mail Fail

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Back in April, I wrote a post about using direct mail and door knocking to acquire more distressed properties (at the time I was buying exclusively at the auction and off the MLS). In it, I promised to keep BiggerPockets readers updated on my progress with these campaigns. Well, so far, it’s not going well. While I’ve scored a few small victories with the door knocking (more on that at the end of the post) the direct mail campaign has been a complete failure.

Why do I consider it a failure? Because I sent out over 5,000 letters, got 18 responses and just 1 deal (a short sale that may never get accepted by the bank). Here’s a breakdown of the list:

  • Approximately 3,000 letters mailed to people that own their homes free and clear.
  • Approximately 2,400 letters mailed to people that bought their homes in 2006 but are not in foreclosure.

By now you may be thinking – why didn’t I just mail letters to homeowners in foreclosure? After all, they’re motivated right? Well, I figured in a big city like Phoenix with over 14,000 active foreclosures they’re already getting tons of mail from Realtors, investors and bankruptcy attorneys. Why give these homeowners more paper to recycle?

With free and clear homeowners at least there are no banks involved. And for those that bought in 2006 but aren’t in foreclosure – well, they’re presumably underwater and may consider walking away via short sale. If the right investor comes along (me) they may take action. The best response I got was from the free and clear list of homeowners. I received 10 calls. Unfortunately, none of them were very motivated to sell. The 2006-homeowner list net 8 calls and 1 deal.

I hired Michael Quarles at Yellow Letter Mail to write, stamp and mail my letters. And let me say that him and his team were amazing – affordable, prompt and responsive. Their yellow letters look just like someone actually put pen to paper, on the page and envelope. In no way do I think they’re to blame for the disappointing response rate.

I have a few theories on why the campaign was ineffective. It could be that there weren’t enough motivated homeowners on these mailing lists. Maybe I outsmarted myself. Or, perhaps I didn’t communicate my message well enough in the body of the letter. Regardless, I think it may be more effective to send letters to people that need to sell (i.e. homeowners in foreclosure, absentee homeowners).

As for the door knocking, both my business partner Manny and I haven’t closed a deal yet, but we’re getting close. We’ve made contact with several prospects and in the end we may be their only option to foreclosure. I’m convinced that in this day and age of social and electronic media a good old fashion face-to-face encounter is the most effective way to find a profitable deal.

About Author

Marty (G+) is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.


  1. Sounds like you have done your homework on tracking your marketing endeavors to see what works and what doesn’t. With the cost of postage now days, sending stuff through the mail seems to be a costly waste of time & effort. If you had email lists for the area, it might change your response rate somewhat and be a whole less costly. I prefer the face to face method as well, but it may be going by the wayside. Many of the younger generation are used to emailing or texting. They can remain unknown at their end and converse with the whole world. There are even REI groups that do not hold live meetings any more. Instead they send everything out by email or have everyone join in on a call or webinar. That is not my ideal of networking. One other item you might want to add to your marketing as well as tracking the results is word of mouth advertising. You spread the word to everyone you meet what you want to accomplish and pay a referral fee for any business sent your way.


    • Dale, I’m not convinced direct mail is a waste of time and money. It’s a numbers game. Like many have pointed out here I think it was my list.

      Getting an email list is tough and I’d probably end up in their spam box anyway.

      And be careful with referral fees – it’s illegal in Arizona to pay someone that isn’t licensed for a deal.

      • When I was a licensed real estate agent I used the direct mail and got one response out of 1500 letters sent. Burnt me out on that marketing option.

        Arizona law: Illegal to pay referral fees if not licensed. Could you refer me to the site on
        the internet that shows this law? There have been numerous discussions about this on BP and laws get cited but can’t be verified. Perhaps I should call it an incentive fee for sending business your way.


        • Dale, this is taken directly from the Arizona Department of Real Estate’s website:

          Referral or Finder’s Fees:

          Referral or finder’s fees for residential sales or leasing may not be paid to an unlicensed person.

          Only a licensee may receive compensation resulting from a real estate transaction and such compensation should be paid at the direction of the licensee’s broker.

          And here’s the link:

        • The link pertains to licensees – they are not allowed to pay a referral fee to unlicensed individuals. A real estate investor can pay referral fees to whomever they want to. If you are licensed in the State of Arizona, then you would need to follow this regulation.



          This means if you’re involved in a real estate transaction and are going to get paid you MUST be licensed with the Arizona Department of Real Estate. It doesn’t matter if you’re a Realtor or investor.

