When it comes to finding great real estate deals, most experienced investors would agree that direct mail is the fastest way to get motivated sellers pounding down your door to buy their property.
Especially when you're starting from nothing, it's hard to find a more efficient way to get your deal flow moving.
The funny thing about “direct mail” is that those two words can be LOADED with assumptions about how the process should be executed, but there are all kinds of different ways to handle a direct mail campaign (and some of these variations can bring about some significantly different results). For example…
- Where is the list coming from?
- How is the list being sorted?
- What kind of mail piece is being sent out?
- What does the mail piece say?
- What kind of “call to action” is included?
- How are the responses being handled?
- What kinds of offers are ultimately being sent out?
- Are the offers being sent with the first contact, or after receiving the responses from each seller?
Most experienced direct mail marketers would agree that it's ALWAYS important to execute certain aspects of this process in a specific way.
It's ALWAYS important that your list contains current and accurate data, regardless of where it comes from.
Data 5 days old = Acceptable.
Data 5 months old = Unacceptable.
While some of these directives are fairly static, I've found that in many cases, there is more than one way to get the job done.
Blind Offers or Open Postcard Solicitations?
Something people ask me all the time is whether I think their marketing dollars are better spent sending out “blind offers” or open-ended postcards.
To be clear, let's define what each one of these things are…
The “Blind Offer” usually includes 2 pages – a cover letter and a purchase agreement in an envelope (or in some cases, these can be combined into a single page).
The purchase agreement is an pre-determined offer to purchase the recipient's property at a low-ball price (which is based on property's size or assessed value).
The exact wording and layout of a blind offer can vary widely (and some layouts are more effective at communicating than others), but to give you an example, the two pages might look something like this…Page 1 Page 2
Postcards can come in many different shapes and sizes (though the most common size I've seen and worked with is a 4.25 x 6 inch layout printed on yellow card stock).
The ideal message speaks directly to the targeted recipient and asks them to respond via phone and/or visit a website to submit their property information if they're interested in selling.
Again, the exact wording and layout of the postcard can vary widely (and the choice of copy and layout can have a major impact on the overall response rate).
Here's one example of the standard postcard could look like (and you can see more examples in this blog post):
The primary difference between the blind offer and the postcard is that postcard don't include an offer – they just ask the recipient to respond in some way if they're interested in selling.
Which Method Is Better?
Let me say, it's a great question.
From my personal experience (and the experiences I've heard from those in the REtipster Club), both approaches have their merit.
Ultimately, I think the right answer for you depends on what you're trying to accomplish, and which “battles” you're willing to fight, because each option comes with some inherent pros and cons.
Blind Offers – Pros:
One huge benefit with the blind offer approach is that it allows you to peg your offer at a very low price from the very first contact. Before the recipient even thinks about responding to you, they should already know where you're coming from and the “sticker shock” will already be over (whereas, the alternative would be to send them a ridiculous offer AFTER they've made the wrong assumptions about what kind of offer you're going to send them).
Given that we’re going to hear the word “No” A LOT in this business, I like how blind offers allow me to get to the point ASAP, rather than hearing the wrong answer AFTER we’ve dumped a ton of time into negotiations (and maybe even some research) that were going nowhere.
When you send out blind offers, it allows you to stop playing games with the seller. They’re never going to have any false expectations, because you already blasted out of the gate with your number (and whatever their response is, it typically isn’t going to cost YOU any time until you know they’re at least remotely interested in your offer). That’s a pretty big PLUS in the grand scheme of things.
Blind Offers – Cons:
In the blind offer campaigns I've done, I found that most of these deals still required a phone conversation (or two, or three) with the seller before we got to the closing table.
When I first heard about the blind offer strategy, my initial impression was that it would allow me to avoid all the time-wasting conversations with sellers. In my naïvety, I figured most of these recipients would just sign the purchase agreement and send it back to me without any questions – which isn't exactly how the process worked for me.
