Why you won't win your dream house with an offer letter (and what to do instead)

Why you won't win your dream house with an offer letter (and what to do instead)

Transcript

Hey friends.

We are here today not to talk about startups, SaaS, onboarding, or of the things that I normally talk about on this newsletter, but we're here to talk about real estate.

Now, if any of you have tried to buy a house or are still struggling to find the perfect home for you in this crazy competitive market you will know that if you don't have money it's going to be really hard to beat out all those multiple offers.

I live in Seattle and I've heard people bidding on houses with 10, 12, 15 other offers for hundreds of thousands of dollars over the original asking price, which crazy if you think about it.

But never fear. I'm here to talk about today an email that I use to win a house in 2014 despite not being the highest offer.

You could argue that the market's been a little different since then, but I actually sold a house last year and someone else wrote me a letter.

And I can tell you exactly why that didn't work and why my letter worked in the first place.

We're going to break it down and hopefully if you are trying to buy real estate or have friends that are trying to buy real estate you can pass on this template and it can just be our little secret.

Before I break into this template I want to give you a little bit of context about why I was buying and what the situation was that I set up before I even got to crafting this letter.

I was living in a pretty tiny house that was probably just too small for my husband and I.

He was working from home, I had a job 15 miles away. It worked for us, but he was consulting at the time and we were just really outgrowing the space.

We had a pretty flexible budget. We had money saved up. We went looking. We found this house. We were floored and we said, "This is really our dream house."

But then when our real estate agent called in, our heart stopped because he informed us there were already 2 people that had scheduled inspections.

Now, everybody that I knew who had brought a house at that point had never heard of this, which nowadays in 2018 it's pretty commonplace...

Either you wave an inspection or do them before you even bid on the house just to make the process clear.

But back in the 90s when my parents were buying homes with 10% interest rates they would have heard nothing of the sort.

So we were thinking in the back of our head, "How can we leverage this opportunity to show that we are the right buyers of this house without having maybe the deepest pockets?"

Because there's always going to be someone that's richer than you that has more money to spend, who's an investor who wants to bulldoze it down and build a townhouse or what have you.

That wasn't the case here, but we were trying to figure out what can we do to leverage and show that we are the right buyers of this house. 

Our real estate agent talked us through the multiple options, like...

We could throw down a lot of earnest money to show that you're serious.

Or he could go and hand deliver the offer and we could do the inspection, but then he mentioned off hand, "You could also write a letter too."

I was like, "A letter? What do you mean?"

He's like, "A letter that introduces yourself and says why you want the house."

And really what it means is when you're going through a house offer there are 50 pages of legal documents and then you have this hand typed letter and it's probably just a nice respite in order to not have to initial or sign or date anything.

It's just a letter from somebody, from a person and it makes it seem it's not just about the number, but that there are people attached to the offer in some way.

I was, "Alright. I can try that. I write email all day."

I wasn't consulting like I am now, but I worked in marketing and outreach.

I wrote a lot of email [campaigns] and I'm thinking, "Well I can get most people to do something. Let's give it a try."

When I Googled, I got terrible, terrible examples. Just top of funnel content from crappy real estate agent blogs about letters and none of them were really resonating to me.

I came up with my own, I deployed it to the owner and what ended up happening was that we won the house.

I'm sitting in the house right now and we paid $35,000 less than what the highest bid was all because of this letter.

Not to say and we'll get into that a little later, the email was the one that made it, but the email was the communication method that we use to communicate an irresistible offer to the owner that she could not refuse.

We're going to walk through some of that at this point.

But before you even write this letter you really have to understand who it is that you're talking to.

If you're trying to buy a house and you know the owner's name, Google them.

Find out everything that you can.

In this case, I knew that this woman, this owner was a divorced mom. She has a teenage son and I made observations when I was touring her house. I noticed that her closets were just packed full of stuff to the point of knowing that she could not comfortably move and not be frazzled in the next six weeks.

I went home, thought about the things that we had to offer her and the thing that we could do was we weren't planning to sell the current home that we lived in.

Basically, we gave her the irresistible offer of [moving] when she wanted to because we didn't have anywhere to go. And obviously [set limits because] we didn't let her live rent free for six months so she could pack up her shit.

