Advice on selling a rehab in todays market

General Real Estate Investing
1

Hi all-

I would really appreciate any & all advice/thoughts/ramblings etc. on selling a rehabbed house. My location is WA State- a very small town, NOT like Seattle, though close enough that the housing market there does do a domino effect here over a period of 2-3 months. Of course, I realize every area is unique, & of course the market “ain’t what it was a year ago”, but even here things are not “flat”, just slow. Perhaps I am just being impaitient, but…well, here’s the story…

I purchased a 3 BR 1.5 BA in serious need of cosmetic repair- mainly inside. Paint, carpets, & updating were all needed as it was built in '72 & nothing had been done since then. (& looked it) ;D

In addition, the seller had pets which had soiled all the carpet, & was a heavy smoker, so it was nice & smelly too. The house had been listed with a Realtor last year, & was on the market for appx. 6 months due to this, B4 I made my lowball offer.

I Rehabbed in 2 months, remodeling both baths with updated vanities, toilets & fixtures, washed & repainted EVERYTHING, knocked out an interior wall to open up living space, put down Beech laminate flooring in the main living areas, put up custom draperies & hardware, new lighting fixtures, & recarpeted the bedrooms. I staged it with nice furnishings & area rugs in the main living areas, so buyers are not walking into an “empty house”.

So after all this, I have a Realtor caravan come through to give an opinion on listing price. Concensus of opinion was to list between 239k & 249k. I chose the lower & listed.

The first month there was a pile of cards every day - I think every agent in town & beyond showed it at least once. But no offers. Then, nothing. I have had 2 showings in the last month, even after a price reduction.

I called my agent & asked what kind of feedback she had been getting from other agents & prospective buyers- ie: what do I need to change? What is the problem? She told me there were NO problems, ALL feedback had been excellent, everyone that had seen it loved it!

The house is in an excellent location, everything is new & updated, & actually, I made certain before I listed that when I got an offer, that it would pass all inspections with flying colors (I went beyond cosmetic)…yet I haven’t even gotten ONE offer? Even after a price reduction?

Other comprable (SF,BR/BA) homes are selling within the price range I am asking, so I don’t think it’s overpriced, & after checking with my agent she agrees. Feedback from other agents comes back as “it’s the nicest house out there, gorgeous, good value etc”.

I advertised on Craigslist Seattle & had over 100 page hits in 4 days.
So what am I doing wrong?
Am I jumping the gun here thinking that it should have sold by now? It has been on the market in its rehabbed state for 2 months.
Or are others seeing the same slowdown that I am?
Any thoughts on what I might do to at least get an offer?
Thanks!

2

In a slow market I’d step it up after about 90 days on the market. Most people looking at your property are probably just nosy and want to see what you’ve done with the place- not serious buyers.

You can offer to pay the buyers closing costs, pay for a moving company, etc. Anything to make it easier for a buyer to purchase your property.

When you finally get an offer, work with it. Negotiate with every offer you get even if they are ridiculous because you never know when you’ll get another one.

3

Any house will sell at the right price. I suspect that the realtors are living in yesterday’s market. In any real estate downturn, here’s what happens.

  1. Sales slow down (days on the market increase)
  2. Sellers hope for yesterday’s price even though houses aren’t selling
  3. Inventory rises
  4. Buyers see the hugh number of houses on the market and look for a “deal”
  5. Sellers finally give in and prices drop

You need to figure out where your market is at.

Good Luck,

Mike

4

what is the demand vs supply in the area?

are other houses in the area(s) selling?

you say the market there is not “flat” - what’s your evidence for this?

you talked alot about the interior - what about the exterior and the surrounding (immediate) neighborhood?

what other incentives could you offer? is price reduction, the only thing you’ve done? consider offering “CASH BACK” or paying for a portion of closing costs. additionally, is your mortgage assumable? if so, maybe offer seller financing with an assumable mortgage.

also, hook up with a good mortgage broker that can get ANYONE a loan.

i think these are some ideas, many perhaps you’ve already considered.

the first few questions i asked only to get you thinking. sometimes, you can convince yourself to think in a dead end manner and unconsciously limit your analysis and creativity.

also, what’s your gross margin - what are you looking to get above and beyond the costs of purchase and rehab? how much is the mortgage and other fixed expenses cutting into this?

is renting it a consideration?

