Re: You can often avoid RE commissions if… - Posted by john-Fla (long)
Posted by john-Fla (long) on January 15, 2002 at 14:35:28:
I have read your guy’s comments on flipping a property and what happens if the property you want to flip might have a realtor’s sign on it.
You might be able to do a number of things. But first I would like to comment on Mr. Artist’s posts. No matter what kind of deal the Buyer and Seller work out either independently of the realtor, or with him/her, as long as the realtor has a current listing on the property when the property sells, then he/she is legally entitled to the agreed upon commission. So in fact, it might be in the realtor’s best interest to agree upon a non-exclusive listing with the Seller because even if the Seller finds the Buyer himself and decides to sell the him/her the home, the realtor would receive his/her commission without having to expend as much energy as he/she would if having to find the Buyer his/herself. The point is the realtor would get paid regardless of the details of how the home is sold as long as he/she has a valid listing at the time of the sale.
Now-as to the flip. Dr. Whisler mentioned a good point which can work whether or not a property is listed with a realtor. That was that the Buyer could sign a contract to purchase the home and and then simultaneously flip, or quick sell the home to a rehabber or an owner occupant. More specifically say both you and the Seller (and the realtor if need be) agree on both a specific sales price of home and time table for you to close on it. You have all ready determined from research that the home has good margin available between the price that both you and seller have agreed upon, and what you can flip it for, then by all means try to flip it by the time period alotted for closing. If you find someone to sell it to before the date of closing, then the both the Seller and the realtor get paid that much earlier. If you are unable to find someone by the date of closing, then both you and the Seller at that time can agree to an extension of the closing date or you can agree to terminate the agreement. You have to make sure that you put all the specifics in the contract, be it a FARBAR or any other type of contract. I myself have found a home where I am going to try to do just this. This home is a FSBO, and the owner has put about $30K into completely remodeling it. However, he has a big mortgage on it and he has indicated that he will sell it to recover $25k out of the 30K he put into it. I have researched the home and have determined that there would still be 15K margin available at the price he ha indicated that he will take. So what I want to do it sign a contract with him and then immediately try to sell it to a owner occupant before the closing date. The home is a 4 bedroom 2 bath, and needs nothing except for some exterior stucco siding. So I think that I could find a few potential buyers to sell it to by the closing date. Well, I hav babbled enought for now. I hope this you in determing whether you could make some money with the home that you are thinking about flipping.—