This isn't necessarily a “bad thing” for everybody… but for someone like myself (who doesn't enjoy having a lot of pointless phone conversations with sellers who aren't actually going to accept my offers), it was a bit of a disappointment at first.
In some situations (depending on how you choose to formulate your offer price), the blind offer approach can put a lot more weight on the property's assessed value, which isn't exactly the most accurate measure of a property's actual market value.
That being said… when you're sending offers that are FAR below this number (however accurate or inaccurate it is), there's usually plenty of cushion to protect you, and if your contract is written correctly, you can always back out of the deal if the numbers just don't work.
In a lot of ways, I think the blind offer approach still makes a lot of sense from the standpoint of saving time, but it can also result in a much higher cost of postage (see below) and lost deals – because I've found that some sellers probably would have sold if they had received more of a “tailored” offer (one that is still very low, but high enough to fit their level of motivation).
Postcards – Pros:
In my first couple of years as a land investor, the postcard approach was almost exclusively what I did.
The postcard approach was good at pulling in as many potential deals as possible, because it gave me a chance to look at each property (and property owner) individually and structure an offer that would arguably have a higher likelihood of being accepted.
When you give yourself room to look at each deal on its own, you're allowed to ask questions like:
- Why is this seller interested in selling?
- How motivated do they seem to be?
- What are the unique attributes of this property?
- Is this property even worth making an offer on?
- Could this property justify a higher offer price, or is not worth the risk?
When you take time to understand the specifics of each deal (and you leave the lines of communication open) you have the luxury of structuring your offer in such a way that can make a lot more sense for each unique seller's situation, while still being low enough for you to pursue.
I've also appreciated the fact that postcards are undeniably less expensive than letters in envelopes. At the time of this writing, the cost of postcards through Click2Mail (including both printing and postage) ranges from .41 – .45 cents a piece, whereas the cost of 2 pages in an envelope can range anywhere from .66 – .91 cents a piece (note: the pricing “range” varies based on what printing options are selected – and the pricing for both goes down when the volume goes over a thousand mail pieces). Because of the lower cost, postcards will allow you to reach more people for less money and look at each respondent individually to decide whether you want to pursue the deal or walk away.
It's also worth mentioning that if a postcard is put together tactfully, it's virtually impossible to ignore the message.
Have you ever thrown away an envelope without opening it? I do it every day.
It‘s not hard to spot a piece of junk mail (whether it's a letter or a postcard), but with a postcard – even if it is horribly written, I have no choice but to see the message before it goes in the trash. Since a postcard isn't not hidden by an envelope, it will always get at least a split second of each recipient's attention before they decide what to do with it.
Postcards – Cons:
The problem with an open-ended postcard solicitation is that – even though they may result in a few more acceptances over time, they also require a lot more attention-to-detail in order to take advantage of this benefit.
Looking at each deal individually requires time… potentially, LOTS of time (especially if you aren't efficient about it) – so if you aren't actually planning to look closely at each deal (whether it's because you don't have time to, or you just don't want to), you'll be throwing away a huge part of the rationale behind this approach.
Some would also argue that postcards can come across as a fairly impersonal type of communication. Granted, I've found some ways to spruce mine up a bit (e.g. – by including some hand-written fonts, addressing each recipient by their first name, adding some interesting graphics and/or making the postcard look more “official” in nature), but if your primary concern is to make it look like the mail piece was written solely with that recipient in mind, it may be harder to accomplish this with a postcard.
The Hybrid Approach
I've worked quite a bit with both methods, and after seeing the pros and cons of both, I developed a sort of “hybrid approach” that takes some of the benefits of both and mashes them together.
One options is to send out postcards (to take advantage of the lower cost), but rather than asking each recipient to call for a live conversation, the postcard can direct each recipient to a buying website, where they can submit their property information for review.
Personally, I also give them the option of calling me (because some people still prefer the phone over the internet), but if they do – they'll get an automated greeting that allows them to leave a message, but strongly encourages them to visit my website and submit their information there (because this is MUCH less time-consuming than a 30 minute phone conversation).