But there was an agreement there, right? That was the irresistible offer that we came with.

Before you write anything before you even think about deploying this technique, always think about the offer because if you don't have an irresistible offer there is no email that you're going to write that is going to make a difference when it comes down to presenting your offer.

In this case, we'll go through the template.

"Thank you for considering our offer to purchase your home."

It's a bland statement if I were doing it again in my copy writer eyes. I would probably come up with something a little bit more snappy, but again this was just based on information that I had in 2014. On the internet I'm sure it's much different now.

We currently live in X city in a type of home and are excited for the possibility of whatever the benefit of buying a new house is. You can use this.

I'm going to go down to the example, which will make a little bit more sense.

It says, "Having this home would mean an easier and toll-less commute from my job as a program manager for Microsoft."

I don't work for Microsoft. Never did. "It's going to allow my husband Jake," that's not my husbands name, "Ample office space to work from home and run his consulting business." 

"We were drawn to the well designed kitchen, the wrap around windows on the top floor and the immaculate landscaping. Jake is excited to utilize the crawlspace for his woodworking workshop while I look forward to cooking many holiday gatherings in the future."

A lot of this is leading up because this is a stranger. This is a cold email that you're sending.

They have all of your legal documents at this point.

They know the number that you're going to give, the earnest money, a type of loan you have, the relationship or the camaraderie that I have with your agent because they usually at this point had been on the phone, talked, gotten first impressions of each other.

In this case, this is where the offer is.

"We don't plan to sell our current home, we're happy to close ASAP and give you up to three months to pack up your belongings rent free. We look forward to hearing from you. Thanks for your consideration."

And then add the signature block at the end.

If I were writing this today I might have changed the order of this and maybe put the offer way up at the top because people don't have time.

But in this case this email has worked for me.

It worked for a friend that was buying Queen Anne at this point and I also want to tell you about when a letter like this doesn't work and what happens when there is no irresistible offer that's in there.

I ended up selling this 900 square foot rambler last year and I made out pretty well with it.

As a business owner, we're always dabbling in different industries and I was a property manager for 3 years and I just really wanted to give it up so I can focus on consulting and doing other things.

We weren't attached to it at that point.

We had not lived there for three years and when we put it up for sale we didn't really know what to expect and we didn't know that the supply was so crazy in Seattle.

When we got bombarded with 15 offers we were just floored and it took probably 3 to 4 hours to sort through all the paperwork. To be honest, most of them were investors.

It turned out to be a lot about the money, but we did get one offer that was from a family and they did end up writing me a letter.

Out of 15 offers, they're the only ones that wrote me a letter. I do remember that.

I remember this so clearly like day.

They were a couple. A husband and wife. They had a toddler. The wife was pregnant and they really wanted this house, but I can't remember the details.

They [talked about]  what they liked about the house or what they were planning to do with it. They did use this template pretty clearly and succinctly the way that I would, but they didn't have an irresistible offer in it.

For years I was telling people, "This email is what got me this letter," when that is actually not true. It's the offer that got me this house.

The email was just the communication method to start the negotiation process to close the offer and make it a done deal between two negotiating parties.

I didn't end up selling the house to that couple. I ended up selling it to an investor to the person that honestly not necessarily paid me the most, but the one that made it easiest on me to close the deal as fast as possible, which those are things that you can leverage when you're trying to sell a home or buy a home in some way.

Just making it easier and making it in the benefit of the owner to sell it to you because real estate is confusing and frustrating and most people don't want to spend the time to deal with it because it's a very financial and legally taxing process.

Whatever you can do to make it easier for an owner if you're trying to buy a home it will make this 1000 times easier.

Hopefully, this helps. Share it with anyone that is trying to buy a home. Share it with family members or try it yourselves if you're trying to buy a house in this market.

If you want my personal opinion on the real estate market I would say just don't buy, keep renting and keep doing what you're doing because I literally think that there's going to be a recession here...

But we're not here to make financial projections on this newsletter, we're just usually here to talk about email, SaaS, startups, and onboarding. 

But thank you for indulging me for this little foray into a different topic and I will talk to you next week.

Thanks a lot. 

Does YNAB.com give me total control of my money? I put their emails to the test

Does YNAB.com give me total control of my money? I put their emails to the test