          Here’s how to legally compensate a non-licensee:

          1. The non-licensee gets a property under contract in their name, or their LLC’s name, and writes “and/or assignee” next to their name on the offer.

          2. The non-licensee “assigns” the contract, for a fee, to their buyer. This fee can be paid through escrow at closing.

          3. The non-licensee gets paid legally for their efforts without any cash out of pocket and without violating the law.

        • Marty:
          When you click on your link – it has a column header that reads:

          “General Information for Licensees”: Then you scroll down to referral fees. Therefore, this tells me (and having held a license for 10 years) that this is a directive from the State Real Estate Division “to Licensees”. It does not read to the general public or to all residents or to all conducting business in Arizona. It is a directive that has to be followed by licensees. Because they see this, Realtors think it is gospel for others to have to follow. Just because it is illegal for a licensee to pay an unlicensed person a referral fee – it does not make it illegal for unlicensed individuals to pay other unlicensed individuals a referral fee. As I have stated there are numerous discussions about this topic on BP forums.


        • You must be licensed to list a property for sale that belongs to someone else, & in order to qualify for a commission for bringing a Buyer & Seller together you also must be licensed. But I am talking about paying referral fees not a commission for selling a property. Jack sends me a referral who buys my house – I pay him $200 for referring the Buyer to me.

        • Dale,

          Go back to the link and click on the GENERAL INFORMATION FOR CONSUMERS tab. You’ll find the exact same language listed there as well. It is a directive that must be followed by everyone, licensees and consumers alike.

          I just spoke with the lead auditor of the Arizona Department of Real Estate. He made it very clear that non-licensees can not be paid referral fees, finders fees, success fees, or incentive fees. Violators face fines and criminal prosecution. I encourage you and anyone else reading this chain to contact the Arizona Department of Real Estate at 602-771-7799 and ask to be transferred to the auditing department if you disagree with me.

          I have no idea what the laws are in other states, but in Arizona if you’re paying referral fees to non-licensees then you are breaking the law.

      • At an AZREIA meeting last night, I had occasion to “consult” with Mark B. Zinman, Attorney and Partner at Williams, Zinman & Parham P.C. (He says to say “Hi, Marty!”)

        Mark says you are absolutely right on this issue! It is, indeed, illegal in Arizona to pay someone that isn’t licensed for a real estate deal.

        I sparked quite a lively discussion during the question & answer period of the meeting. Apparently a LOT of investors working in the local market aren’t aware that the payment of referral fees to non-licensed individuals is a no-no. The expert panel discussed the “clever” work-arounds that “birddoggers” are attempting, such as claiming to be paid for, say, sweeping driveways, and getting caught.

        Heck, the professional panel said that even using the words “bird” and “dog” together in Arizona while working real estate is probably NOT wise.

        • Here in North Carolina, unlicensed individuals my pay referrals to unlicensed individuals. Any transactions involving a real estate agent, however, may not include referral payments.

          We began investigating thoroughly when we wanted to pay referral gifts to our tenants anytime they brought us a customer. Because you must be a licensed real estate agent to manage properties you do not own, we have a full service real estate company with licensed agents to oversee all property management. The tenants are, therefore, managed by licensed real estate agents. Because of this, NC law states that tenants may not be paid any referral fees nor may they be given any monetary compensation including rent reductions, etc.


          Know the laws of your state. You can get by with whatever you can get by with until you wind up in court. You never know when you’re going to wind up in court, so KNOW and OBEY YOUR STATE LAWS!

  2. Marty –

    I have been doing direct mail for many years with great results, and I can tell you what your problem is. It’s your list. You don’t know if any of the people are even remotely motivated on these lists.

    Free and clear mailings go to a lot of people that have paid off their houses. Most plan to live in them, and many of these folks are retired. There’s really no reason to think that they might be motivated sellers just because they own the house free and clear. And if you were to find someone on this list that wanted to sell, they would most likely want retail. Sure there might be exceptions, but in general this is the way I have found that it works out.

    As far as the second list goes, I never did understand why a list would be built around the time a property was owned, because it has nothing to do with equity. A home owned for only a year or two could have very well been a cash sale. By the same token, a house that has been owned 20-25 years, could have been mortgaged over and over and have no real equity. Time owned really doesn’t have much to do with equity.

    I always use equity as my main parameter, and I market primarily to what are two of the most motivated seller groups — probates and absentee owners.

