In the competitive market for a home that exists in many parts of the country, more buyers are embracing a novel tool: adding to their offers a heartfelt letter and a family photo in hopes of swaying the seller to choose their bid.

"It is very common these days. It is so competitive out there. I think you've got to pull out all the stops," says Klaus Gosma, a Redfin agent in Seattle. "If all other things are equal, [a compelling letter and photo] could be a scenario that may make a difference. Most people are going to make the logical choice, but some people are going to be more emotional."

These days it's not only rare for the buyer and seller to meet during the homebuying process, but the buyer's agent and listing agent may never meet, doing all their interactions via text message and email. That can make the buyer's letter the only biographical information the seller receives.

"It does help humanize the buyer in the seller's eyes," says Victor Quiroz, an agent with Berkshire Hathaway HomeServices California Properties in the Southern California town of Cerritos. An effective letter is likely to include the buyers' professions, the ages of their children and a nice family photo. "It doesn't always work, but it does help a little bit."

For sellers, the letters add another factor to evaluate when weighing competing offers. But, agents say, letters can be persuasive because sellers are often emotional about selling their homes, particularly houses in which they have raised families.

"Every seller is different, and they're selling for a different reason," Quiroz says. "Sometimes sellers make decisions not based on financial issues. Sometimes they make decisions for emotional reasons. … I'm actually seeing sellers accept less money and turn down fast closings because they resonated with the buyers."

In markets where multiple offers are common, such as San Francisco and Seattle, families seeking to buy a home with a mortgage are competing with investors offering all cash and a quick closing. If a seller isn't in a hurry, and the net proceeds will be the same, a connection with a prospective buyer can influence the seller to accept a longer closing time and a bit more uncertainty.

After the real estate crash, large hedge funds came into Atlanta and began buying up rental property, competing with owner-occupants to purchase homes. Atlanta sellers, who usually are staying in the general area, often preferred to sell their homes to a family that planned to live there rather than a company that planned to rent the home out, says Craig McClelland, chief operating officer of Better Homes and Gardens Real Estate Metro Brokers in Atlanta.

"The sellers are typically connected to the property they're selling," McClelland says. "Sellers wouldn't sell to institutional buyers because they would leave their neighbors with a rental. … The sellers want someone to buy the house that wants the house." This is where a personal appeal can help buyers. "When they tie all these things into it, and the offer is equal in value, the majority of time they lean toward the letter," he adds.

But the most heartfelt letter can't trump the two most important factors in any real estate transactions: price and terms.

"If those two things don't make sense for the seller, then the emotional appeal won't matter," Quiroz says.

However, Gosma says he's participated in several transactions where sellers chose a buyer who wrote a personal letter over an offer of slightly more money. "They wanted it to go to someone who was going to be a good steward of the home going forward," he says of sellers who rejected an all-cash developer's offer for their childhood home in favor of a family who planned to live there.

While an all-cash offer from an investor with a quick closing may appear to be a sure thing, sometimes an offer with a mortgage contingency from a buyer who loves the house is actually stronger, McClelland says.

"To experience that emotional connection to the home is important for the seller," McClelland says. "This person is not going to give up on this purchase if a number shifts to the right or the left. … These are the ones that will have a smoother transaction," he says. "There is a monetary value to that."

Here are six questions for sellers to ask before being swayed by a buyer's emotional appeal.

Does the price meet your goals? Most sellers have a net amount they want to receive from their home sale, once the real estate commission and other sales expenses have been paid. If you can net the same amount from multiple offers, you may prefer to sell a beloved family home to someone you think will love and enjoy it as much as you do.

Do the terms work for you? The closing date, inspection contingency and other aspects of the contract may matter to you as much as the price does. If you need a quick closing, you may not want to wait for a family to secure a mortgage. If you haven't found a new home yet, you may benefit from a longer wait before you have to leave.

Is the buyer likely to close? This may be the most important question. Has the buyer been preapproved for a mortgage? Is his or her financial profile strong enough to likely meet all the qualifications and get the loan? You want to make sure your agent gets a significant financial profile of the buyer, not just an emotional appeal, from the buyer's agent. "They can write the best letter in the world, but if they can't verify that they're qualified, that's not enough," McClelland says. "We would never put [a letter] in place of them showing the ability to purchase."

What size down payment is the buyer making? The size of the down payment isn't always a sign of the buyer's financial strength, but it can be. If the prospective buyer is making no down payment or putting down 5 percent or less, ask questions about the buyer's other financial qualifications.

What will be the potential reaction to inspection issues? Nearly every home inspection yields a surprise, which is often a surprise to the seller as well. If expensive problems are uncovered, that could reopen negotiations. Is an investor or a buyer who really loves the home more likely to negotiate and come to a satisfactory solution? In some cases, an investor will walk rather than negotiate. In other cases, a buyer who has little cash reserve may not be able to close on a house that needs repairs.

Can you get a backup contract? In cases where a home draws competing offers, you may find that a prospective buyer whose bid you didn't choose will be willing to sign a backup contract. Or, an investor may be willing to come back. But it's also possible that either of those buyers could find another home and not be interested in yours the second time around.

Tags: real estate, housing, housing market, money, Seattle, San Francisco


Teresa Mears writes about personal finance, real estate and retirement for U.S. News and other publications. She was previously the real estate blogger for MSN Money and worked as the Home & Design editor for The Miami Herald. During her journalism career, she worked on coverage of immigration, religion, national and international news and local news, serving on the staffs of The Miami Herald, The Los Angeles Times and the St. Petersburg Times. She has also been a contributor for The New York Times and The Boston Globe, among other publications. She publishes Living on the Cheap and Miami on the Cheap. Follow her on Twitter @TeresaMears.