Four Effective Keys to Contacting Preforeclosures
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According to the leading online marketplace for foreclosures, RealtyTrac, foreclosure listings grew to a peak of 2.14 million units in 2009. Today those numbers are down over 73% to 560,454 units in 2017.
However, the number of “distressed sales” still represents 16.2% of the overall real estate market in the United States, or nearly 1 in every 6 home sales last year fell into that category.
So the distressed market could be a good opportunity for you to contact pre-foreclosure owners. However, this is also the point where many real estate agents and investors often struggle.
Here are four keys to make this an effortless campaign.
Some real estate agents and investors mail letters to all of the pre-foreclosure owners in their cities. This blanket approach is not effective. The reason for this is simple: it’s virtually impossible to become a smart real estate agent or investor in several areas unless you have unlimited time and resources.
Instead, think quality rather than quantity. For example, focus on identifying several zip codes that you are interested in working, and eliminate all those properties not in those zip codes.
It’s important that you become very familiar with the real estate market in the few areas that you target. This will ensure that you make informed decisions on which pre-foreclosure properties to approach. As you become familiar with an area, you will know if new road construction is planned, for example, which may negatively impact an investment. Or, you will know if commercial rezoning has been approved close to that area.
Being on top of local issues like these can make or break a purchase.
Also, becoming very familiar with a few areas will also give you insight into when a home on a preforeclosure list is a “diamond in the rough.” You may be able to find a gem with a high resale value, for example, if a school district changes its boundaries to include homes in a new neighborhood.
Once you’ve identified homes in a high resale area, it’s best to contact the pre-foreclosure owners by mail. You may expect to send 1,000 letters a year to preforeclosure owners. But if you close 10-15 deals a year that net $5,000 to $15,000 per deal, you’ll have created a successful business for yourself.
It’s important that your letters are professionally written. If you need to pay an experienced writer to compose your letters, it’s worth it. Remember this is part of your business. Small investments you make will help guarantee its success.
Don’t be discouraged if you don’t hear from anyone after making contact with owners by mail. Most pre-foreclosure owners are in a state of denial about losing their homes. For this reason, you should contact them regularly.
For best results, contact your list of pre-foreclosure owners once every week to two weeks week with original letters—no form letters or postcards. Each letter should reference the previous letter and be slightly different. Much like the way we market to For Sale by Owners (FSBOs) and Expired Listings, all your letters should be individually signed and mailed with a first-class stamp.
In addition, purchase a stamp that says, “ADDRESS SERVICE REQUESTED” and place it 1/4 inch below your return address. This way, if an owner has moved the post office will give you the property owner’s current address.
People seem to be more receptive to mail received on Saturday. Therefore, mail your letters on Thursday so they arrive on the weekend.
And remember this: letters should appeal to the emotions of the pre-foreclosure homeowner because this is a difficult time for them. So just like any listing appointment where you’re giving a presentation, your stance should be one of wanting to help. Make it clear how you can assist them, including offering cash for their equity, finding them a new place to live and keeping them from having a foreclosure on their credit history — something that could make it extremely difficult to qualify for a home loan for up to seven years.
The main goal is to keep your name and phone number in front of the troubled homeowner as much as possible so that when they are ready to ask for help, they will contact you.
In addition to pursuing foreclosures, you could also establish some ads that would bring the foreclosures to you. There may be a higher cost, but the quality will be supreme, because these people are looking for help and have sought you out. The following message, on a flier, in the Classified section or in a homes magazine would be sufficient and to the point:
Don’t lose your home to foreclosure.
Learn your options. Preserve your credit.
For a Free Recorded Message 24 Hours a Day
Enter Extension #XXXX
Your recording on the extension could be as simple as:
“Hello, my name is <your name> with <your company>. Thanks for calling. If you are nearing foreclosure let us help you. We have clients who are willing to buy your home at fair market prices. Why lose everything and damage your credit when you don’t have to? Would you like a free information packet that explains all your potential options mailed or emailed to you? If so, say yes.”
And like I mentioned above, you could include this in flyers and post them in various locations throughout your community as well as create signs with the above message and your sign riders with the toll-free number above. Simply get permission to place them in high-traffic areas.
For more free actionable tips and strategies to help you grow your real estate business, check out any one of our free resources.
We hope to hear from you!
All the best,
Proquest Technologies, Inc.