    Here are the parameters I use for my absentee owner lists:

    In my area the average home price is under 160K. I will ask for the list source to send me homes valued at between 60k and $250k with at least 50% equity. This could be a home someone bought last week for cash, or a home owned for years where the owners have paid down the mortgage. I will also omit the zip codes for bad areas and war zones. Homes in really expensive areas will automatically fall outside of these parameters. I want to buy homes that are in the price range most retail buyers are looking in.

    As I said, the two groups of people where I find the most motivated sellers are absentee owners and probates. A large amounf of absentee owners will sell the house at some point. They may get transferred and decide to be landlords initially. But a couple of years down the road, they will be fed up with trying to manage this property and will then will get very motivated. I bought a house about a year ago from an absentee owner I had been mailing to for 3 years.

    Probates all have a house they want to sell. It’s just a matter of whether it is a nice house they will list (and may or may not sell), or whether it needs a ton of work and they just want the money sitting in the house. I love probates. They never want the house, only the money in the house.

    With a different list, I think you could have much different results. Don’t give up on direct mail. It works great. The secret is to pick a good list with potentially motivated sellers, and market to them consistently.


    • Sharon, excellent points, especially on the free and clear homeowners. Every person that responded to my letter wanted retail or above for their property. A few questions for you…

      1. Where do you get your lists and how do you know these homeowners have 50% or more in equity? Doesn’t that require title checks on all of the properties? That seems very time consuming and expensive.

      2. How do you find your probate deals and make contact with the heirs?

      I have a huge list of absentee homeowners, about 75,000 properties in the greater-Phoenix area. I’m going to get it down to around 1000 in select areas and send out another batch. I’m not giving up. Thanks for the advice!

      • Hey Marty-

        You don’t need any title work. The professional list companies can filter your list for you. Regarding your large number of absentee owners, are these only out of STATE absentee owners? You can narrow that list down that way, and these are really your motivated sellers.

        In the beginning, I got my absentee owner list from our local tax assessor’s site. The list was very reasonable, however you couldn’t filter it by the amount of equity in the house. It had everything else. I could leave out zip codes that were in bad areas.

        About 18 months ago I started using a mailing service and they provided the list as part of the service. You can buy your list from though. You can filter your list so that you get out of state absentee owners, by the equity in the house, the original mortgage amount and many other criteria. I had to call and get some help figuring a couple of things out. I need to update my list so I am looking into this myself.

        A lot of mailing services have a list service included. If you are interested in mailing postcards to your absentee owners I can tell you about a great resource.

        Where probates are concerned, every area is different. Where I live, they are published in the newspaper once a month so they are free (or they cost $1.00 if you don’t subscribe).
        Some areas have them online, but others you have to go to the courhouse. Just call your local probate court and ask how you can get a list. Where probates are concerned, I only use white letters in hand addressed white envelopes. I get a lot of leads from probates.

        Everything I need is in the newspaper. The name of the deceased, the property address where they resided, the executor/pr’s name and address. One thing to note is the “property address of the deceased”. This may or not be their home; it could be a nursing home or something else. After you do this for a while, you will recognize the nursing home addresses. Anyway, you have to pull each one up on the tax assessor’s site and verify that they have a house (that you want).

        I put them into an Act Database and do my mail merge from there.

        • Hi Sharon,
          You mentioned you use a mailing service to do your mailings…..mind sharing who that is?

        • Sharon,
          Is that SalesTeamLive? I’ve wanted to use them but the monthly fee (forced continuity) as it’s called in marketing has forced me not to use them. And they don’t seem to have a pay for what you use option.

        • I’ve called Sales Team Live twice wanting to purchase their service and for some reason they don’t return my calls. Must be making enough money, God bless them.

  3. Very interesting article. Im impressed that you are honest about your direct mail efforts. I started direct mail about 3-4 months ago, I got a list of absentee owners. I decided to hand write them myself. My goal was to do 100 a week and I cud do approx 20 an hr. My first batch of 200 I was surprised to get over 30 calls and I ended up flipping an old fixer in a bad area for $12,000 and I paid the seller $10K Since then I’ve sent out a few thousand and have a stack of warm and hot leads for lease options and wholesale flips. I hope to close a few more deals. It is a big gamble but I know it can pay off big. I now have my sister writing my letters and I pay her 25 cents each. I get a huge response response rate between 15-20% Of course 99% are a waste of time. My best deals have come from my bird dogs. The contacts I’ve made and prospective deals from my yellow letter campaign I believe will pay off .So far
    with the $2,000 profit I made, Im still in the black. Let’s make some MONEY

