Marketing high end houses - Posted by The Baze


#1

Posted by Bud Branstetter on December 23, 1998 at 11:05:10:

I don’t know that I could negotiate 500k but then I wouldn’t do it with a 40K margin either. The 120 days on that size house at this time of year with no previous network is the bigest detriment. You could spend several thousand on advertising alone. The risk is spending your time and some money on something that is not likley to be fruitful. The time may be better spent on other deals. With a larger potential profit(10-20%) I would spend more time.


#2

Marketing high end houses - Posted by The Baze

Posted by The Baze on December 22, 1998 at 21:23:21:

I just got an option on a house in an exclusive neighborhood here in J’ville. House is worth $725,000. I have an option for $685,000. (Karp, thanks for the line - “I believe I can find a buyer before you can. If I do, I’d like the opportunity to profit from it.”) Problem. I’ve never dealt w/ a house in this price range. I’m sure marketing these houses is different than marketing your normal, everyday $50,000 house. I’d really like to pull this one off. A $40,000 payday would make my 1999. Anyone have experience selling these houses? I’d really appreciate some insight and advice. My option is only good for 120 days. Thanks folks, and I hope everyone has a terrific Christmas and New Year.

Tom Bazley


#3

Lesson learned - Posted by The Baze

Posted by The Baze on December 23, 1998 at 16:37:55:

When your profits usually come in the form of $1500 option consideration, or an occassional flip for $5,000 - $8,000, a $40,000 payday seems like a big deal. But I spoke w/ some investors earlier today who told me this wasn’t such a good deal. I thought “C’mon, 40 grand! I don’t have to buy the darn thing, I just have the OPTION to.” But now when I see the same advice coming from people I really respect like Joe Kaiser, Jim Piper, Millie, and all you others, I guess there’s a lot I didn’t consider. I may put a little bit of effort into this thing, but it’s not going to be the gung ho, win one for the Gipper type of effort I had envisioned. Thanks all.

Tom Bazley


#4

There’s a name for these type of people . . . - Posted by Joe Kaiser

Posted by Joe Kaiser on December 23, 1998 at 13:01:43:

We call them real estate agents.

If you’re working on margins this slim, you might as well just go get licensed up and make a career out of it.

No, not really, but you probably get the idea.

Joe


#5

Re: Marketing high end houses - Posted by JPiper

Posted by JPiper on December 23, 1998 at 01:46:38:

I think you forgot all about decimal points.

Would you buy a house for $68,500 that was worth $72,500?? I doubt it, it would be too skinny. So’s this one. I’m with Millie. I’d need to buy this one for $500K to make it worth my while.

JPiper


#6

As far as marketing the home… - Posted by SCook85

Posted by SCook85 on December 23, 1998 at 24:54:07:

Marketing this home will require more leg work on your part then print advertising. You need to target potential buyers and let them know that you have the property. Don’t mention that the property is worth $725,000 (really when you get into that price range what is the home worth, if you get $795,000 it will appraise for that). I would call large corporations in your area, ask for there human resources department and see if they have any high profile executives transferrin in to the area. Talk to business owners or your attorney, ask if they know anyone interested. I think you are probably going to have to find your buyer.
Hope this helps!

SCook85


#7

Re: Don’t need expensive houses to make big profit - Posted by Millie I.

Posted by Millie I. on December 23, 1998 at 24:18:07:

Dear Tom,

You’ve got courage man, I’d never try to flip a house in that price range, not unless I have a few millioneers standing in line to buy it from me. High price houses don’t move too easily. They often sit for a year or more ( unless you are in the west coast ). The cost of selling this kind of houses could run up quite a bill. Irwin is being practical. You could spend more than half of you potential profit before you get a buyer. And then what if the buyer is a smart-ass and decide to make a low ball offer, then what happens to your dream ???

$40K is not a lot of profit on a $725K house, I made $38K profit on a house I paid $35K for early this year, and sold for $80K. The one I am working on right now, I paid $33K, I will sell it for $70K after $3K of work is completed, that’s $34k in profit. I try to put out as little as possible to make as much as possible. Yes, I pay cash, but out of a credit card with a 3.9% interest for 12 months. Very low loans costs. Balance paid off before the 12 months is over.

The bottom line is: Do you want to make $40k in profit or do you want the glamor of dealing with high price properties? Personally, I shy away from high price projects because if something went south, I want to make sure I won’t lose my shirt. Maybe I am chicken, but I like to keep as much of my hard-earn money for myself if possible.

To me, the best deal is the ones that makes the biggest bucks for the lowest cost. For a $725K house, I have to be making at least $250K profit before I’d even look at it.

My 2 cents,

Merry Christmas & a Happy Richer New Year,
Millie I.


