Tom Kelly: Do personal notes work in a hot market?

“Three girls and dad looking for house to buy. Erin, Laura, Jill and their dad are looking for a house to buy in this neighborhood … If you (or someone else that you know) are thinking of selling your home in the near future, please give us a call, Thanks a lot.”

Do notes like the one above, which was recently distributed in a red-hot neighborhood for real estate, have any success?

There is no specific data but they probably can’t hurt your case. It’s a good idea to send similar fliers to homeowners in the neighborhood you are completely sold on, but use your personal inquiries to supplement the work of a competent, knowledgeable agent. Personal notes expand your possibilities, but an agent could be the key to getting a house in an area you desire.

For example, I once knew an individual who represented a small investment club that wanted to buy rental homes in a specific, 15-block area of town. He felt the area would greatly appreciate and said that any neighborhood with sidewalks, tree-lined streets and a community park was a sure bet. He drove down the individual streets, wrote down addresses that looked appealing, and then visited the county website and obtained the owner’s name, assessed value and sale history of the home.

The investor subsequently wrote the owners, inquiring if they planned to sell soon or in the near future. He received five interested leads and eventually purchased two of the five homes. Another owner kept the investor’s letter, called later that year, and the investor closed on a third home.

In addition, an agent produced two more sellers in the area in the same calendar year, bringing to five the number of homes the investment club accumulated in its targeted neighborhood.

Some agents might argue that if a consumer is going “to work the neighborhood himself” there’s no reason for the agent to spend the time and money trying to find a buyer for a house.

I think that’s shortsighted. Historically, more sellers would rather sell through an agent than handle the deal themselves. Some folks, not all, like the middle person and don’t want to go toe-to-toe with the buyer of a property they may have owned all of their adult lives. These people much prefer somebody else to do the work and are willing to pay for it.

According to the National Association of Realtors, about 80 percent of home sellers use real-estate agents. But of the 20 percent who sell their homes without an agent, only 25 percent say they would sell without an agent again. That should tell you something.

Saving the trouble and expense of going through an agent should not be a huge incentive for a seller to sell or a buyer to buy. The bigger question is why should consumers involve an agent in the purchase or sale of residential property?

The answer is that some people need a real-estate agent and others do not. The average person does because most homeowners are not prepared for the tasks involved. They generally will overprice the place, handle advertising improperly, negotiate poorly and jeopardize a legally binding earnest-money agreement.

I believe that an agent earns a large portion of the commission by producing an honest, informed selling price for the client. If the house sits on the market, nobody wins and the asking price just artificially inflates the market.

Keep in mind that the real-estate agent gets paid only when a deal goes through. If you choose to contact owners in a specific area with personal notes, do so as only part of your plan. Ask an agent familiar with that area to help you and then talk with friends who have friends in that area if you can.

If you choose to write up an offer yourself and it’s your first time doing so, buy an hour of an attorney’s time to have the document checked. Then take the purchase and sale agreement to a reputable escrow company so the escrow process can begin. Be prepared to work until the deal is closed.

Did the three girls and their dad find a house? Not in the neighborhood they were seeking.

“It’s curious,” the dad said. “A couple of the homes I contacted had for-sale signs on them right after I wrote the note. I think the Realtors have worked that area pretty well and told the owners to contact them when they were ready to sell.”