  4. Hey Marty, now that I see a copy of your yellow letter I can see a big part of the problem. You appear to be a business. You have a website. I suggest making the letter more personal wth a local phone number.I think the reason I get such a good response is I keep the letter short, to the point and that Im just a regular joe. Heres my exact copy: John and Mary, My wife Miriam and I would like to buy your house at 123 main st Fresburg CA Please call us, Randy and Miriam Phillips 555-555-5555 PS Please Call This short letter almost compells the home owner to call and I think that has to do with the curiosity factor. Also it needs to be in a small envelope thats hand written. And of course you need to start off with a better list. Anyway this is how I learned to do it thru Ron Legrand. Randy

    • Randy, that’s just the middle paragraph of the letter. In the introduction I explain that I’m local and the phone number is local. The envelope is also small and handwritten. The website is very basic with a contact form. Check out my website and you’ll see it’s very basic, doesn’t look like a “business” site. I think it’s the list.

      • Hey Marty,

        I’m going to take a small exception to your comment here. I think as Sharon said, that your list plays into it alot with the 100% equity folks & the year purchased, but it’s not the ONLY “problem” with your campaign.

        Over the last month, I’ve been working with a couple of other BP’ers following up on their inbound calls from letters on a particular campaign. Our total response rate has been around 5% (186) from 3333 letters so far to absentee (not just out of state), 40% equity, probate, and some commercial (apartments). The letters are short and sweet (and usually funny) and appear hand-written on medium note-sized yellow paper in small handwritten envelopes, stamped and sent from the BP investor’s address so it’s post-marked locally. Many of these folks have received SEVERAL letters from investors & chose to call us because the letter caught their attention. In my experience talking to all these responders, the NOTE or followup post cards got their attention to call us over the other investors, Maybe made them laugh a little.

        The exception to this format is for probate. Our probate letter is a little more formal, but still casual enough to not look “business-ey”.

        In my opinion, I think this type of marketing should be called “yellow NOTE”, not yellow letter, because I hear about letter sized envelopes & even the letters themselves going straight into the trash because it just screams scam/con/junk mail. I’ve heard this from some of the folks I’ve talked to in this campaign.

  5. Marty:
    Thanks for sharing your experience. And, way to keep track of the details. We can’t fix what we don’t track.

    We consistently buy and sell about 8 properties a month. By far, our best source of leads is direct mail marketing. Like everything else, direct mail marketing takes time.

    We mail to areas where we want to own. I don’t mess much with lists (other than free and clears) because, once they’re on a list, everyone has it. And, as Sharon pointed out, being on a list doesn’t necessarily mean they’re motivated. By mailing to areas where we want to own, we hit everyone and know that, when they call, we’re interested.

    One particular neighborhood where we mailed something to the homes every 4 weeks netted ZERO results for a year. We were just ready to stop mailing there when the calls started. In the next three months, we bought 8 houses there and have been buying in that neighborhood ever since.

    Don’t consider one mailing a statistic. Be consistent. Give homeowners time to learn who you are and that you’re still going to be in business six months from now.

    Use the great advice you’ve gotten in all these responses to tweak what you’re mailing and keep with it. Take it from me, the cost you put into direct mail can come back a thousand fold.

    Good luck!

      • We picked 4 neighborhoods and had 5200 homes that we direct mail marketed to when we started our business. For years, we hit them every 4 weeks. We now do only about 1500 post cards per month because our repeat and referral business is so strong. People know who we are. All of our purchases were within a 9 mile radius.
        Cost is about 39 cents per post card and we buy 3-5 houses per month from the 1500 post cards.
        It will take 6-9 months for you to start getting results. All marketing works – some better than others – but you have to be consistent.

    • Hi Karen,
      How many investors do you think only mail to their prospects once or twice then stop?? Also, I wonder how many investors do not follow up with sellers they’ve made offers to who’ve said no?

      • Tara:
        Great point. Follow up is a MUST! We have had people come back to us as much as 3 years later and ask if our deal was still good.

        Follow up with sellers until their property is sold, or at least under contract, to someone else. The sure way to kill a potential deal is to stop pursuing it.

  6. I type my letters with the website and business phone number because I think it gives owners the perception that I can actually buy their house instead of a regular person without much money. The envelopes I hand-write though. My response rate has been good. I have sent out less than 400 letters and did one deal. Your list sucks. You need motivated sellers.

