To Yellow Letter or Not to Yellow Letter? A Marketing Primer

If you’ve been involved in real estate investing for any reasonable amount of time, you probably have heard about the yellow letter marketing technique.

The Yellow Letter Explained

Here’s a standard yellow letter.

It’s been used for years and is a highly regarded marketing technique by many because of the high open and response rates you’ll receive on your mail pieces.  When it comes to direct mail, the first key (other than knowing WHO to send the mail to) is to ensure that your marketing piece is actually seen rather than tossed in the garbage without even a look.  The yellow letters are effective at eliciting a response from homeowners for a variety of reasons:

1. The addresses on the envelopes are handwritten
2. There’s a first class postage stamp — doesn’t look like junk mail
3. The letter itself is handwritten (or at least appears to be even when done via computer)
4. The letter is simple (it only indicates that you’re interesting in buying the home and provides a number for you to be reached)

I’ve mailed out quite a few yellow letters since the beginning of this year — not thousands, but certainly hundreds.  However, despite the solid response rates and the fact that many investors swear by these letters, my husband and I have decided to stop pursuing this marketing method, at least for now.

With great response rates, why in the world would we want to stop sending these letters out?

The yellow letter elicit responses for sure, but the majority of responses in my experience have been merely curious (tire kickers/time wasters), suspicious (“Why did you send me this letter? Are you stalking me or something?”) , or angry (“Leave me the #$*! alone and stop sending me your &^%#!@ letters!”).

Maybe it’s not fair to judge this method from hundreds rather than thousands of letters.

Maybe if we just persist, we’ll find that we get enough great deals to make it worthwhile to waste time defending ourselves with potential sellers.

Or perhaps this marketing technique is better used with certain lead sources vs. others.

My opinion (for whatever its worth) is that if an investor is going to use the yellow letter marketing technique, he or she should at least consider the following:

1. Pay an individual (or company) to handle the initial screening on all of the seller calls that come through to avoid the headaches and the wasted time
2. Consider edits to the standard yellow letter that will provide some level of comfort to the seller. For example, making it clear you’re an investor…or saying that you’re looking for properties in their neighborhood and would like to make an offer IF they are interested in selling).  The idea is to keep it short and simple, but the wording can be certainly be changed from the standard letters (for example, see this post for a yellow letter that investor and blogger Matthew Smith uses with pre-foreclosure leads).

Of course you ?can also just go with the standard letter as is since its apparently a proven method for many. Just be prepared for the responses you’ll get.

In the meantime, we’ve chosen to move forward with professional letters (that indicate that we are investors) with handwritten envelopes and first class stamps (which should give us the high open rate).  We’ll have to see how it works out.  Based on the responses over the next few months, we may revisit the yellow letter marketing, but if we do, it will definitely be with a different message.

For those who have or are currently using yellow letter marketing, I would absolutely love to hear your thoughts and comments below.?  What’s working for you? Are your experiences similar or quite different?

Image: YellowLettersComplete

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.