Contact with the Property Owner
Communicating with a property owner in pre-foreclosure is not as easy as it might first seem. After finding an owner in default, contacting him via mail is relatively easy. The reception your correspondence receives is likely to be disappointing to you.
Most property owners facing foreclosure are not likely to want to discuss their failing financial situation with total strangers. The vast majority of defaulting borrowers are more likely to be in denial of their worsening finances than they are of admitting their trouble.
The best method to contact the defaulting property owner is via the mail. A professionally prepared letter is likely to get the best results.
You might be tempted to make a cold telephone call or an unannounced visit to the property. Few defaulting property owners are going to be receptive to such methods. By the time you learn of their failing financial status, they have been beleaguered by telephone calls. Suddenly appearing on their doorsteps is more likely to result in a slammed door in your face than a meaningful conversation.
Direct mail to the defaulting property owner is more cost efficient than any other method. Persistence will pay off.
Sending Multiple Letters
It often takes several letters before the property owner will contact you. Mailing to property owners on regular intervals often makes sense. Following up and maintaining contact every seven days for a month produces the best results. This requires five letters, based on the following schedule:
First letter: mail immediately
Second letter: mail seven days after first letter
Third letter: mail fourteen days after first letter
Fourth letter: mail twenty-one days after first letter
Fifth letter: mail twenty-eight days after first letter
With use of a personal computer and some simple word processing software, producing the correspondence is painless. Simple mail-merge techniques make it easier to produce personalized and professional looking correspondence. Maintaining your mailing list is also much easier with a personal computer.
Other real-estate investors will also send letters to the defaulting property owner. One of the best things you can do is to make your letter professional and businesslike. It should look like it came from an attorney's office, but it should not be full of legalese. Your message should be simple, friendly, and encouraging.
Sending letters to defaulting property owners requires some work and discipline. Using a personal computer takes a lot of work out of the process, but there is still work for you to do every week.
Professional Appearance of Your Letters
Don't send out any letters that are not professional looking. Avoid cartoons or fanciful fonts; your letter should project a business look. Just because your computer can produce different-looking typefaces or brochures doesn't mean you should use them. Stick to the conservative approach of a plain business letter.
Here are some tips to make your correspondence look better and stand out:
Use a better grade paper and envelope. Don't send out a letter printed on copy paper.
Make sure the paper and envelope match.
Use only white, ivory (or cream), gray, or light blue paper colors.
Always personally sign the letters.
Mail on the same day of each week.
Never send a brochure; send only a well-crafted letter.
Don't be discouraged if you have a low response to your mailing. You might mail out 250 letters and only get five calls. By following up the next week to the remaining 245 on your list you may get another five calls. After the cycle of five letters, if you get five calls per mailing 250 letters, you will have received a 10 percent response of the total 250 names on your list. Of course, you will keep developing new prospect lists by adding, deleting, and replacing names. Take the time necessary to learn how to use the software that will maintain your mailing lists and produce professional correspondence.
What to Say in Your Letters
Here are five sample letters for you to use as a template. Modify them to suit your needs and style.
First Letter to Defaulting Homeowner
George Sheldon
Post Office Box 6238 • Lancaster, PA 17607
Phone (717) 555-6222
E-mail:
January 7, 2009
Mr. Frank Debtor
321 Mortgaged Street
Elizabethtown, PA 17022
Dear Mr. Debtor,
Your mortgage lender has filed a lawsuit in Lancaster County Court of Common Pleas to foreclose on your property. As you know, if you cannot bring your loan payments current immediately, your property will be sold at a public foreclosure auction sale at the Lancaster County Courthouse. You will be evicted from the property.
You do have options. You could do nothing and allow your lender to sell the property at the public auction. You'll receive nothing. Your lender does not care if you get anything. They just want their money back.
Another option is for you to try to sell your property yourself, or list it with a real-estate agency. In four or five months, the property might be sold.
Or you can call me. I specialize in assisting people in Lancaster County who are in foreclosure. I can help you, too! When you call me, we can discuss how this nightmare can end within the next seven days. I can stop the foreclosure process quickly. After making an offer to buy your property, I can also help you locate another place to live. I handle everything, from working with your lender to pay off your loan to handling all the paperwork at the title company.
To get started, all you have to do is call me at (717) 555-2666. Let's talk and set up an appointment to meet at your property.
I look forward to hearing from you. I am most eager to work with you to stop the foreclosure on your home.