      • Marty –

        I agree with Shanequa. I think there is a big difference between one of those franchised home buying companies, and a small company that buys houses. The fact that I actually have a company name and I present myself professionally that way, has never hurt me in any way. I am the face of the company, and I work hard to build relationships. They know from the start that I am a real buyer.

  7. Although I am new to the whole real estate investing biz, I am a self professed marketing junkie, and yes the list does make all of the difference when using direct mail. Also tweaking the message of your letter may do the trick. Another great idea is to do a split test letter A to x amount of addresses on your list and test letter B to the other half of your list and the one that pulls the most responses is the one you use for your campaign. A great resource on direct mail campaigns is Dan Kennedy.

  8. Marty,
    Sharon’s response is on point re your list and Karen’s advice on repeat mailings is also correct…To be successful with direct mail you MUST have consistent repetitive mailings, a minimum of 5-8 times. Karen’s 12 times per year is perrrfect assuming you can afford it! Your 1 and done attitude is common to people using direct mail for the first time and it is the reason many people say it does not work. However I challenge you to look at it this way:-

    Even with the WRONG list you still got a 0.3% response or 18 responses with a conversion of 1 possible deal! You got the phone to ring 18 times, 18 new leads without the physical effort of going door2door. With continued repetitive marketing over time, more of that 18 will convert + you probably will pick up few more responses..And that’s with a WRONG LIST! Can you imagine what would happen with the correct list? How long would it take you to door knock 18 interested leads, even if you got “I’m interested” every time you knocked on a door? And could you keep that up in any type of weather? Your door knocking campaign is multiplied 1000 fold every time you send out your direct mail piece (postcards, yellow letter etc), as long as the message is correct and the list is right.

    So did you have an epic fail or a minor setback? Keep in mind, you must have a continuous repetitive mailing, as verified by Karen, and you had a bad list to begin with, as Sharon will confirm, even for foreclosures.

    By the way, why did you mail to two different lists instead of one large list of the same type of seller?

    • Terence,
      Would you recommend mailing the same postcard/letter every month or switch it up?
      This past yr we’ve lost out on at least two deals because we only mailed our lists once…..lesson learned!!

      • Tara,
        The more followup messages you have after your initial postcard the better. However you can take 4 messages (your 1st postcard/message and 3 followups) and repeat them in series every 4 months. That’s what I do.

        However if all you have is 1 postcard, repeat it monthly. Constant repetition of the message, your name and your ability to solve their problem is the key!

  9. All of these replies are very interesting and I’ve learned a lot. Esp about following up with repeated contact letters. I am getting such a huge response to my simple and short yellow letters, sometimes up to 30% I def wudnt change that portion. These people respond best to a regular couple wanting to buy their house. My results are proof of that.. I suggest trying the simple joe letter and track ur results.

  10. Marty I’m not trying to be an internet troll or anything, but 1 series of mailers doesn’t do it.

    I just started this for of marketing with a list barely a fraction of that size and here is the results.

    200 Probates/Some F&C some not.
    1st Series- No calls period (Not counting getting cursed out)
    2nd Series- 1 Call No Offer
    3rd Series – No Call
    4th Series – 3 Calls 1 Potential Deal
    5th Series – 2 Calls No Deals
    6th Series -3 Calls 1 From Earlier (Now 2 Deals)
    7th Series – 4 Calls 1 Deal (Now 3)
    8th Series – 3 Call No Deal Yet.
    9th- 12th Series Pending

    Noted: Deal 1 -Quick Assignment $6000.00 from 4th/6th series Granted twelve series of mailers cost about $210.00 a series that equals about $2100.00 out. Gain $6000.00 Net $3900.00 Solid Profit.
    Noted: Deal 2 – Going back to closing estimated net 17,500 after cost. This should have been my 1st deal, but like most rookies I did not double close this one. Though the end investor was going to net over 90k after repair holding and resale. He was not happy about me making 20k on the flip and flipped out! Pun intended. Thank god I had 3 other investors chomping at the bits to get the deal so I’m going to be closing this one by end of the week.

    Now let do the math:
    Short List Cost me 8 hours of time locally to acquire $96.00
    Mailing Series that does not have to be paid for all at once $3900.00
    My out of pocket cost about $4000.00
    Deal one quick assignment $6000.00
    Deal two double close $17,500.00
    Gain $19,500.00
    BTW I’m not even counting the $1000 than my flaked buyer out up that is now all mine.

    Keep pounding the same list. Its worth it. a 1% response is typical but with some repetition you could have closer to a 10-20% response.

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