Hey all,
I just completed my first rehab. I’ve had it on the market for about 3 weeks now with a couple of nibbles but that’s it. My question is who out there is selling rehabs fsbo or who is using realtors to get their property sold? Any comments or stories that you can lend to the question is appreciated.
Nate-WI
I sold my first rehab with realtor. I wanted to make sure I didn’t pay holding costs any longer than I had to and I also wanted qualified buyers only to be looking. It sold fairly quickly and I had favorable comps and support from the realtor in pricing it to sell. I guess it just made me feel better to use a realtor. Graciez
depends on your tolerance for holding costs vs commission.
I put up a FSBO sign as soon as renovations start to generate “drive by” interest. Sometimes you’ll have a buyer even before you’re finished! A week or 2 after completion, I list with a realtor to get it on MLS.
If you can bring the realtor more business, you have leverage to negotiate hard on the commission.
I’ve done it both ways. Depends on how fast you want to sell and how much traffic/interest you can generate on your own. I sold a property that was at the top end of the market where it was located with a realtor as I knew it required a well-qualified buyer. I’m doing a FSBO right now where the buyer is a tenant. It is definately some extra work as thye are first time buyers and clueless about the whole process.
Another way go is pay a couple of hundred dollar to get it on the MLS and then offer 2.5% to buyer agent. I sold my primarly residence a few years back (late 90’s) that way with good success (sold in 45 days in a pretty neutral market place).
I also tried FSBO once and had a lot of “just interested” phone calls, but never could get it to sell. Listed with a realtor for more than shte FSBO price and got it sold right away.
"Another way go is pay a couple of hundred dollar to get it on the MLS and then offer 2.5% to buyer agent."
How did you manage to get the listing on the MLS without paying an agent a commission?
There’s lots of sites/people that will do this. Forsalebyowner.com is one site that will place your listing in the local MLS for a set fee. Other realtors also advertise placing a listing in MLS for set fees, I’ve seen them range from $250-$1000. My MLS system doesn’t charge any extra to put a listing in the system so if I my boss would agree, I could offer the same service.
Anyway, the way I look at it, it’s kinda like fixing your own car. Some people have the skill and proper tools to do it, some don’t. Sometimes people really aren’t saving that much money when doing it themselves. Know how some mechanics are really skilled and with the right skills and tools can do a job in a couple of hours whereas it would take you the whole day or more to do the same thing?
So once it’s in MLS, you still have to offer a commission to the other side so you end up saving half the usual fee. Actually less than half because you did pay someone to put in MLS. Then you have to schedule your own showings, consider your own personal safety, qualify your buyers, handle home inspections, smoke detector inspections, and other additional paperwork. Depending on how many hours you spend, it could be like a second job, so you just trade the saved commission as extra work for yourself. Also the commission come out of your profits so you don’t get taxed on it.
Anyway, just putting in the good work for realtors… I figured someone got to speak up for us! Oh, and I forgot the most important part. Realtors get paid when the sale goes through so they’ll prod each side to negotiate til there’s a sale. You don’t really have that in a FSBO and people get too caught up emotionally so they don’t sell.
This is a key point (I’m not an agent BTW)!!!. I’ve been in a couple of deals where the other party got really pi$$y and bigheaded but the agents kept it on track. Strangely enough a lot of people somehow lose focus on what is important and do all kinds of strange things. I’ve spent a lot of my non-RE business life doing project management and negotiations. Staying focused on the end goal is critical.
Well, I make about $20/hour at work and I’d save at least $3000 by selling my place myself even if I did pay for a flat MLS fee and the buyer’s agent. That means it would have to take me at least 150 hours of extra work selling the place FSBO in order for it to be worth hiring a “professional.” And that’s not even considering that I’d still have to spend SOME of my time and energy working with an agent anyway.
