“Dear Mr. and Mrs. Smith,

My name is Jim Johnson and I’m a sales representative with ABC Realty Ltd., Brokerage. I may have clients who are interested in buying your home and are willing to pay top dollar for it. If you’re considering selling, please contact me so we can discuss this in confidence.”

Letters like this have been around for as long as I can remember. They’ve become much more prevalent of late in central Toronto because the supply of homes listed on MLS has been insufficient to keep up with demand. This has caused agents and buyers to look for homes to buy which aren’t on MLS. If you live in central Toronto and haven’t received a letter like this yet, don’t despair. There’s a pretty good chance you’ll get one in the future.

Enough people have been asking me how to respond to these letters that I thought it would be useful to share some tips about what to do if/when you receive your letter. One way to respond is to rip it up and throw it in the garbage because you’re not thinking of moving. But let’s say you’re toying with the idea of moving. What should you do?

First, examine your own situation: Are you ready to move? Do you know where you’d like to move? How much will your new home cost? Approximately how much is your current home worth?

Unless you know the answers to these questions, you could make a costly mistake. Here are a few examples of mistakes I’ve seen people make:

• Seller A thought the offer was too good to be true and sold his home for $1m. He planned on renting while he looked for another home, which he figured would cost him $800,000. Unfortunately, he soon found out he had expensive taste and the homes he coveted were in the $1.5m price range. He couldn’t afford these homes and, with hindsight, determined he never should have sold his home in the first place.
• Seller B also thought the offer was too good to be true and sold her home for $2m. She planned on renting while she waited for the market to crash so she could buy a larger home for her growing family at a lower price. Unfortunately for her, the market didn’t crash. Prices continued to rise and, as a result, not only was Seller B unable to afford the larger home she wanted, she was also unable to afford to buy a home the size of her original home and ended up buying a smaller home for her growing family.
• Seller C couldn’t believe his ears when the Realtor told him the offering price. He thought he’d won the lottery. It was only after the deal was completed, when he did a little research, that he realized he had sold his home for less than fair market value.

Second, assess the seriousness of the letter: You need to determine how much time to spend on this. Read the letter carefully. Notice how this particular letter says “…may have clients…”. The Realtor may have clients. Or he may not. He may be sending this letter to numerous homes in search of potential clients in the form of people who are thinking of selling their homes.

Also, I hate to say this, but unless your home is being purchased for land value, chances are the letter isn’t all that serious. Remember, the buyer and the Realtor haven’t even seen your home yet. How many buyers are willing to pay $1m for something they haven’t even seen? I’d suggest you call the Realtor and ask questions such as: What kind of home is your buyer looking for? What features do they want? What’s their price range? The Realtor’s willingness and ability to answer these questions should provide clues as to the seriousness of the letter and whether or not this is worth your time pursuing. Ask questions until you have a clear picture as to why you were contacted.

In my experience, most of these letters are a waste of time. If you’re serious about selling, you should be putting your home on MLS to get maximum exposure and receive maximum value. If you’re not serious about selling, I’d suggest you only sell if you receive a worthwhile premium for your home and you know where you’re going to go after you sell.

My best advice to you is this: if you’re considering selling and receive a letter like this, speak to your own Realtor before you do anything so you’ll have a good handle on the true value of your home, how much your new home will cost and how long it’ll take you to find it because it could take a long time in this market. If you’re like most people, you won’t want to be renting or living with relatives for a few years. And what happens if prices go up by 10% or more while you’re looking for your new home?!

As always, if you know anyone who’s interested in learning how the market works and who’d like to receive the kind of help that involves honest answers, straightforward advice, no pressure and being treated like family, please let me know the best way for me to connect with them because I’d like to offer them this kind of help. And as always, don’t be shy if you have any questions or comments about this post! Thanks for reading.