Highly Converting Pre-Foreclosure Sample Letter to Distressed Homeowners
This article will show real estate investors how to craft an effective letter to distressed owners of pre-foreclosure properties that will improve the investors’ success rate.
We’ll go through the letter format in detail and include a sample letter to distressed homeowners. Let’s begin with a clear description of the letter’s purpose.
How to Write a Pre-Foreclosure Letter to Distressed Homeowners
After you find motivated distressed home sellers, you need to reach out to them in a way that will ensure the highest chance of hearing back from them.
Below are the important aspects to consider when composing your letter.
Purpose
The purpose of your letter is to move the owner to action. The action that you want them to take is to meet with you in their home.
This allows you to conduct an informal inspection of the property.
Time Is of the Essence
You’ll need to remind them that they have a limited amount of time to find a solution to their problem.
Federal law states that real estate lenders have to wait 120 days after default before they can begin foreclosure proceedings.
The borrower probably knows that they are in default but they might not understand that the 120-day period may have already started.
Deed of Trust or Mortgage State
Real estate wholesalers or investors starting a home flipping business must learn the laws of their state and use them in the letter.
If your state uses a Deed of Trust rather than a Mortgage format, the lender usually doesn’t have to go to court to foreclose on the property.
That speeds up the process giving the homeowner less time before losing their home. Point this out to the homeowner.
A mortgage will require the lender to go through the courts.
Does the borrower realize that this will add to their costs in the form of continuing interest accumulation, late payment fees, and the lender’s foreclosure related costs such as legal fees? Tell them.
Reduce Credit Damage
An important point to make is that a foreclosure will hurt the owner’s credit beyond the damage done by late payments.
If you can help them pay off the loan before foreclosure, you will be providing a huge benefit to them.
Buying for Cash and As Is
These are critical points for investors to make in the letter. Paying cash is how you can fix their problems quickly. There is no underwriting process to go through and no appraisal that can stop the deal.
Buying their home as-is is how you can keep their costs low.
Along with the elimination of foreclosure related costs that the lender will pass on to them, not having to pay for repairs can make your eventual offer more palatable.
Referring to this could get you the visit.
Discretion
You’re asking someone to tell you about their financial circumstances and the disposition of their largest asset.
Assure them that you are a professional who will maintain confidentiality throughout the process.
Empathy
Distressed homeowners are one of the most sensitive types of motivated sellers.
Preforeclosure is likely the most embarrassing thing that will ever happen to the homeowner. Remember that they are amateurs and you are the professional.
For real estate investors, the tone of the letter can determine whether or not they get the visit that they are asking for. A wrong tone may be the reason why much of your effort spent on finding foreclosures gets wasted.
You have to understand the pain of the recipient. We make our messages sound very personal and try to touch upon the pain points of the recipient.
We then show them proof that we can help solve their problems by including legitimate reviews from past clients.
Use language that lets the prospect know you truly care about their plight.
Typed vs Handwritten
A handwritten letter can be seen as coming from a small investor who may or may not have the financial ability to complete an all-cash closing.
On the other hand, it may evoke more trust because of looking more personal.
A well-written typed letter can convey an image of a professional who is sincerely interested in helping the owner with a difficult situation. On the other hand, it will more resemble a marketing junk mail.
The best direct mail services for real estate investors have tested templates that are proven to be effective.
Some of them even offer letters written by robotic ballpoint pens or typed letters that look handwritten.
Additionally, this guide from the subject matter expert Joy Gendusa will help you learn the basics of direct mail marketing for real estate investors.
A handwritten envelope already can set you apart, but eye-catching envelopes with color or pattern help as well.
Personalize
If the record shows multiple owners, your letter should be addressed to each of them.
If the owner’s address of record is different from the property address, the owner might be another investor or the heir of a deceased owner. Either case is good for you.
The salutation should be addressed to the owner personally, addressing them by their name and not to “Property Owner” or “To Whom It May Concern.”
I would stress that you make it as personalized as possible. This will be very important, and getting the deal will likely hinge on properly doing it.