5

now i’m wondering if your realtors are experienced profesionals with a track record. Now i’m from oregon in the south and did a couple deals in smaller areas of western washington. So i could give you more of my take if i get a general vicinity, PM me if more consice opinion. Closing costs are a good thing for selling a home, cause people trying for 100% financing have more of a chance with that.

6

Wow…Thanks for all the responses!

In answer to all the questions:

Danny, Yes, Thank you, I kind of figured that quite a lot of the first showings were “lookie loos” but the weird thing is, that we had at least 3 repeat visits by the same prospective buyer (that was starting to look serious to ME, but what do I know), but never got a hard offer. To me, that was very strange. I never “turn up my nose” at an offer, I always counter if it’s not where I want it to be.

Property Manager Mike, we are at #4 right now, price reductions 3-5 times a week 10-20k each…which is why I dropped on my price as well. (competition, competition…got to “go down to keep up”- does THAT make sense? LOL)

TMCG, we have about 5-6 mos worth of inventory right now, this changes weekly as we have a Coast Guard station nearby & many sellers are pulling their listings & renting them to CG & CG buys as well. Also, lots of retirees have been recently priced out in nearby areas, so we are picking those up as well as their extended families as our pricing is anywhere from 50-100k lower.
2. Anything under 200k has been selling within a month provided the home in not a total “dog”. (many are on the inside, very dated & disrepair).

  1. I have access to the MLS through my agent & watch on a daily basis to see which homes go under contract when. Under 200k & those up to 250k with major price reductions of 20k go under contract. It takes about 1-2 weeks for price reductions to sell at the new price.
  2. NICE neighborhood. Clean, all homes are well kept & in good repair, quiet, no crime, neighbors are a mix of both young urban & retired. This actually extends for several miles in all directions, with the exception of the west where you get into 300-500k professional homes. Also, I didn’t list everything I did to the home (would have taken 2 pages LOL) but yes, it has curb appeal with landscaping & lots of flowers. ;D I also put in a new front door with a beveled glass panel.
  3. Have thought about cash back but holding that in reserve rather than another price reduction. Have all ready listed that Mtge is assumable with low interest rate (6.375) so agents are aware of this.
  4. My Mtge Broker could almost get my DOG a loan if I asked…well maybe not QUITE, but CLOSE! :smiley:
  5. I generally like to get 10-25k net out of my rehabs, depending upon how much work & $ I put in. On this one, even though it was a short rehab period, I put in a lot of work & $ so am looking at the high end of that. As it stands right now, with what I have in it + closing costs & commision, I stand to net just above the 25k. So I DO still have room to negotiate by cutting my profit. BTW, just curious, what do you other rehabbers like to net on your deals?
  6. Yes, I have considered renting, & can make the figures work, but it’s a slim margin when you consider all the variables, which does not excite me.
    Involved Solutions, yes, my Realtor has a good track record, has been at it for almost 10 years, so not just because of the recent hot market. I know a good percentage of the Realtors here (small town like I said), & she is one of the better (& more honest) ones available. That being said, I will PM you with the exact location… ;D

Again, I appreciate everyones time & response on this, I am always open to creative solutions & sure don’t claim to know it all, so every response is welcomed & certainly helps me to keep an open mind!

7

Sounds like your doing all the right things. It’s only a matter of time before you get an offer.

8

As a real estate agent, I have a theory on why this may have happened. Sounds like you had an interested buyer who thought it over, and wanted to show family and/or friends to see what they thought. More than likely, if they were younger buyers, they brought ‘mommy and daddy’ over to see what they thought. Obviously, mommy and daddy have a nicer home, and make the mistake of thinking of themselves in that home compared to what they are living in. In those cases, and I only mention this because I’ve seen it many times, whoever they bring to look at the property shoots it down, goes out of there way to point out its flaws, that sort of thing.

Suddenly, your interested buyer just got talked right out of making an offer on the advice of family or friends so they can “see what else is out there.”

Just a thought.