Yellow letters are personalized, often handwritten pieces of correspondence sent by an investor (typically in the role of a buyer) to a property owner. Most yellow letters propose the purchase of the property at a discounted price.

They are so-called because yellow letters were originally written on the yellow-lined paper of a legal pad. While some investors still send handwritten yellow letters, some services allow the investor to create a yellow letter on a computer or an app, and the resulting mailing still looks handwritten. The investor can then hire that same service, or another marketing business, to send out yellow letters to a mailing list.

Yellow letters are an example of direct real estate marketing. These are still among the most effective and popular ways for real estate investors to reach out to prospects[1], especially to motivated sellers.

Investors usually start sending yellow letters by compiling mailing lists with property owners that are likely to sell their properties.

The process starts with researching prospects and obtaining a list of property owners. Investors may go online to search for details about foreclosures and tax liens or browse the county’s public records for any useful information[2]. Real estate data collection software may also provide addresses of property owners based on the investor’s search criteria.

Upon compiling such a list, investors may filter it by using controls like age, income, and family size[3] and sort them based on the likelihood of selling their property, or their “motivation.”

In general, real estate investors may send yellow letters to those that fit the following factors[4]:

• Owners with outstanding mortgage payments.
• Owners facing foreclosure.
• People who have owned properties for a long time.
• Absentee owners or those who do not live on the property.
• Owners with tax liens.
• Owners who recently inherited their properties.
• Owners with a lot of equity in their properties.

BY THE NUMBERS: Direct mail marketing can provide businesses with a return on investment of 34%.

Source: United States Postal Service

The typical content of yellow letters varies by the investor. In general, though, these mailings contain information about the investor, contact details, and a personalized message to the property owner.

The message is the most important part of a yellow letter campaign, where the buyer (the investor) details the offer to buy the property. While the strategy depends on the buyer, they may either set a price (or price range) or make a neutral offer. They can also declare buying the property “as-is” or buy the property outright for cash and offer to close the deal quickly[5].

Investors should keep the message short, simple, and direct to grab the homeowner’s attention. The purpose of the yellow letter is to get the homeowner to contact the investor for more details about the deal and not bog the reader with unnecessary information.

RELATED: Simple Real Estate Postcard Templates That Work

Finally, the call to action at the end of the yellow letter lets the readers know how they can reach out to investors to discuss a deal.

Delivered letters usually have the complete name and address of the recipient, ideally on hand-addressed envelopes. This is to add to the personalization effect of a yellow letter marketing campaign.

As a marketing channel, yellow letters have both advantages and disadvantages.

Pros

Here are some of the benefits of using yellow letters to connect with prospects[6]:

Personalized

Yellow letters have that “personal touch” that gets potential sellers curious. As opposed to mass-produced postcard templates, the personalized mailing lets the readers know the investor seeks to engage in a conversation. This direct mail reaches prospects where they are and gives the impression that someone has taken the time and effort to hand-write them a personal letter.

Readable

Yellow letters grab the attention of the reader because the message is clear and concise. With a simple call-to-action statement, the homeowner can be motivated to contact the investor for more details about the deal.

High Response Rates

Compared to email, yellow letters and direct mail marketing pieces have higher response rates. This direct mail marketing technique allows investors to send specific messages to a target audience. The personalized communication also increases leads and conversions[7].

Measurable

Investors can monitor and assess the performance of their yellow letter direct mail marketing campaigns. They can track how many letters they send out, the number of calls they receive from target prospects, and the number of deals they could close because of the campaign. Plus, investors can use the insights for their follow-up strategy[8].

Cons

Here are some of the downsides to using yellow letters in real estate marketing[9].

Time-Consuming

Personal letters take up much more time to produce than comparable pieces of marketing outreach, even more so than a mass-produced direct mail campaign. This is doubly true for investors who choose to write the letters themselves.

Investors may hire another company to mass-produce and send yellow letters, but it will still require a significant amount of time and effort, even just to approve the content of what is being mailed.

Low Conversion

While yellow letters have a high response or open rate, they also tend to land in the mailboxes of unmotivated or unwilling sellers. These leads are typically homeowners who are attached to their homes or properties and thus will not sell, even at full market value (much less at the steeply discounted price the investor offers). Investors may end up wasting their time trying to get these leads to convert.

In addition, many yellow letters are not received well. Some people find them annoying, intrusive, and insulting. In fact, some may even attempt to mail the investor back with threats or abusive language.

Expensive

Compared to postcards and traditional marketing templates, it can be twice as expensive to produce and send out yellow letters. The costs for each yellow letter can go anywhere from $0.70 to $2, depending on the type of envelope. Investors may also have to spend more if they are hiring a third party to mass-produce their yellow letters[10].

Also, the time spent crafting a personalized letter is a resource that the investor will not be able to recoup.

BY THE NUMBERS: 4 in 10 Americans look forward to checking their mailboxes every day, especially those 65 or older.

Source: Gallup

• A yellow letter is a handwritten (or made to look handwritten) piece of mail from an investor sent to a prospective property owner.
• Yellow letters are so-called because they were originally written on paper from a legal pad.
• The contents of a yellow letter typically contain information about the investor (in the role of a buyer) and an offer to buy the owner’s property.
• Real estate investors send yellow letters to motivated sellers, whose information they obtain from the county’s public records or a data collection service.

1. Real Estate Skills. (2020.) Yellow Letters: The Ultimate Guide For Real Estate Investors. Retrieved from https://www.realestateskills.com/blog/yellow-letters
2. Brumer Liz. (2021.) Tax Lien Foreclosure: What It Is and How It Works. Millionacres. Retrieved from https://www.millionacres.com/real-estate-investing/reo-foreclosures/tax-lien-foreclosure-what-it-and-how-it-works/
3. Cromwell, C. (2021.) Yellow Letters: The Best Lead Gen Strategy for Investors? Business Builder Mag. Retrieved from https://businessbuildermag.com/yellow-letters-the-best-lead-gen-strategy-for-investors/
4. Esajian, P. (n.d.) A Beginner’s Guide To Real Estate Yellow Letters. Fortune Builders. Retrieved from https://www.fortunebuilders.com/real-estate-yellow-letters/
5. Beitler, L. (2018.) How to Craft a Printable “Handwritten” Yellow Letter Sellers Will Actually Read (With Sample!). Bigger Pockets. Retrieved from https://www.biggerpockets.com/blog/eye-catching-yellow-letter-with-sample
6. Costello, S. (2014.) The Yellow Letter Resource. Struggling Investor. Retrieved from https://strugglinginvestor.com/2014/04/the-yellow-letter-resource/
7. Dunlap, C. (n.d.) How to Double, or Even TRIPLE, Your Response Rates With Yellow Letter Marketing. Retrieved from https://realestatewealthnetwork.com/blog/yellow-letter-marketing/
8. Post Grid. (n.d.) Real Estate Direct Mail Marketing. Retrieved from https://www.postgrid.com/real-estate-direct-mail-marketing/
9. Letter Friend. (n.d.) The Death of Yellow Letters in Real Estate Direct Mail? Retrieved from https://letterfriend.com/blog/the-death-of-yellow-letters-in-real-estate-direct-mail/
10. YellowLetters.com. (n.d.) Pricing. Retrieved from https://yellowletters.com/letters