I believe there is no single strategy to writing effective letters. My advice is to tailor your letters to the specific type of property and/or lead.
Make it look as personal as possible and keep it all 100% genuine.
Create Value
Give motivated sellers an incentive to meet with you by offering something of value — yourself as a resource.
Focus your letter on your willingness to answer their questions which will prepare them to deal with their situation.
You will certainly have questions of your own at the meeting, but first, you have to get the appointment.
Presentation
Well-designed letterhead stationery isn’t expensive. If you haven’t already, visit your local office supply store or go online and order a professional letterhead.
It should display your contact information prominently. Make it easy for the property owner to trust you and to find you.
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Sample Letter to Distressed Homeowners
Download our sample letter to distressed homeowners in PDF or MS Word (Docx) for free or read it below.
Your Name
Your Company Name
Company Address
Phone Number
Property Owner Name
Property Owner Address
Date
Dear (Mr./Ms.) ______________,
My name is _______________ with (Company Name if applicable). I am a professional investor who is active in your area. My research indicates that you may be in a position where you need assistance with your property.
I pay all cash for properties in their current condition. I help homeowners avoid foreclosure and the unnecessary damage to their credit. A credit report with some late payments is much easier to repair than one with a foreclosure.
Paying cash for properties as-is means that I can close quickly. You can avoid the expense of a foreclosure. Past due interest and late fees stop accumulating. You’ll have no repair costs, no marketing costs, and no commissions to pay.
Mortgage state version
You may not be aware that in (State) a lender is required to go to court to foreclose on a property. The resulting expenses may be passed on to the borrower.
Deed of Trust state version
You may not be aware that in (State) a lender is not required to go to court to foreclose on a property. This means that you may not have much time to avoid foreclosure.
Federal law gives you 120 days from notice of default to fix your situation before the lender can start foreclosure proceedings. You may already be in the 120-day period.
In order to make the best decision for your future, you need to know your options without delay. I’d like to meet you at your property to answer your questions and see if I can help you.
I can promise you that the conversation is confidential, there’s no pressure, and no obligation. I’ll make sure that after we talk, you’ll be better prepared to effectively handle your situation whether or not you will decide to sell your house to me.
I’ve helped others in similar situations and I believe that I can help you, too. Please give me a call.
I hope to hear from you soon.
Regards,
Your Name/Company Name
Phone #
email address
Additionally, we have a more generic sample letter to motivated sellers as well as two sample probate letters for real estate investors. Hopefully, all this information helps you begin wholesaling real estate easier.
Where to Get Highly Converting Distressed Seller Leads?
We’ve just discussed how to write a letter to distressed homeowners. But do you already have a stable source of distressed property seller leads to send letters to?
Look into the HouseCashin Investment Property Marketplace. This platform lists off-market properties whose sellers are currently looking for cash buyers.
It features both properties listed by owners themselves and homes listed by wholesalers who’ve already negotiated a deal for you.
If you are a wholesaler, you can both find distressed FSBO deals and list them for cash buyers — all in one place. This is convenient and makes for better time management.
It’s easy to filter properties for sale by the deal type so that the search will only show you distressed home listings, short sales or various other types of motivated seller deals.
Property listings allow you to learn such valuable data as the property’s projected profit (either fix and flip or rental), rehab costs, the reason why the owner is selling, etc.
For the time being, the HouseCashin Investment Property Marketplace is probably the easiest way to find distressed homeowners.
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About the Author
Kristina Morales is a REALTOR® with over 20 years of professional experience. She actively practices real estate in Ohio but also has practiced real estate in California and Texas. Conducting her real estate business in three states has allowed her to gain unique experiences that make her a well-rounded realtor. She obtained her Bachelor of Arts in Business Management and her MBA with a concentration in Banking and Finance. Prior to real estate, Kristina had an extensive corporate career in banking and treasury. She ended her finance career as an Assistant Treasurer at a publicly traded oil & gas company in Houston, TX.