#8

A Medal of Honor Effort - Posted by Irwin

Posted by Irwin on December 22, 1998 at 22:22:11:

I see these advertised in exclusive publications, i.e. those read by professionals, executives, i.e. the very rich. I don’t know how much these ads cost, but they don’t look inexpensive. Then there are brochures and direct mailings to corporate relocation specialists.
A photo spread on various internet sites might attract someone.
The problem you will no doubt run into is that people who buy in this price range ususally utilize brokers. Unless they employ a buyer’s broker, no broker will bring you a customer unless you agree to pay at least 1/2 a commission, which will probably cost you about $20-$25kk., which is half your potential proft.
Also, is this house in perfect condition? People who shop in this price range expect perfection plus, and they’ll drive you nuts trying to satisfy their every whim. (If you get the impression that I don’t care much for rich people, you’d be right.)
If you get this done and make money, you deserve the CREONLINE Medal Of Honor. And if there is no such award, I’ll bet J.P. would create one for this success story.


#9

High end Houses, the Real opportunity… - Posted by Mark R in KCMO

Posted by Mark R in KCMO on December 24, 1998 at 11:52:05:

Baze,

Here is the Myth!

“Marketing to high end is different than everyone else.”

WRONG!!!

A buyer is a Buyer, this will be thier home, emotions come into play. You need to reach the potential buyers and sell them on your house.

Notifying companies that it is available, is only worth the time it would take to send a fax.

You are looking for a short closing time to pull this deal off, so look for people needing to dump cash and buy real estate, who would be your best target???

Guessed yet???

What about people needing a 1031 exchange??

What about people who have currently listed thier high end house?

High end homes are for marketing the realtor, not the home.

You have a chance to create a list of high end sellers and buyers.

Your Normal Classiffied ads should be your best bet.

As you generate this list, you will now have a list of people in your area that will have assets and have a desire to invest them some where to get a good return.

Could these people be a source of Notes?? or could these people be buyers for notes?? Or best yet would these people become private investors so your can buy notes.

I have a small stream of high end notes that were found by marketing high end houses.

If you need more details please feel free to contact me.

hope this helps

Mark R in KCMO
Sales@usa-mall.com


#10

Re: Lesson learned - Posted by Reif

Posted by Reif on December 23, 1998 at 19:42:33:

Since the sentiment here seems to be that it will take some time to get your deal done, why don’t you try and amend your option with the seller.

Ron LeGrand talks about a non exclusive option.

Maybe you want to say to the seller, “I MIGHT have been a little optimisitc with my first time estimate, how about this: Let’s sign a deal, commencing with the first day after my exclusive option expires, that if I sell your place I still give you the option price, but if you can try and sell it as well. If you sell it first, I’ll have no claim. That way, you’ll have two of us working on it and it doesn’t cost you anything more.”

Just a thought if you start to get the hang of the marketing and you’re running out of time.

Reif


#11

What the?!?!? - Posted by Joe Kaiser

Posted by Joe Kaiser on December 23, 1998 at 18:33:23:

Tom,

It would be really cool if you would figure this thing out and prove everybody wrong. You’re into it already, have at it man and stick it to us. I’d love to see you rub our noses in $40k.

Joe


#12

I Don’t Understand… - Posted by Marvin Seawood

Posted by Marvin Seawood on December 23, 1998 at 10:48:03:

What Tom’s risk is… provided he is willing to do
the marketing for $40,000.

JPiper - He already has a seller willing to accept
$685,000 (presumably, minus closing costs). In the
event he cannot find a buyer with $725,000 or more
(plus closing costs), he can let the option expire.

Marvin


#13

Re: I Don’t Understand… - Posted by JPiper

Posted by JPiper on December 23, 1998 at 20:54:04:

Marvin:

This deal looks like a waste of time to me.

I believe houses are sold by either price or terms?..this has neither going for it. Last time I looked, wasting time was like wasting money?..using up time that could have been used searching for that deal that truly made economic sense and would put significant dollars in your pocket.

I agree that there doesn?t appear to be risk other than that of losing your time. But don?t count on it. Real estate deals always contain a certain number of risks that we can?t see or predict. Let?s say Tom sells this deal, collects his $40K. Later, the buyer discovers something wrong with the house, a latent defect or something material that he says you should have disclosed. Ouch! Your $40K is going to look mighty small. Now this could conceivable happen on any deal, just like you could walk across the street and get hit by a car. But for this reason I would like to be playing in the appropriate game, where the reward compensates both my time and my risk. I bring this risk up, but I could bring others up. Because you don?t see the risk, doesn?t mean there is none. Regardless, this deal is going to take time to produce a buyer, like any other. And you better be well compensated for the time and risk.

This deal is approximately similar to the average listing. Maybe I exaggerated somewhat with my $500K number. But I?d rather be more in my direction, than the other.

JPiper


#14

Re: I Don’t Understand… - Posted by BankRobber

Posted by BankRobber on December 23, 1998 at 19:19:11:

Although I personally would not spend much on this deal (other than sticking it into MLS). I agree with you that he is not taking much of an economic risk here unless he takes out full page ads in the WSJ.