Sincerely,
George Sheldon
Second Letter to Defaulting Homeowner
George Sheldon
Post Office Box 6238 • Lancaster, PA 17607
Phone (717) 555-6222
E-mail: georgesheldon@msn.com
January 14, 2009
Mr. Frank Debtor
321 Mortgaged Street
Elizabethtown, PA 17022
Dear Mr. Debtor,
The clock is ticking. Each day limits your options. As I mentioned in my last letter, I assist people in Lancaster County who are in foreclosure.
Your lender is going to sell your property and evict you. Let's stop your foreclosure now.
Call me so we can discuss how to stop the foreclosure within the next seven days.
When you call me at (717) 555-2666, we can talk about your situation. There is no obligation on your part. Let's discuss your options before it's too late.
Sincerely,
George Sheldon
Third Letter to Defaulting Homeowner
George Sheldon
Post Office Box 6238 • Lancaster, PA 17607
Phone (717) 555-6222
E-mail: georgesheldon@msn.com
January 21, 2009
Mr. Frank Debtor
321 Mortgaged Street
Elizabethtown, PA 17022
Dear Mr. Debtor,
Your mortgage lender has scheduled a public foreclosure auction sale at the Lancaster County Courthouse. You will be evicted from your property. You will receive nothing, and in fact, your lender may try to collect more money from you even after the sale of your property.
In my previous letters, I informed you that I help people in Lancaster County who are facing foreclosure. I can help you, but only if you call me. I can stop the foreclosure process quickly by buying your home.
There is not much time before the auction, so call me now at (717) 555-2666. Let's talk and set up an appointment to meet at your property.
I am eager to work with you to stop the foreclosure on your home.
Sincerely,
George Sheldon
Fourth Letter to Defaulting Homeowner
George Sheldon
Post Office Box 6238 • Lancaster, PA 17607
Phone (717) 555-6222
E-mail: georgesheldon@msn.com
January 28, 2009
Mr. Frank Debtor
321 Mortgaged Street
Elizabethtown, PA 17022
Dear Mr. Debtor,
As I mentioned in my last letter, your mortgage lender has scheduled a public foreclosure auction sale at the Lancaster County Courthouse. You are going to be evicted from your property. When this happens, you will receive nothing. In fact, your lender may try to collect more money from you even after the sale of your property. The nightmare will not be over even after the public sale and eviction.
In my previous letters, I told you that I can often help people in Lancaster County who are facing foreclosure. I can most likely help you, too, but only if you call me now. I can stop the foreclosure process quickly by purchasing your home from you before the scheduled sale.
Since there is not much time before the scheduled auction, call me now at (717) 555-2666. Let's chat, and make up an appointment to meet at your property.
I am still quite eager and willing to work with you to stop the pending foreclosure on your home.
Sincerely,
George Sheldon
Fifth Letter to Defaulting Homeowner
George Sheldon
Post Office Box 6238 • Lancaster, PA 17607
Phone (717) 555-6222
E-Mail: georgesheldon@msn.com
February 5, 2009
Mr. Frank Debtor
321 Mortgaged Street
Elizabethtown, PA 17022
Dear Mr. Debtor,
Doing nothing about the foreclosure on your property is the worst thing you can do. By now you realize your lender cares nothing about you and your situation.
Although this is my last letter to you, I want you to know that I am still willing and able to assist you. But it is up to you to take the next step.
My invitation to call me still stands. We can discuss your options with no obligation on your part.
Each day that passes means less time to stop the foreclosure. Don't ignore the problem. We can still resolve your foreclosure and get you back on the road to home ownership again, but you need to call me at (717) 555-6222.
Sincerely,
George Sheldon
Your Marketing Approach: Pushing and Pulling
Your marketing accomplishes one of two things: pushing your message to pre-foreclosure property owners, or pulling owners to you by having them contact you. This two-pronged approach can produce a constant flow of investment properties when effectively used by a real-estate investor.
By using direct mail, you are pushing your message that as an active real-estate investor you purchase foreclosure properties. By using advertising, you are sending the same message but are encouraging direct contact to you.
Marketing campaigns can be expensive. Fortunately for real-estate investors seeking foreclosure properties, the cost of marketing is not prohibitive. Mailing letters, placing small advertisements, posting brochures, and taking other steps necessary to get your message out takes more work than deep financial resources.
The most important part of your marketing campaign is to start it and then maintain it. Don't give up. If you are not finding enough potential properties and subsequent deals, it is probably because your marketing efforts needs some fine tuning.
