Joel Goyette and Margaret Cooley walked into the open house for a two-bedroom 1920s Craftsman in Berkeley, California, and knew they’d found their dream house. So did 10 other couples.
Having lost out in two bidding wars, the couple decided to try to connect with the sellers over more than money. Neighbors had told them about all the restoration work the owners had done, including five weekends stripping interior doors down to old-growth Douglas fir. They learned how close-knit the neighborhood was, with "meals shared, tools borrowed" and how "people overall looked after each other," says Goyette.
So when they sent the sellers their bid, they included a two-page personal letter. They wrote about how much they appreciated the home's character and the hard work the sellers had put into it, that it would be their first home, and how much they valued being part of a close community. Since Goyette had made a foodie connection with the sellers when they saw him ogling a bookshelf of cookbooks, "we couldn't resist sharing our plans to construct a masonry grill in the backyard and build a thriving social community with friends and neighbors," he says.
The couple raised their offer by $25,000 during the ensuing bidding war. It wasn’t the highest bid, but it was the winning one. “We were told that our letter made a big difference. The sellers felt a connection to us,” says Goyette.
Goyette and Cooley’s experience shows the value of writing a “love letter” when pursuing a home. These letters can be so effective that some seller’s agents try to intercept them to keep the focus on price. Nearly four in 10 home buyers facing off against other bidders included a love letter with their offer last year, according to national real estate brokerage Redfin. In multiple-bid situations in 2013, Redfin found, bids with love letters were 9 percent more successful than bids without a letter.
The Kid Card
For a buyer billet-doux to have the greatest impact, children may be pressed into service. Kris Paolini, a Redfin agent in Rockville, Maryland, recalls one bidding war in which his clients included not just a letter from themselves but a note from their teenage son. He mentioned how great it would be to live in the same neighborhood as his two best friends.
Including a picture can also help tip the odds. San Diego real estate agent Cheree Bray recalls one deal in which her clients beat out an all-cash offer after noting in their letter that the spacious backyard would be an ideal romping area for their two young boys, and included a family photo. “The seller was choosing between an investor who wanted to tear down the home and build a new house, and my couple, who wanted to live in it just like she had,” says Bray.
Just don't go too far, like the pregnant woman who offered her first-born child as a namesake.
Love letters aren’t solely for bidding wars. A few years ago, Seattle real estate agent Ryan Halset was helping a woman sell the home in which she had raised her family. The list price was $375,000. A single bid arrived from a young couple offering $350,000; it included a letter saying how much they hoped to be able to raise their family in the home.
The seller insisted on accepting the offer, despite Halset’s advice that she at least counter. “She wanted to give the family a leg up,” says Halset. “For some sellers it’s about being able to drive by every few months and feel good about who’s in your home that gave you so many memories.”
The utility of the home buyer love letter makes perfect sense to Jared Curhan, an associate professor at the Sloan School of Management at the Massachusetts Institute of Technology who specializes in the psychology of negotiation. “The higher the stakes, the more our emotions can come into play when negotiating," he says. "And for most of us, buying and selling a home can be our biggest financial transaction."
People are prone to incorporate “subjective value” in negotiations, all the stuff that doesn’t center on cold hard dollars and cents, says Curhan. In the business world, that softer stuff comes in understanding that an interaction may not be a one-shot deal, and is part of judging whether people will be good long-term partners. While a home buyer and seller probably won't interact again, accepting the initial offer isn’t the end of the deal. “You’ve still got the inspection and the back and forth to get to the close,” he says. “On some level a love letter can signal to a seller that the buyer is someone they think they'll be able to work with through the closing process.”
That's not just academic experience talking. Curhan and his wife knew that a house they wanted was coming on the market, and that homes in their area were getting multiple bids. So they wrote a handwritten letter to the owner saying how much they liked the house and sensed that it would be a great place to raise their family. They included a photo of the kids and the dog. Curhan says the letter opened the door to a negotiation and they got the house before it went on the market.
If your offer is way off in price and you’ve yet to line up your financing, even the most compelling letter won’t be of much help. And your agent should have done enough legwork to let you know if a letter is even worth it.
“There are two types of sellers,” says Paul Stone, a Denver real estate agent. “One is focused on the bottom line and the other is more emotional. If it’s the former, don’t bother.” Same goes with bank-owned homes and short sales, sales made when a lender approves the purchase of a home for less than the balance owed.
Most agents recommend keeping a letter to one page, though as Goyette and Cooley found, this is more art than science. Aim for genuine, not smarmy. You and your agent should keep an ear open for any mention of projects the sellers undertook; that’s where they may have an especially strong connection you can call out in your letter, as Goyette and his wife did.
If the home is still occupied when you tour it, do some sleuthing. Agents point to bookshelves as a great tip-off to the seller’s hobbies and interests. For example, if you see gardening and landscape books and it's evident the owners have put a lot of effort into the grounds, a seller may respond to your interest in landscaping, or at least a commitment from you to ensuring its upkeep.
Writing a letter doesn't guarantee it will be read. “When I represent the seller, my job is to get the highest amount of money from the most qualified buyer,” says Portland, Oregon, broker Rob Levy. “So I am not inclined to show a love letter to my seller.” But get this: When the tables are turned and Levy is working with a buyer, he includes a written stipulation in the offer that the love letter be presented to the seller.
Bray, the San Diego agent, leans on technology. She merges the offer and the love letter into one PDF, betting that most listing agents might not have the software to splice the love letter out of the document.
The fact that listing agents like to omit love letters suggests the strategy’s potential effectiveness. “A seller does not have to take the highest and best offer,” says Pat Combs, a Grand Rapids, Michigan real estate agent and past president of the National Association of Realtors. “They have to take what makes sense to them."
Letters can backfire if enthusiasm comes off as desperation. Nancy Lynn Jarvis represented the seller of a Santa Cruz, California, home that attracted six bids above the list price. A couple, one of whom was very pregnant, wrote in a letter that they would gladly name their first-born after the seller. Another man offered his Purple Heart. Neither got the house, says Jarvis, who now writes mysteries with a real estate agent as the protagonist. That particular misadventure in love-letter writing made its way into her book “Buying Murder.”