Direct mail response rates for real estate investors: the honest answer
By Josh MillerUpdated 4 min readThere's no honest single response rate for investor mail, because the list you mail moves it more than anything else: owners with a foreclosure filed sold off-market at about 13 of every 100 within a year, free and clear owners at about 1.5. Track your cost per deal instead of response rate, since a list with fewer calls and more sellers beats a list with lots of calls from people who won't sell.
Ask ten investors their response rate and you'll get ten numbers, and none of them will help you. Here's why, and what to measure instead.
Why no single number is honest
Response rate is calls divided by pieces mailed. Three things move it more than anything about the mail piece:
- The list. In the county records, owners with a foreclosure filed sold off-market at about 13 of every 100 within a year, expired listings at about 12, free and clear owners at about 1.5. Mail the second list and you'll get fewer calls from sellers, no matter how good the postcard is.
- The timing. The same list mailed in the month it sells and three months after gets very different calls.
- The county. Expired listings sold at about 15 per 100 in Harris County, Texas, and about 8 in Denton County.
So when someone quotes "1% response," ask: on what list, in what county, how long after the filing? Without that, the number is noise.
Why industry benchmarks don't apply
Direct mail industry reports publish average response rates across all kinds of mail: catalogs, credit card offers, coupons, mail to existing customers. The averages they report vary from report to report, and none of them measure a cold letter asking a homeowner to sell their house. Don't plan a budget from them.
A high response rate can be bad news
A postcard that says "CASH FOR YOUR HOUSE, ANY CONDITION" to every owner in a zip code can get plenty of calls: curious owners, people who want a free valuation, people who call to tell you to stop. Lots of response, few sellers. A plain letter to owners with a recent filing gets fewer calls, and more of them want to sell.
What to track instead
| Number | What it tells you |
|---|---|
| Calls | Whether the mail is reaching people |
| Conversations with an owner who might sell | Whether the list has sellers on it |
| Appointments | Whether your first call works |
| Contracts and closed deals | Whether the whole thing works |
| Cost per deal | Mail spent on the list, divided by deals from it |
Cost per deal is the one that pays your bills. Work out yours in thirty seconds.
Questions investors ask
What is a good direct mail response rate for real estate investors?
It depends on the list, the county and the timing more than the mail piece, so any single number misleads. Measure cost per deal: what you spent on mail divided by deals closed.
Do industry direct mail benchmarks apply to investor mail?
Not really. Published direct mail benchmarks average across catalogs, coupons and offers to existing customers. A cold letter asking a homeowner to sell their house is a different kind of mail.
Why did my response rate drop?
Usually the list changed, the timing slipped, or the list is being resold to more investors. Check whether the owners you mailed still had a recent filing, and how old your records were.
What should I track instead of response rate?
Calls, conversations, appointments, contracts and deals, by list, and cost per deal. A tracking number per list shows which lists produce sellers, not just calls.