For my latest rental property purchase, I submitted a cover letter along with my offer to purchase the seller’s property. If you are unfamiliar with this strategy, you may wonder what I’m even talking about since this step is not standard practice. If you’ve used a cover letter before, you may already know just how well this one extra page can work. With my most recent purchase, the cover letter set the stage well for negotiation and helped get the deal done on mutually beneficial terms where it may have otherwise fallen apart.
Cover letter basics
An offer cover letter is just what it sounds like, a brief one page letter used as a cover to your offer. There are numerous reasons to use a cover letter, but the simple fact is that including a cover letter with your offer boosts your chance of having that offer accepted.
5 ways a cover letter can strengthen your offer
There are several purposes for submitting a cover letter with each offer, but here are some things the letter will help you do:
- Stand out from other offers – Attaching a cover letter is not standard, so it will immediately make your offer stand out. In a hot market especially, it doesn’t hurt to be unique (in a good way).
- Show that you are human – Prefacing the legalese of a standard offer by providing a human touch shows the vendor that you are a person too. The cover letter can help establish a positive rapport with the vendor and set the tone for more harmonious negotiation.
- Explain your offer in plain English – A confused mind says no, so a cover letter which explains the terms of your offer in simple language can be a powerful tool.
- Let the seller know what you want – You can use your letter to let the vendor know what terms are important to you. If you need a certain closing date, seller financing, or some extra showings before closing, use your cover letter to make this known.
- Highlight the benefits of your offer – Perhaps the greatest benefit of the cover letter is that you can tell the vendor why your offer is a good one. Whether you are giving them the closing date, price, or other terms they want, be sure to emphasize how your offer meets their needs and creates a win-win deal for each party.
Ideas for your next offer cover letter
Depending on what your offer entails, here are a few things you may wish to try in your next cover letter:
- Feel out financing terms – If you are interested in seller financing, you may wish to offer that option to the vendor. The cover letter is a perfect place to offer this opportunity.
- Test multiple offers – You might be willing to offer more if you get a certain closing date, appliances, or seller financing. If these things are valuable to you, let the vendor know you are flexible and consider including an alternative offer.
- Request open communication – As an investor you may be flexible on certain things such as the closing date which could be a point of contention with other buyers. If you can get the vendor let you know what is important to them, then you can use your creativity to create a win-win solution and get the deal done. Request open communication in your cover letter and try to use any info you receive to address the vendor’s needs throughout the negotiation process.
- Justify your price – Whether you want to mention comparables, point out some “scary” flaws in the property, or flatter the seller, you can use the cover letter to justify the price you are offering. If you are offering great terms and a slightly lower price, simply explaining this may have the vendor take your offer more seriously.
Give this a try on your next deal and you’ll be impressed with the results. You can even include cover letters with your counteroffers to aid in the negotiation process. Even if you lose out on a deal, you’ll sleep well knowing you went the extra mile and did your best to put together a winning deal. It only takes a few minutes to write a professional letter, but that one page could make all the difference.
If you have any creative uses for offer cover letters or tips on what works well, please leave a comment below.
photo credit: andrewrennie