Gordo, I am a real fan of professionals. I don’t do my own brain surgery, and I don’t sell my own houses. In my opinion, real estate agents have their place. They can’t help decide if a property will make money, they can’t help with the best financing, they can’t help decide on how much I should pay for a property. What they can do is sell my house. My lesson was learned about 3 years ago when we built a house and put a “For Sale” sign in front of the house and listed it in the local paper. It was on Lake Conroe and comped for about $250k - $300k. It was on the market 6 months. Then I took a trip to Europe, on that long plane ride, I read Rich Dad, Poor Dad, where Robert Kiyosaki talked about how we will tip the waiter well, but grudgingly pay our professionals who actually make us money. I don’t agree with every thing that Kiyosaki says, but that made sense to me. We listed it and had an offer in hand that month and closed that next month. I have always since then believed that if you want to sell a house, use an agent. That is what they are the best at.
I just bought my first rehab. The wife takes her real estate exam next month, just in time to list. We will be getting the best of both worlds with her being a realtor.
If your wife is a realtor it could end up costing you money. As a realtor she will be required to disclose that at any sell or buy. People will know that she has a better understanding of how much the property is really worth there for slimming your chances of getting a lower offer accepted. I took all my classes and skipped the state exame. I learned all the info and contacts and don’t have to tell anyone. I then made a deal with a realtor. I find the houses and she will pull all my comps and list for me for 1%. She makes quick easy money if I’m buying or selling. Anyways, just something to think about.
Hopper
Here’s my take on this. The quickest way to sell a house is to have a prescreened buyer that can afford that house look at the houses that meet their criteria. This is where a real estate agent comes in.
When you buy a rehab, chances are that was not a nice house when you bought it. Now that your’re done with the rehab, in theory, it is the nicest house in the neighborhood. All the real estate agents in the area need to know this, and they won’t know it by just listing it on the MLS or by putting a “For Sale” sign out front.
Have some post cards printed up with a picture of your house on the front. You can get these online for less than $100 for 500 full color post cards. Send them to every agent in your area. On the card, advertise an Agents Open House for a full day during the week. Also advertise what commission you are going to pay to a buyers agent. Give some incentives to get buyers sooner rather than later. 4% if sold before April 20, 3% after.
This will get many agents walking through your house. They now know it is an awesome house, and they probably have at least 2-3 buyers that would be interested in it.
My first flip was supposed to be a good deal for my wife and I to live in, but plans didn’t work out. We were 4 hours away, so we had to list w/ an agent. First agent listed house, ran it in the magazines, and put a sign out front. However, all agents in town knew this house as that dump bank owned property. After 3 months, we fired that agent and hired a new hungry one. She was one that knew it as a dump. She walked through it, and immediately set up an Agents Open House two days later. Most of the area agents went through the house that day. We had 3 offers that week, and actually sold it for a couple thousand over our listing price.
The key here is that many times, buyers don’t know about your house. Your job is to make sure that their agent does know about it.
Well, I make about $20/hour at work and I’d save at least $3000 by selling my place myself even if I did pay for a flat MLS fee and the buyer’s agent. That means it would have to take me at least 150 hours of extra work selling the place FSBO in order for it to be worth hiring a “professional.” And that’s not even considering that I’d still have to spend SOME of my time and energy working with an agent anyway.
Do you know the average days on the market for your area? Do you know the average sale price per days on the market for your area? Do you know how to figure what your marketing price should be and what your actual sell price should be? Do you know your state’s laws concerning RE sales? Can you prequalify potential buyers BEFORE they get to look inside your property? Can you have outsale hundreds of RE agents, most of whom will be trying to sale your property (find out how many REALTORs work in your area. Everyone of them can sale your property). Those are just a few of the services that RE agents, the “professionals” provide.
And do you really “save” the commission? What is the average days on market for a listed property in your area vs. a FSBO? Do you know? If your total monthly holding costs are $1000/month, then it only takes three months longer before you’re losing money. If the average FSBO sells for $3K less than a listed, then you’re already in the hole.
Raj