Sick of selling my Rehabs FSBO. Advice? - Posted by Ron (MD)

Posted by HR on May 09, 2000 at 06:30:54:

Hi Vic,

Yes, I remember you, and I hope you can make it to our next reia meeting. Thanks for the info; I had a suspicion that I could cancel the deal if the final price is too low and the deal isn’t in writing yet.

Cheers,

HR

Sick of selling my Rehabs FSBO. Advice? - Posted by Ron (MD)

Posted by Ron (MD) on May 07, 2000 at 12:39:20:

I rehab homes that I then sell for $60k - $75k. I’ve been selling them myself, avoiding the realtor commission.

My rationale has been, if I’m doing 10-12 houses per year, selling them without a realtor increases my profit by $50k (or so) annually.

The problem is that I spend a lot of time spinning my wheels with unqualified buyers (although I try to screen them before showing them a house). I think the biggest problem is that I haven’t found a great lender/loan officer who wants this business. These first-time low/moderate income buyers need a lender with a firm hand to guide them through the process and decent programs (points/rate) that are afforable.

I’ve sought lender recommendations from realtors, but have been disappointed with the service and programs they offer. People have suggested giving seller financing and then selling the note. I think that is more expensive than a realtor commission.

When I have listed homes with realtors, they have sold quickly and settled without a hitch. Frankly, I think realtors have a higher quality buyer than I get. My buyers are usually those who have seen my sign in front of the house. They are not seriously involved in the house hunting process – they see the sign and decide they want to live there.

I’m leaning hard toward listing all of my houses right away and then devoting my time to doing a few more deals a year. Never talking directly to unqualified buyers again.

What do you think?

Ron

Re: Sick of selling my Rehabs FSBO. Advice? - Posted by Bud Branstetter

Posted by Bud Branstetter on May 14, 2000 at 22:52:11:

Surely there must be a hungry mortgage broker in your area. Thoughts-do not do showings for individuals. Multiple showings cause competition. Have an application fee and have them fill out a 1003. Charge more than the cost of a credit report. Get the credit report and fax with the 1003 to your favorite broker. Learn how to sell a note if the broker can’t do his job. Some pro’s have them fax the app(available at the house) directly to them. Unless you can get the credit report real cheap get the money up front. Charge $30 to take an app and give them $10 back when they return it. You can get many realtors to list for 1%. Rent a voice mailbox and ask for how much down they have. Say you will call those back first.

Re: Sick of selling my Rehabs FSBO. Advice? - Posted by eric

Posted by eric on May 08, 2000 at 11:14:46:

all good advice below. In addition, if you do elect to list it, get an exclusive agency agreement, rather than an exclusive right of sales. That way, if the realtor brings the buyer to the table, they get paid a commission, as they should. However, if you find one on your own, they don’t get anything. Under exclusive right of sale (the norm) they get a commission regardless.

Specialist in this area! - Posted by Steve

Posted by Steve on May 08, 2000 at 10:58:21:

Check out her courses. She is an expert at turning B buyers into A buyers and prequalifying them and she does this over 50 times a year. I just listened to her talk about this last week at our REIA meeting.

www.robynthompson.com

Good luck.

Re: Sick of selling my Rehabs FSBO. Advice? - Posted by Bill

Posted by Bill on May 07, 2000 at 17:36:36:

Ron- Those who wish to reduce selling costs just have to decide that they are going to take over the functions a good agent provides. If the time, expense, effort and aggravation are worth it, go for it. Only you know how much your time is worth.

An other option is to select the best agent in the area and “partner up”. This ol’ world has lots of talent and if your “sales staff” is the best in the area, you’ll benefit by closing sales at market, in the least abount of time, and you’ll know that you’re attracting buyers looking 'by owner" ANd with agents.

Building goodwill with the best agents pays off when it comes time to buy, too.

I suggest you look at the big picture and the long term. Get the best area agent on your team and make him/her feel like an important, vital part of your business. The goodwill and the loyalty you demonstrate to one another will make your business MUCH more effective.

As far as the “cost” of marketing… you’ll pay for marketing an way you cut it. Either YOU pay the cost, time, aggravation, etc, or you pay someone else to perform the function (only they get paid only if they perform).

Bill

Try this. - Posted by Lisa in Oz

Posted by Lisa in Oz on May 07, 2000 at 17:25:07:

I’m in a situation where I pretty much have to sell my rehabs the “old-fashioned” way through an agent. My last house sat for over three months–open houses and no interest. Had a contract that crashed due to financing (agent should have known by asking a few questions of the buyers).

Anyway, after the listing ended, I tried a technique outlined in the book “How to Sell Your Home in 5 Days” by Bill Effros. I placed ads Wed, Th, Fri had Open houses Sat and Sun and sold the house Sunday night. The ad generated seventy phone calls; had fifty “groups” through (over one hundred people) on Sat and Sun. By Sunday I had twenty written offers (11 had cash or pre-approved loans). Ended up in a bidding war between three of the buyers and, in the end, I got a fair market price for the house.

My advice, if you try this, is not to stray from the book’s instructions AND do not show the house before Sat and Sun–no matter what sad stories the callers tell you.

Good Luck.

Lisa Charles
’Lisa in Oz’

Re: Sick of selling my Rehabs FSBO. Advice? - Posted by Steve C., Houston-Remax

Posted by Steve C., Houston-Remax on May 07, 2000 at 13:57:42:

I have a few suggestions…

  1. If you have a Countrywide Home Loans office in your area, you might check into them. Since they are direct lenders (underwrite their own loans), they can often close a deal in 10 days. The people at our local office are great, and they get the job done. They will qualify your buyers, and if everything else lines up, will get it closed fast.

