Offer price in the letter

17 Replies

I saw a wholesaler on the site use a letter like such: "hi my name is XXX. I want to buy your property at 123 Main Street for $XXXXX$" She put an offer price in the initial offer. And the offer price was 45% of the ARV based on comps she found. She looked up every one of the properties beforehand. What does everyone else think about this strategy? One of the biggest objections I get from sellers is this Seller: "yeah you sent me this letter about my property at 123 Main Street" Me: "yes thank you for responding blah blah" Seller: "so what is your offer" That seems to happen more times than not. Question 1: is the offer price in the letter a good strategy Question 2: if not, how do you overcome that objection from the seller

I think adding a price into the letter is a bad idea for a couple reasons.

1. You have a higher probability that the seller will call with a sale price in there. For all they know they will be getting market value.

2. You may have offered too much in the letter which is going to make negotiation harder.

3. You're probably sending out quite of few of these letters. I don't think it would be worth your time to do an evaluation of every property before sending them a letter.

Sounds like a lot of extra work.  Would be interested in the results to see if it was worth it.  Wouldn't be viable if you are sending out volume.

Frank

I've toyed with this idea.    I would only do it for "driving for dollars" houses.  There's no way I could justify the time spend doing it for a long list of houses I've never driven by.

If I wrote one like that, I would probably run comps, and put the offer in the letter as a range, between worst case, full gut offer and cosmetic only offer.  It would read something like this:

Hello Mr./Mrs. Seller,

I've been looking at your house at (address) for some time, and would like to buy it from you.  I would be able to offer you somewhere between $40,000 and $70,000 depending on the condition and how fast you would like to sell.

Call me blah blah blah

Disclaimer....never say in a letter you've "seen" or "driven by" someone's house if you haven't.  They will ask you about it if it's in the letter.  And you don't want to start off lying. 

Thanks for the reminder about this :) I may write some on some D4$ properties :)

I don't like the idea of putting a dollar figure in the letter.

1. If you have not been in the property, then you cannot know all the issues it has. If you send the seller a letter that says I want to offer $40,000, then you see the property and decide $40,000 is way too high, it will make the seller angry - like bait and switch.

2. If you give a range, they will expect the high end of the range. $40,000 - $70,000 reads $70,000 to a seller. Coming in at $40,000 will again seem like bait and switch.

3. Giving them a dollar figure may be more than they are expecting. Why pay $40,000 when they are only expecting $25,000?

then how do you all overcome the objection from the seller when they get on the phone expecting you to have an offer right off the bat 

Originally posted by @Devan Mcclish :

then how do you all overcome the objection from the seller when they get on the phone expecting you to have an offer right off the bat 

Why would they expect a number over the phone? Does your letter indicate that you will make them an offer sight unseen? Do they really expect that someone would have a price to offer having never stepped foot inside of the house?

My guess about the letter that you saw is that the wholesaler is trying to get a response by putting in a price that is high enough to get a phone call from but way higher than they will end up actually offering.

Devan Mcclish I think you're talking about me ::blush:: yay I'm BP famous now! Jk lol. That's why I usually put a lower offer in the mailing. And I use the current estimated value that listsource offers when you purchase a new list. It's like .02 cents extra for each name so you're not going through each and every lead to get a current ARV. I've found that the estimated value is usually not that far off from the true ARV so if they accept 45% it's the same as if they called you for an offer and you tell them a price over the phone. Most times, you'll notice that these properties are really not in the worst condition. These sellers live in their properties so usually they're not living in filth. And if it's a VERY bad condition property it's as easy as "Wow this property is worse than I thought. Look Mr Seller I'm confident I can buy your house and still make a little bit of money but the price is going to have to be $X. That (insert biggest rehab issue) right there is not something we see normally in houses like this." Most times these sellers are tired of losing money with these properties. They will accept your price. And if they don't accept it immediately, they WILL call you back. Like I said, they are tired of losing money. Also, by offering 45% you have a built in cushion for rehab. And if the property happens to need no rehab, that's more profit for you.

@doug no the letter says nothing about an offer. However, a lot of people expect me to have seen the place or driven by it at least that's what they say to me and when I say I need to look into it they don't like the fact that I don't have an offer. In fact as I'm typing this I just got another call from a seller saying the same thing

Doug W. If wholesalers went to see every house that a seller calls about, we'd all be out of business from sheer exhaustion. The offers are low enough so that there is a cushion in case the property actually needs a gut rehab. Also, my market is very competitive. A property with or without rehab at 80% ARV (not minus repairs or fee) goes FAST. I've had two sellers accept the blind offer price. And I've kept the blind offer price exactly the same because the offers are low to begin with. Why lower an already very low price? Why bait and switch? Most times I'm actually INCREASING my price over the phone because the seller thinks it's too low (which it is).

@Devan Mcclish

I know what you mean.  I've gotten that.  Seller: "You sent me the letter but you haven't seen the house?"  My new standard response is "I've driven by the property but I need to do a quick inspection before determining the best offer I can give you.  Is there a good time we can do this?"

@Ana G.

Have you always put the offer amount in your letters?  It would be nice to know if you didn't then you did and if it affected your response rate.

David W. So far I've put offers in two separate mailings and got one deal off the first and two deals off the second. Both times I sent it to a list of 1,000 names. I've gotten WAY more leads off the non offer letters but there's a lot of sifting and calling back and negotiating to get the same number of deals from just putting an offer in the letters. I'll continue to do some offer letters and more non offer letters since it's worked well for me so far.
Devan Mcclish Sorry if I hijacked your post! It just seems that so many people are against blind offers but it's worked so well for me I just can't keep quiet about it right now.

@Ana G.

I like it!  Maybe you've found a short cut that cuts through all the garbage.

@Ana G. no that's perfectly fine I like hearing both sides. The biggest objection I get is that I don't already have an offer. And this would differentiate myself in a very competitive market. And I'm not wasting time. Yes I might get less calls but they might be more qualified leads. Is that how it is for you? Have you had any downside to the letter? 

So far the only downside is that you're going to get a lot more "wtf is this offer?! I wipe my a** with this offer!" but the upside is that for the people who ARE interested, the negotiating is already done (most times you'll have at least ONE interested seller). Also, in my opinion it's totally fine to use a voicemail for these leads because most everyone will leave a message. It's either an angry message or an intrigued message. It's almost like a push to start car. The works already been done for you. All you have to do is get the contract signed asap and you're well on your way to a check.
Also I hate those "ok so what's your offer" because it's like all those people already knew they wanted well above retail and they just waste your time making you hang up and call back and leave a message and hear them talk about how crappy your offer is. Like David W. said it's almost like a shortcut.

I agree that getting all the excited calls from people saying "what's your offer?" because they think you're going to pay full retail, cash, and close within the hour is exhausting.  If this is working for @Ana G. I would stick with it. let us know how the numbers work out over a longer run to see if it's a viable strategy.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.