Article Updated 5/9/09; The piece was initially written in March, 2006.
In this post we share some ideas about finding and contacting owners of homes in pre-foreclosure. As the housing market remains shaky, there are countless opportunities for investors to find great deals. Targeting pre-foreclosures is just one strategy you should have in your arsenal; remember to focus on expanding your investor toolkit.
The Three Marketing Options for Pre-Foreclosures
- Door Knocking – This method is terribly time consuming and represents the option that will have the lowest likelyhood of ending in a deal. On the plus side, getting out and door knocking will help you to identify the characteristics of abandoned houses.
- Prospecting with phone calls –
You’re going to spend a lot of time calling people who’se numbers are no longer working . . . in fact, Jim claims that this method yields only about a 30% response as far as listed numbers go. The ones you do talk with usually aren’t happy to be on the phone with you, and more likely than not, will end up cursing you out. Fun!
- Sending Mailings –
BY FAR, the best way to market to foreclosures is by doing mailings! The idea is not to focus on those owners who are still living in their home, but those who no longer live there. The ones that respond are just icing on the cake.
A Focused Approach to Using Pre-Foreclosure Mailings
The idea is to have the post office tell YOU where the ABANDONED houses are, for just .44 cents!!!
Abandoned owners have no emotional ties left and once you find them, nearly 100% of the time they will sell for payoff. Here is a list of steps you must take to be effective in your snail-mail marketing:
- Use plain white legal size envelopes. – Bright colors piss owners off as they think that you are bringing attention to them.
- Use a regular 1st class stamp – A metered stamp looks impersonal, so stick to a physical stamp.
- HAND WRITE the name & address and don’t list “or current resident” – In fact, have a female do that part. According to Jim, women get a 50% better return rate than men in his market. Supposedly the hand writing is less intimidating.
- The return address must be a home street address and NOT a PO Box or work address – In addition, do not put your name on it. If they see a name and they don’t know you… it gives them a reason to not open it.
- Use a stamp that says, “RETURN SERVICE REQUESTED” – This is an extremely important step. Even though it is a 1st class letter, the post office is slow to return letters without it. Supposedly, 15% of all the foreclosed houses are abandoned. In fact, 30% of the time the post office will return the letter with the owner’s forwarding address printed on the envelope!
Following these steps should get you between a 2% and 8% return call rate on top of 10-15% returned letters to follow up on. Just make sure the letter you write is good.