Posted by Rick(MD) on August 01, 2003 at 05:34:06:
dell,
I see you are from Ohio. I had to check the date of your post as I read your response because it sounded like the way we did business back in the 70’s and 80’s. Don’t get me wrong, there is something very interesting about how different parts of the country adopt different customs. Here in Maryland (Metro DC area), most purchasers of MLS properties are represented by Buyer Agents. The listing agent rarely sells his own listing. It is also very easy for buyers to know what the seller paid for the house since it is right there in our MLS.
I currently have an REO property under contract at $80,000, the house needs about 10,000 worth of work (appliances, carpet/tile and paint). The house is 2 stories and about 2500 sqft which will make it appraise over 130,000 with said repairs completed. My only concern at this point is that these repairs will only take me 2 weeks at the most and then I intend to list it again–how big of a problem will I have selling a property I purchased for 80,000 and reselling for 130,000 when the buyers agent can see I paid 50,000 less then Im reselling it for in the same month?
(my only advantage is that the current agent took no pictures of the property, so the MLS will not show before and after…just after)
Let me get this straight. You think the buyers agent is going to point out the difference between what you paid and what you are selling for? Agents show properties to make a commission. If the buyer likes the property, the agent gets it under contract. I don’t know any agents that are in business to lose a part of their commission by pointing out how much less the seller just paid. Pointing that out might turn the buyer off and cost a sale.
You needn’t worry about a buyers agent. What may be an issue is an appraiser. When your buyer goes to the bank, the bank will order an appraiser to appraise the current value. He DEFINATELY will see the prior sale and will do some investigating to account for the asking price. As long as the original listing agent can verify the previous condition and the appraiser can see the current condition he can write it into his report to the bank as a justified increase in value. These things happen quite often and shouldn’t be a hassle for you.
The price you paid for it more than likely will not become an issue. Most properties sold through mls are sold without a buyers agent. They are sold by the listing agent or someone acting as a dual agent. I have dealt with a lot of realtors on different properties and I have never yet had an agent tell me how much the seller paid for the property, most do not know.
When I told one listing agent what the owner paid the agent got very offended. I had to explain to him that it is public record. He didnt think it was right that I should be able to find this information. So again seriously doubt that you will run into a retail buyer that will bring up your original purchase price unless he lives in the neighborhood and found out from a neighbor what it had sold for.
I would venture to guess that 95% of retail buyers never look at what the previous owner paid. Retail buyers are most concerned about, do they like the property, can they afford the property, is it priced at or below appraised value. If you meet these three criteria you dont need to worry.
Nick,
You may not even have a problem. But, if you do, then this would be yet another example of the advantages of lease/options as an exit strategy. You will get a higher price than a realtor could get you, without the commission. You get some up-front cash from the t/b. If you need more cash, you can do a cash-out financing and still have a positive cash flow. Landlord problems are minimal. And, if you can avoid dealer status, there are tax advantages.
Posted by gerald(tx) on July 31, 2003 at 16:24:37:
There are so many properties on MLS, probably the only one who would remember the address would be someone who had showed or submitted an offer on that particular property. Also, what are the chances of the same agent getting interested in the same property?
Plus, unless he was completely stupid, he would not point this out to a potential buyer, even if he knew.