  2. I wouldn’t let a buyer make an offer without a pre-qualification letter, with a stated dollar amount, from a reputable lender. I wouldn’t even show them the house without it. That will screen out 90% of the lookie-loos on the phone. Don’t worry that you’ll scare off some serious buyers. Serious buyers who aren’t willing to show that they’re qualified is a contradiction of terms.

  3. You might see if there is a realtor who is willing to represent your buyers for 2-3%. I offer a similar program to FSBO’s and their buyers here. All I do is handle the contracts and guide the buyer through the transaction, so they don’t mess up the deal. Call a realtor you’ve dealt with before. They may be willing.

  4. If you’re doing 10-12 houses a year, you might be able to work a deal with an eager beaver realtor who would love to have “guaranteed” income at a reduced commission. Just agree to work with him/her exclusively, as long as they deliver. (Don’t enter into some exclusive contract for a period of time. List each property separately, and make them show they’re worth it every time.)

  5. A Web-based company, www.nationwidebyowner.com, is going around the country setting up arrangements with lenders to place nice (metal, not cardboard) signs in the yard, “For Sale By Owner” with the lenders name and number on the sign. The lender gets the call from buyers, screens them, qualifies them and then sets up the showing with you. The Web site also agrees to put 6-8 pictures of your property on the site for free, and the lender even takes the pictures. (Am I putting myself out of business saying this? Oh well, I believe in full disclosure.) See if there’s a lender arrangement with them in your area. If not, have a lender or two to suggest and they will probably call them and get it set up.

There’s a million ways to skin that FSBO cat.

LIST YOUR HOUSES WITH A REALTOR!! - Posted by Soraya

Posted by Soraya on May 07, 2000 at 13:44:54:

Sounds like you have a “one man show”. Looks like you have two choices: 1- Bring in a partner and “crank up” your buying program and also have him/her help you sell the houses. 2- List your properties with a Realtor and just do a few more deals a year to pay for the cost of using a Realtor. (Sounds like doing deals is what you are good at so it would be a lot less stress than dealing with selling your properties.)

Unless you want to really “crank up” your buying program you will make a lot more money paying a Realtor 6% or so than it would be to share with a partner.

If you want some guidance on how to “Crank Up” your buying program you may want to get Ron LeGrande’s Guerrilla Marketing Program.

Soraya

Re: Sick of selling my Rehabs FSBO. Advice? - Posted by JohnG

Posted by JohnG on May 07, 2000 at 12:59:25:

It all depends on what kind of profit requirements you have to have out of each deal and where you want to spend your time.

Could you reduce your costs by buying cheaper; spending less on rehabs; and could you get more for the property when you sell. It may be that you could get your same net dollar using a realtor just by decreasing costs and increasing your sale price by the 6-7% you pay the realtor.

Is it that you are getting a run of poor quality buyers or that you prefer not to be involved with the sale at all. I personally, would love not to be involved in the sale but that 8-10K that I give up to the realtor is way too much for me to give up, so I put up with all the bad ones till I find my buyer.

I don’t REALLY want to give my deals to a realtor, I just want to say that I want to give my deals to a realtor. Make sense ?? !!

Lisa, a couple questions, please… - Posted by HR

Posted by HR on May 08, 2000 at 17:57:59:

Hi Lisa,

I bought that book about a year ago and have forgotten about it. I have a duplex I would like to sell fast, for fair market value. I really like this guy’s ideas. I have a few questions for you…

How did you know what fair market value is? Are you sure this technique brought the home up to fair market value?

Did it really work like he says? It’s an interesting method. If it works well, it could be a godsend.

You are in the Australia, aren’t you? Would this be a factor?

Just for the fun of it, I may do the 5 day method. I need to check with my re attorney, but I believe in my state I don’t have to honor offers that are verbal or that I have not accepted in writing. Hence, if I get a bum offer, I want to be able to nix it (especially since my wife is a realtor and we can list it in the MLS).

Any more ideas or advice is appreciated.

HR

Re: Try this. - Posted by Laure

Posted by Laure on May 07, 2000 at 21:14:20:

So, what is a fair price. If I take the time selling, I can get about 5k more than a realtor can get, in addition, I don’t pay his fee.

I bought a house from a doctor who used the 5 day method, and I subsequently bought the book. Still scared to use it, but I agree… tired of screwing with buyers.

Laure :wink:

Re: Sick of selling my Rehabs FSBO. Advice? - Posted by Laure

Posted by Laure on May 07, 2000 at 21:19:11:

It wouldn’t matter if I cut my costs or not. The fact remains that the realtor fees are outrageous ! 50k a year, as Ron says is still a lot of crackers. If I cut my expenses, that should be that much more profit for me. Maybe I’M JUST TOO GREEDY ??? As rehabbers, we constantly review each project trying to do the next one better and cheaper, so it goes against our grain to pay that large expense on every sale.

Laure :slight_smile:

Re: Lisa, a couple questions, please… - Posted by Vic

Posted by Vic on May 08, 2000 at 23:05:22:

Hal,
Hi, remember me from the re inv. club meeting? I’m the one that you weren’t sure who I was. lol

Anyway, in this state, under the statue of frauds, a real estate contract must be in writing to be enforceable.

Hope to see you at next meeting.

Vic