What are typical response rates in high income areas?

[Nate Si]

What are typical response rates for a direct mail campaign from an investor or homebuyer to potential sellers?  What kinds of target groups give the highest response rates?  Does direct mail from buyers / investors work in high income areas, or does everyone in those areas sell through real estate agents?

[Whitney Hill]

Hi Nate! I've mailed in Northern NJ in high income areas -- houses with assessed values from $400K all the way up to $800K+ (with market values typically 20-30% higher than those assessed values). I believe these pricier homes receive less mail than lower valued homes, since high value aren't the 'typical' target of investors. Here are some response rates I can share from my pilot of 371 recipients, which I mailed up to 4 times over a 3-9 month period. This was just a pilot so sample size isn't huge, but hope it gives you some ideas.

Types of targets...55 of the leads were houses we wanted to live in (looking for a new primary residence at the time, we've since moved to CA) - those received a slightly different letter than the rest, stating that we were looking to move to their town and wondered if they were interested in selling (it did also say I was an investor, which was why I was looking for a house in an unconventional way!). 316 leads were "normal" leads and received a typical "we're buying houses in your area and yours caught my eye" sort of letter.

Sources of leads... I used driving for dollars, "data for dollars", and some tax liens+foreclosures. Data for dollars = properties where the improvement value is a low % of the overall tax assessment (meaning the house is probably old/unrenovated), low assessed value in area with lots of knock downs, recently transferred into name of a trustee...

Overall response rate for the whole 371 was 6.7% (response = anyone who called sometime in the mail campaign). 64% of those responses were to the 1st mailing, 28% to the second mail, 4% to the 3rd, 4% to the 4th.  Appointment rate was 3.5% of the 371 (I made offers on 80% of those appointments). Offer rate was 3% (this includes the offers made on appts plus a few phone estimates) - of those 11 offers, I have one tentatively accepted (seller keeps calling back to update me on their timing, I give it a 50% chance of closing). Put another way... my first mailings had a 4.3% response rate, 2nd mailings 2.4%, 3rd mailing 0.5%, and 4th mailing 0.8%. So a different experience than some who say the magic happens after hitting them 5+ times).

By type of target...for the 55 recipients who received a letter that I wanted to buy the house as a primary residence, I had a whopping 16% overall response rate. For the remaining 316, overall response rate was 5%. I will use those 316 targets for the rest of the numbers that follow, since the primary residence targets were clearly responding to the type of letter and results are not 'typical' (though good to know, in case you could legitimately say you are also looking for your next primary residence!). 

By lead source... driving for dollars targets had a 7% response rate, data for dollars 4%, foreclosures+tax liens just under 5%. 

By assessed value... to address your question about whether mailings work for high income or high value areas. I broke the targets into three ranges - those with an assessed value <$400K, $450-550K, and $550K+ (arrived at those numbers to get roughly 100 in each group). <$400K = 3.9% overall response rate, $450-550K = 5.6%, and $550K+ = 5.7%. So the higher valued houses had an even better response rate than the lower values (offer rate was about equal across groups). If we throw in those primary residence targets, the response rate for the $550K+ group goes up to 10%!

What type of mailers to send... I sent a different letter each time. First one is a basic intro (we buy houses, want to buy 2 in your town this spring, selling direct is great for X reasons, let me know if you want an offer), second one highlights what type of sellers typically like to sell to investors (own timeline, no hassle, house needs repairs etc), third mailing is a simple postcard that has similar message on it, fourth mailing is a letter saying I've reached out before and thought you might find these FAQs useful (and I include a 4 pg FAQ distilled from my website)-- I expected that letter to have more response (you'll see above the 4th mailing had a <1% response rate) and it may be that ppl are waiting til after Easter to call, as I get more calls after holidays when ppl have had time to talk to their family.

How to track all of this... you can guess by now that I'm super data oriented. So I use a combo of CallRail for incoming calls (it can record them) + Podio as my CRM + excel to transfer data for creating mailings (though I think Podio can do this directly, I'm just more comfortable in excel). Podio is free, CallRail is $30/mo for 10 phone numbers (I use a different one on different targets so I already know what type of person is calling before I answer, e.g. is it someone with a tax lien, someone I told I want to live in their house etc). You can read all about Podio on the forums, but in a nutshell you can set it up to automatically incorporate data from CallRail so that you can "link" those calls to the entry you have for that address. Then all your data is available in one place, even on your phone (so helpful if you get a call on the road, you can quickly figure out who you are talking to even if they don't give you much info). Also useful for scaling, as you can invite users to access Podio (e.g. someone who works your leads). 

Many people don't track leads at this level (and I'm sure most are doing more deals than I am now!). But my intent was to set up a good structure to manage leads as I scale up so I can measure what works and what doesn't. I'm going to outsource direct mail and start hitting many more targets now that I have the infrastructure set up. Good luck with your mailings!