Posted by Natalie-VA on July 01, 2007 at 12:32:33:
Show them proof. Give them examples of listings that took too long to sell because the sellers started too high and had to reduce. Show them other examples where listings that were priced correctly sold faster.
–Natalie
Is this the correct way to proceed? - Posted by Kris
Posted by Kris on June 25, 2007 at 09:01:25:
I would like to buy a home worth 225000 for 200000.I will be able to give the seller $30000 cash. I expect to pay a buyer’s real estate agent a total of $6750 to sell it. The homeowner purchased it for $210000 and has a mortgage of approximately 147000. Should I ask the lender if they will allow me to assume the loan at an agreed upon rate for the balance of the loan and agree to pay the seller 23000 at closing (when I re-sell immediately). I am a real estate listing agent and I think this should sell with a month or two. Does this plan seem to be the the best way to proceed?
No - Posted by Don (VA)
Posted by Don (VA) on June 25, 2007 at 10:01:23:
If I’m following your scenario correctly, there’s no deal here. You say you’d like to buy a home worth $225,000 for $200,000. OK, you’re buying it for $25,000 under market. Not enough for any real investor, but…
You expect it to sell within a month or two. If the home is worth $225,000, unless you’re in a hot market (not too many of those around today), you’d probably want to price it at $210,000 (roughly) to move it quickly…maybe less. But you’ve bought it for $200,000. There goes all your profit. Plus your holding costs for “a month or two” will be $2,500-$5,000, roughly. And what about your marketing costs to sell it? And any fix-up or repairs?
Let’s say the homeowner would simply hand the property over to you for what he/she owes: $147,000. Even then, it might or might not be workable. You’d still have to look at holding costs and transaction costs. Plus rehab. And to sell it quickly, you’d again be looking at a sales price of maybe slighly over $200,000. But there’s no room to pay the seller $23,000…and/or $30,000.
Finally, why would the lender agree to let you assume the loan? Very likely, the loan is not assumable. Only time a lender might consider it is if the interest rate on the loan is way above market. Sure, a lender wouldn’t mind letting you assume a 10% loan…but that might not be a good move on your part.
Or am I missing something here?
Re: The missing info… - Posted by Kris
Posted by Kris on June 25, 2007 at 17:11:51:
I am the agent who listed this perfectly good 2 year old house in December. The price is right-60 showings and no particular thread of anything specific that people as a whole do not like about it. The seller thinks that the lack of a sale is my fault and will re-list tomorrow with another agent who will certainly get the asking price of 224900 for the house within a week or so (since the pace of showings has picked up recently) with no marketing work into it since it is priced well below similar new construction. I don’t want to lose my commission after all the time and effort and I know the house is saleable-especially since the owner moved everything out of it last weekend. Does this info. change anything?
Re: No - Posted by colvegas
Posted by colvegas on June 25, 2007 at 10:28:28:
I think don is right on in his posting on this scenario.
Why would you assume his loan and as don stated most loans are not assumable anyways.
You will end up losing is you do this deal for sure…
If you took it sub2 for a longer hold and had a tenant with some monies coming in I would say ok sounds good since if the homeowner needed cash he can do a cash out refi as long as there is some equity left and the financing is still favorable to make a profit with a tenant.
If I can help further let me know since I work these transactions while protecting all parties and the property.
Re: The missing info… - Posted by Penny
Posted by Penny on June 26, 2007 at 05:19:15:
Have you run the numbers to see what your real profit or loss is after your commission, less advertising, less holding/carrying, less staging, etc. if you purchase the house and it doesn’t sell as expected or if you have to reduce the price even more? I’d suggest comparing it to what you’ve spent on your current advertising. Be careful not to throw good money after bad. Remember, it has already not sold as expected and obviously not for lack of showings.
If you really think it will sell in a month, could you offer a short term listing agreement to the seller possibly with some sort of incentive to give you more time? At least then, you wouldn’t be buying the problem and could have the possibility to recoup your advertising expenses & commission.
Good luck!
Re: The missing info… - Posted by seldon
Posted by seldon on June 26, 2007 at 03:44:26:
if it is “priced right” and has been shown 60 times why did it not sell?
Re: The missing info… - Posted by Kris
Posted by Kris on June 27, 2007 at 07:17:49:
Thanks for the insights. It has been helpful in formulating my plan, but, alas, despite a carefully worded and convincing proposal to the seller outlining all the benefits of an investor-purchase he has decided that he will hold on even longer (6 months already) in an attempt to recoup his purchase price!
Re: The missing info… - Posted by Penny
Posted by Penny on June 27, 2007 at 07:58:08:
I think you’ve had a lucky escape. I give you a lot of credit for trying something creative to help your seller even though they don’t seem to realize it.
It sounds like the seller doesn’t want to reduce the price and that may not be very realistic. For whatever reasons, 60 potential buyers did not see the value at the current asking purchase price for this property. That’s a pretty strong trend. A property can be in a good price range and attract lots of lookers, but if its perceived value to asking price isn’t good relative to other properties in the market, then it won’t sell at that price.
So any agent taking on this listing will have the headache of convincing the seller on the purchase price versus time to sell situation. Or they will have to figure out how to increase the value perception, and that will most likely involve some costs to the seller. I don’t see reasons to think that another agent will have a quick, easy success.
Did they relist with you or are you now free from this particular headache? For your sake, I hope you are now free because you sound like an exceptional agent who really goes the distance. You will be far more successful in helping new clients and working your other listings with the time no longer being spent on this one. Take pride in that you did your best within the constraints provided by the seller.
Best of luck!
Re: The missing info… - Posted by kris
Posted by kris on June 29, 2007 at 14:46:07:
I received an e-mail from the sellers concerning my suggestion that they cut their losses and take the down payment to move out of their rental apartment which they told me is in a bad part of town in their relocation area. They told me that they just couldn’t do it after all the money they’ve spent! What did they not understand? So, they are re-listing with another agent. The listing was supposed to have started yesterday, but so far I can’t see that it has been-not on local MLS yet. I think one thing I’ve learned from this is to encourage a seller to trend toward the lower than the higher range of asking price when listing. These sellers, like most, wanted to start higher than they should have in a market where there are a lot of new homes competing.
Re: The missing info… - Posted by Natalie-VA
Posted by Natalie-VA on June 29, 2007 at 19:34:47:
Most sellers do want to start higher on price. They always think they can just lower it later. What they don’t understand is that the first couple weeks of the listing are the most important and it should be priced right. Once you start lowering the price, the listing becomes stale IMO.
–Natalie
Re: The missing info…pricing property - Posted by kris
Posted by kris on June 30, 2007 at 15:53:16:
It seems as if most believe they should take a shot at making as much money as possible. What do you say or do to convince them that it is better to start at a price that will be attractive to buyers immediately?