When I receive their property information, I look at their supposed “market value” and respond to them via email with my offer price, which usually ends up being around 10% – 30% of the market value they submitted to me. Depending on how they respond, the deal either moves forward, or it stops right there.This video explains how it works:
(Note: Since this video was first published, these offer emails now take me about 5 seconds to write and send, thanks to the TextExpander app on my computer).
The way I see it – this process is just a different way to send a blind offer. It capitalizes on the benefits of both approaches, because the cost of postage is less (thereby allowing me to reach more people), it almost never requires a phone call, and the time I spend on each prospect is measured in mere seconds, not minutes or hours (and when you're sifting through hundreds of prospects, those minutes and hours add up quickly).
With all that being said, there are still some disadvantages to this approach (remember, EVERYTHING has it's tradeoffs).
While this has been a HUGE time-saver, is extremely convenient, requires a lower cost for each direct mail campaign AND has allowed me to generate thousands of free leads online… the downside is that it lacks a personal connection.
There is very little rapport-building in this process, and while you can improve the “warm fuzzies” in some ways (e.g. – by including a video introduction on your website, personalizing your postcards and having a well-spoken automated voicemail greeting), some sellers may be less willing to do business with an investor who relies entirely on email.
This approach also requires a bit more effort from the seller, because they have to:
- Go to my website (i.e. – which limits my respondents to the sellers who have internet access).
- Fill out a submission form (which takes about 5 minutes to complete).
Granted, there are still some workarounds to these minor obstacles (because people CAN leave me a voicemail, they're just strongly encouraged to use my website instead), but it may discourage those in our society who can't get on the internet and/or don't have 5 minutes to fill out my form.
Overall – this approach has worked well for me and I've closed plenty of deals this way, but as you can imagine… when you push your prospects into a funnel that can come across a bit “cold” (due to the lack of a personal voice that responds to them in real-time), it's possible you'll end up leaving some deals on the table.
For me, it's a sacrifice I've been willing to make, because there will always be some sacrifices in the process… it's just a question of what.
I will say that I've gotten into the practice of calling each seller once the contract was signed and we're ready to close (at the END of the process, once I know the deal is in the bag). This phone conversation is intended mainly as a courtesy call, which can help clear up any last-minute jitters (if any).
In my mind, when I'm holding off on these calls until the deal is basically done, it's much easier to justify spending my valuable time this way.
Which Approach is Best for You?
I've learned that there's no “perfect approach” that will get the optimal results from every angle. At some point, you'll have to decide which sacrifices you're willing to make.
If you're not sure which one is right for you, I think the answer depends on a couple of things…
- How much cash you have to play with (specifically, for the purpose of direct mail).
- How much time you have available to scrutinize properties and make deal-specific offers.
When Postcards Make Sense:
- If you have limited funds.
- If you have plenty of time.
- If you want to squeeze every last drop of potential out of your direct mail campaign.
Why? Because you'll spend less money on postage and printing, you'll be able to reach more people, and you'll be able to spend the time necessary to understand each seller and send the most appropriate, deal-specific offers you can possibly make.
When Blind Offers Make Sense:
- If you're not afraid of spending money.
- If you want to target ONLY the specific property types that make the most sense for you.
- If you're mostly concerned with saving time and energy.
Why? Because you'll be able to cut-to-the-chase and immediately tell each prospect what your offer is going to be, without wasting time on pointless negotiations about deals that aren't going to happen (or deals that aren't exactly what you want).
When Email Offers Make Sense:
- If you want to keep your direct mail costs low (or potentially, non-existent).
- If you're mostly concerned with maximizing your time and energy.
- If you're less concerned with pursuing sellers who don't have internet access and/or want to talk on the phone.
As with anything, there are pros and cons to every approach. The important thing is to understand where you're coming from, what types of prospects you're most concerned with reaching, and what kinds of sacrifices you're willing to make along the way.