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How to handle an unsolicited purchase offer for your home

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With housing supply still scarce, some real estate agents and speculators are trying to gin up sales by blanketing neighborhoods with offer letters. If you see one of these in your mailbox and you’re one of the statistically few people who is actually looking to move — or if your interest is piqued and you might slide into that category — you shouldn’t necessarily jump on the offer at your doorstep. Instead, it’s a good idea to do your due diligence and explore your options more thoroughly.

Different types of unsolicited offers

Offer letters are not all created equal, so before you contact a lawyer about getting closing documents drawn up, it’s a good idea to figure out how serious the correspondence is.

“If you receive a handwritten letter, that would be a little more realistic an attempt at buying a home,” said Angelica Olmsted, an agent with RE/MAX Professionals Cherry Creek in Denver.

A more generic form letter, she added, might be going out to your entire neighborhood and could be an attempt by agents to drum up listings.

And then there are the more predatory versions, where large companies or flippers try to convince you to sell your home for less than it’s worth by telling you it’s in bad shape.

“These letters are intended to create a situation where the homeowners have a loss and they have a gain,” said Doug Sager, a Realtor with the Grubb Company in the San Francisco Bay Area and at the InRealty Group of Better Homes & Gardens Real Estate in South Dakota’s Sioux Empire region. “We’ve seen offers of 50 or 60 cents on the dollar,” he added, “it’s a way to tap into your equity without you knowing what that equity is.”

Why you should still work with an agent

Because the real estate market remains extremely competitive, sellers still have the upper hand in most transactions. “You can make so much more money on the open market,” Olmsted said.

An agent will be able to evaluate your home’s worth and let you know if the letter you received seems like a reasonable offer. Even if it is, it’s still probably a good idea to list your property publicly before you sell, because you could be leaving money on the table if you don’t consider other offers.

“You still want to make sure that you’re represented in the transaction and that your interests are represented,” Olmsted said. “If you don’t have an agent representing you, the chances of you getting the bad end of the deal are pretty high.”

Even if your property is in need of some TLC, Sager said, you shouldn’t necessarily put stock in a letter that tells you it will be hard to sell. “Every property has a value regardless of its condition,” he added.

“One of the biggest parts of when you work with someone to sell a property, or to buy property for that matter, is the element of trust,” Sager says. “I don’t know how you could find that element in a process like this, where someone wants to shortchange you from the start” with an unsolicited offer.

Are offer letters effective for buyers?

For buyers, it’s probably not worthwhile to send letters out, or have your agent do so on your behalf.

“The chances of that one person that you sent something to being interested and willing to sell, it’s a slim chance,” Olmsted said. “There’s so much coincidence and happenstance that has to happen for the right house anyway.”

The National Association of Realtors also strongly recommends against buyers sending “love letters” to sellers because they risk veering into Fair Housing Act violation territory. Essentially, a letter that provides too much identifying information about you could lead a seller, whether consciously or not, to discriminate against either you or other potential buyers for your or their race or other protected demographic categories.

Even so, buyers may have reason to be a little more optimistic this year, with most experts predicting a slightly more normal level of competition for properties in 2022.

Bottom line

Whether you’ve been thinking about selling your house for a while or are prompted to do so by an unexpected message in your mailbox, it’s rarely a good idea to agree to the first offer you receive on your property, especially if it hasn’t been listed on the open market.

Instead, you should contact a real estate agent with knowledge of your neighborhood, figure out if the offer makes sense for you, and strategize with them about the best way to proceed if you do want to sell.

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Written by
Zach Wichter
Mortgage reporter
Zach Wichter is a former mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.