A well-written real estate love letter can reduce a buyer’s purchase price by 1% – 10%. If we’re talking about a $1 million property, that’s $10,000 – $100,000 in savings.
At the very least, a real estate love letter can help you get a counteroffer when a seller receives multiple offers. Staying in the race is vital if you really want the property.
Yet most people, out of ignorance or laziness, don’t bother writing a real estate love letter when making an offer.
After every job interview, writing a hand-written note can make the difference between landing the job or not. Yet, few people bother to write a hand-written thank you letter either.
I firmly believe one of the reasons why it’s so easy to get ahead is because most people don’t care enough to try. Folks are kinda clueless when it comes to building rapport with others. Instead of first trying to give, it’s all about taking, taking, and taking some more.
There is no downside, only upside, to writing a letter to try and make a connection with the seller. The listing agent has a fiduciary duty to present all offers as is. Thus, the greater the connection you can make, the greater your chance of getting the best deal possible for a property you want.
Another person’s lack of emotional intelligence is your pot of gold!
How To Write A Real Estate Love Letter
The keys to a good real estate love letter are:
- Finding a common connection with the seller
- Increasing the perception that you are a dependable buyer who won’t flake during escrow
- Reducing or eliminating the perception that you are a profiteer/flipper
- Pointing out specific things you love about the property
- Describing why you would be the perfect owner of the property
- Sharing information you feel that will make the seller like you
- Keeping the letter to 600 words or less (two pages)
Below is an example of our initial real estate love letter we sent to the seller with a written offer of $1.55 million. The asking price is $1.99 million with the hope that it sells for closer to $2.1.
At the time, we did not know the names of the sellers, only the listing agent’s name.
Example Of A Real Estate Love Letter
My wife and I are interested in purchasing your lovely home. We live just a block away on the same side of the street next to Julia’s house (a neighbor they knew) at (our address). We first purchased and remodeled (name of our house’s original owner) home back in 2014.
The remodel was a labor of love for 1.5 years, but it gave us the experience and confidence to update and remodel an older house again. Not only did we remodel all bathrooms and kitchen, we also painstakingly landscaped the entire grounds.
We love living in Golden Gate Heights and know the neighbors and the neighborhood quite well. Because we work from home, there’s no need for us to commute downtown either.
In 2017, we were blessed with a baby boy and we are hoping to have another child sometime soon. Your family’s house seems like the perfect fit for us and our expanding family.
Further, the house is large enough to have one set of parents move in with us if need be. Our parents are in their 70s, and we would like to make preparations to take care of them when it’s time for them to need assistance.
If we are fortunate enough to buy your house, we would spend several hundred thousand dollars over the course of two years to update the house. We’d paint the exterior, get a new roof, replace the water heater and furnace, update the electrical, change the windows, update the plumbing, remodel the bathrooms and kitchen, and maybe even create a deck to enjoy the western sun.
It will be an extensive and arduous endeavor, but we plan to own the home for decades and take great care of it. Maybe in 20-30 years, when our boy graduates from college, he might be able to move in and start his own life there as well one day.
After working hard and saving diligently for the past five years, we are in a position to pay $1.55 million in cash for your home. We would then set aside $300K over the next two years to pay for the remodeling. There are always unexpected surprises that come up during rehabilitation.
As we have experience selling and purchasing several homes before, we are comfortable with a quick three-week close without any financing contingencies. We understand the uncertainty when it comes to selling a home, as we sold a property we owned for 12 years in 2017 to simplify our lives. As a result, we promise to make the closing process as quick and painless as possible.
The three weeks will give us time to have one of my contractor friends come by to inspect the house and move our funds from our investment accounts to our bank.
Thank you for your time and consideration. We look forward to hearing from you.
Sam and family
Review Of The Real Estate Love Letter
From the letter, you will notice that we made the following points:
- Made sure they knew we were neighbors.
- Made it clear we were long-term owners who planned to raise a family in the house.
- Highlighted their neighbor, whom we also know.
- Made it known we plan to rehab the house and take great care of it.
- By highlighting we plan to put in $300,000 to remodel the house, it makes them realize that we aren’t just spending the initial offer price. We also remind them how much time and work it takes to rehab the property if they do not sell.
- Empathized about the stress of selling a property and reassuring them we’d be a trouble-free, 21-day, quick close with all cash.
- Emphasized our desire to grow our family, since they were a large family with five siblings.
- Included our family holiday picture with our son who is as cute as a button.
After two days, the agent got back to me and said they were “very pleased” with our offer! Remember, the agent initially wanted to list the property for $1.99 million. Our real estate lover letter effectively negated any offense a seller may have taken by our low-ball offer.
The negotiation has begun!
Spend Time Writing A Real Estate Love Letter
Remember, the goal of your low-ball offer is to anchor low and negotiate your way to a higher price that is still below estimated market value.
The main goal of your real estate love letter is to lessen the unhappiness your low-ball offer might cause. Your letter should humanize your offer and make it clear that you are a serious buyer who is willing to negotiate.
Unfortunately, our low-ball offer was not accepted because they are waiting for an official appraisal. But this was to be expected. Only after they get the appraisal will they respond to our offer.
An appraiser is an independent operator who objectively comes up with a value for a property based on rebuilding costs and recently sold comps. The appraiser’s estimate is just one person’s opinion, albeit a person who appraises properties for a living.
I know with 99% certainty the appraisal report will come back higher than our $1.55 million offer. I also feel with 70% certainty the appraisal report will have a $2 million value or higher.
But for now, all we can do is wait. We don’t want to seem too anxious and make a higher offer too soon. I, too, am curious to hear what the appraiser comes back with.
Even if he comes back with a higher number, I am confident that the allure of an all cash offer, a quick close, and a friendly buyer from the neighborhood will be good enough variables to get us a deal.
Besides, if needed, I still have one last strategy up my sleeve: The Real Estate Breakup Letter!
If you just don’t want to put in the effort to write a real estate love letter to potentially save 1% – 10% off the purchase price, then stick to investing in REITs and real estate crowdfunding. There’s definitely a beauty to keeping things simple and being all numbers. Personally, I’m happy to do both.
Invest in commercial real estate for passive income: Take a look at CrowdStreet a real estate marketplace that primarily focuses on secondary metro markets that are lower cost with higher cap rates and higher growth than the expensive coastal cities. These cities include Denver, Austin, Memphis, and Charleston. Due to technology and the rise of the freelance economy, I think investing in lower cost growth cities will be a multi-decade trend. CrowdStreet is free to sign up and explore.