Making An Unsolicited Offer For An Unlisted Home

By
Real Estate Broker/Owner with Cordon Real Estate 01370983

Making An Unsolicited Offer For An Unlisted HomeHave you been looking for longer than you would like and still can’t find the right home listed for sale in the neighborhood where you most want to live?  The simple fact is that homes in the most desirable areas don’t come on the market very often and they are snatched up quickly when they do.  But must we really have to wait for great homes to come on the market before we can buy one in a great neighborhood?  Nope.  We can try making an unsolicited offer for an unlisted home.

A growing number of homes are sold in response to unsolicited home purchase offers.  Statistics vary greatly by location, but we know that many homes are sold without ever making it onto the Multiple Listing Service (MLS).  These could be homes “For Sale By Owner” or “pocket listings” that sellers want their agents to market out of the public eye for personal reasons.  Some homeowners haven’t considered selling, but might if they receive a good offer – they are potential targets for unsolicited offers.

The process for making an unsolicited offer is not unlike how we would go about making an offer for a listed property.  Let’s look at an overview of one approach.

Identify Preliminary Target Neighborhoods.  Write down the most important characteristics of your potential new location.  Schools, work commute, noise, traffic, and potential for future price appreciation are often important considerations.

Meet With Your Broker.  Share your selection criteria with your broker and identify neighborhoods that might meet your needs.  Discuss current home values in those areas and any other costs that might be associated with owning a home there, such as homeowner association fees, special taxes, etc.  Review recent sales activity in the area.

Get Pre-Qualified.  Meet with a financial planner to create a family budget and establish financial boundaries for the purchase and long term costs of home ownership.  Then meet with at least three different mortgage lenders to determine the buying power of your budget and to shop for financing that best fits your needs.

Meet With Your Broker Again and Create A Target List of Properties.  Refine your search criteria and begin driving neighborhoods to identify homes to add to your target list.  Submit candidates to your broker regularly so that each can be researched regarding size, features and the most recent sales activity.

Prioritize The Target List.  A long target list of properties is better than a short list, since most unsolicited offers are initially rejected.  To save time on your first round of offers, do the deepest research on just the top two or three properties on your list.  For these properties, establish price and term strategies.

Develop A Story.  Why should someone who has not already put their home on the market now want to consider selling to you?  Unless you come in with an above-market price, many won’t.  But some may be motivated by the opportunity to help others while they see a silver lining for themselves.

Make Inquiries.  Beginning with the top property on your list, have your broker submit inquiries to determine if the home owner is interested in looking at an unsolicited offer.  If they reply that they are, probe carefully to find out why so that you can address their specific needs or motives in your offer.

Develop A Strategy.  Your strategy is the approach you use to link your story with the home owner’s needs.  The more information the seller provides in response to the initial inquiry, the better you can tailor a strategy that motivates the home owner to consider a sale.

Submit Offers.  Submit only one offer at a time.  Try to present the offer in person with your broker.  If the homeowner’s preference is to have the offer delivered, submit it with a single page summary that explains your story.  Most residential purchase offers are valid for three days; make your offer valid for at least a week, maybe two.  This gives the homeowner time to hire a broker, analyze the offer, and make a decision to sell.  Your offer is, of course, subject to inspection and you’d need to do a walk-through prior to negotiating if the homeowner does decide to sell.

Keep Making Offers.  If your first offer is rejected, move on to the next property on your list.  Expect a lot of rejections and owners that just plain won’t respond.  Too many brokers use the “I have a buyer for your home” letter as a standard marketing piece, even when they don’t really have a specific buyer for the property.  Owners have become used to depositing those letters immediately into the trash.  Your broker will need to develop a more unique approach that gets the owners attention and lets them know you’re serious.  Success with unsolicited offers is often a matter of timing.  Continue to scan the MLS and other listing sources, but you’ll also want to keep making unsolicited offers as you find additional unlisted homes that fit your needs.

I hope you found this information helpful.  If you have questions about making an unsolicited offer for an unlisted home or buy/sell/investment strategies, drop me a line!  Contact Us.

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John A. Souerbry & Associates (DRE 01370983)

Comments (63)

Jill Sackler
Charles Rutenberg Realty Inc. 516-575-7500 - Long Beach, NY
LI South Shore Real Estate - Broker Associate

It's as good a tactic as any, especially when inventory is low. It's like ordinary door knocking. You never know when you'll get lucky and get someone who was thinking about it.

Jun 14, 2013 12:57 AM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Martin #38 - I've been told many times that a "client" is consulting with friends and family regarding the home, only to find out they're trying to better-deal me with another broker. Such is the business..

Jackie #39 - Thanks!  Put me in, Coach.

Linda #40 - mine is "pay"

Chris #41 - way to go! Part of the Grand Equation is that it's a numbers game - get out there and meet a lot of people and a lot will happen.

Joan #42 - yes, the markets certainly have changed, though an investment client who has been buying and selling since the 1960's tells me that he's seen all this before several times.  He's acurately predicted the last 2 market swings and says the next market move will be....

Robert #43 - Great points!  A weakness I see in many agents is that they rely on other agents for their inventory. I put that in the same category as the old business adage "the fastest way to go out of business is to get an increasing share of a shrinking market."  Agents need to grab their market by the horns and make their own future.  I yield the soap box.

Jill #44 - I discourage door knocking for this strategy, as it creates an immediate negative impression of the agent that turns the home owner off to the message (my personal opinion...).  I also discourage cold calling.  I also discourage neck ties and men's shoes with tassles.  And... don't get me started...

Jun 14, 2013 01:17 AM
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

John, don't forget to have someone--either buyer or seller--to agree in writing to pay you a brokerage fee.  Otherwise, you may be working very hard for a "thank you".  If you're getting paid by the seller you better get a written commitment how much before you present an offer, otherwise you can get squeezed out of the deal during price negotiations.

Jun 14, 2013 01:45 AM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Lloyd #46 - Excellent point.  Since this post is directed at consumers, I didn't reveal all the paperwork that goes along with the process.  At the first meeting, my buyers sign an exclusive buyer's rep agreement with all the terms spelled out.  My agreement includes a provision that any homes I show them earn me a commission for the next "N" months, even if they use another agent.

Jun 14, 2013 03:12 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

This sort of offer should be delivered in person and they should make it clear it is not an offer to List the Home for sale.

Jun 14, 2013 03:28 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Interesting and thorough approach.  Great post!  It's always been said that people do business with others they trust, know and like.  That said, making an offer in person is one way to accomplish at least some of the previous.  They'll have to get to know you and know you are serious.  Good job!

Jun 14, 2013 03:38 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer
Interesting - and time consuming! If a buyer is determined, it's a beautiful plan.
Jun 14, 2013 04:21 AM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Gene #48 - Indeed, this should not appear like any other sort of solicitation, which is why I recommend not cold calling, door knocking or sending a letter addressed to "Sir and/or Madam" (I got one of those in the mail yesterday).

Jan #49 - thanks!

Marte #50 - We reject 75% of potential buyers who come to us as prospects (unqualified, hard to work with, etc.).  You're right, the word day is too short to work with anyone who isn't as dedicated to working toward the goal as you are.

Jun 14, 2013 04:47 AM
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

I constantly market to distressed sellers online.  They sell homes to our firm without the home ever making it to the MLS.  Then we get in there and fix the problems, clean them up, and sell them on the MLS for top dollar.  Happens all the time.

Jun 14, 2013 05:22 AM
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker
Happened to a client of mine with a multi million dollar home. They knocked on his door.
Jun 14, 2013 06:08 AM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi John, we agree.  And often they result in listings where the offer is not accepted.

Jun 14, 2013 06:11 AM
Paddy Deighan MBA JD PhD
federalfinanciallawgroup.com - Vail, CO
Paddy Deighan J.D. Ph.D

my experience ios that there are more such offers too...people want a particular location and they are not satisfied with the current offerings...I have done this myself in Vail Colorado and Austin TX

Jun 14, 2013 08:34 AM
Sherry Swift
Realty One Group - Dana Point, CA
Helping Buyer and Sellers in the 949 since 1999

John,

I have used a version of this and it works great in Southern California where our inventory like many areas is really tight.  I have 10 pocket listings that are waiting for a tick up in prices and they will sell.  They didn't work for my clients for various reasons but they are interested as soon as the timing is right.  Should be a great summer!

Jun 14, 2013 11:52 AM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

This type of marketing occurs in most desirable neighborhoods that are targeted by investors or their agents, so it's not unusual at all.

Jun 14, 2013 01:08 PM
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

I think this type of offer is unusual ini my local market, and I'm going to try it!

Jun 15, 2013 02:18 PM
Debbie Cook
Long & Foster Real Estate, Inc - Silver Spring, MD
Silver Spring and Takoma Park Maryland Real Estate

I have recieved letters from potential buyers at my own house, looking for a home in my neighborhood.  the letters wee never from an agent - just the buyers themselves.

Jun 16, 2013 09:54 PM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Rob #52 - I try to stay away from distressed sellers, that's not my market, but good for you if you can help them.

Hella #53 - you just never know...

Bob #54 - I believe this happens when the agent soliciting the unlisted home doesn't act obnoxious and push the home owner.  Give them space to make up their own mind, it generates liking and respect.

Paddy #55 - I think it will work anywhere, the operative term is "work."

Sherry #56 - We don't take pocket listings, but I get your point. I'm not sure it will be such a great summer across the board.  Many offices in my area are reducing their agent role because there are so few transactions available.  Prices are up, but overall volume is down.

 

Jun 16, 2013 10:08 PM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Kimo #57 - I won't do this process with an investor, they're a different animal.

Joetta #58 - good luck!

Debbie #59 - I receive letters like this directly from "buyers" in my Silicon Valley home every month and 90% of them are from investors trying to get me to sell below market.

 

Jun 16, 2013 10:18 PM
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West - Carlsbad, CA
Presence, Persistence & Perseverance

John, what sort of success rate are you experienccing using your directions noted above?  We all are looking for the 'Golden Egg' when it comes to developing a niche approach to increasing sales. Thanks!

Aug 15, 2013 12:29 AM
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Norman, there is no standard success/failure rate given a fixed set of circumstances.  Every hunt is different.  In general, about 1 out of 10 of our letters gets a response and only 1 out of those 10 (1% overall) will seriously consider an offer.  Improving the potential for a positive response is usually done by having a "good story" about why the buyer wants the house and why the seller should sell.  "I want a good school district for my kids" may be true, but it's a weak argument.  There's nothing in there for the seller, unless they truly just have a bleeding heart for young parents.  That story could be made stronger by adding that the buyer currently lives in a neighborhood where most kids join a gang by age 10 and the best paying job on the street is drug dealer.  If the kids already have knife and iklwa scars, don't be afraid to mention that.  When a deal does result from the solicitation, it's usually because of a strong story as much as good terms of sale.

Aug 15, 2013 01:47 AM