Listing Question?
I have a rehab I will be finished with in about 2 weeks. I was wondering what my best course of action will be to sell this thing.
I have had many people tell me to post a for sale by owner sign in the yard. I have waited to do this because it will show the property is vacant and I have my tools stored their. I feel if people think is is occupied they want be looking in the windows and seeing what I have in the house.
Now I am nearing the end of my rehab and I was wondering if I should try selling it myself for a month or so before turning it over to a real estate company.
Anyone with insite to this question please respond.
Thanks in advance
Marty[ Edited by gfpd311 on Date 11/05/2004 ]
Its really a call you need to make.
There are tasks you'll need to do to complete the sale. Like advertising & marketing the property, showing the property to potential buyers, drawing up the sales agreement, etc.,
You should try to estimate your time required to complete these tasks and compare that to what a broker would charge you in commission.
If you think the house will sell for 200,000 and the negotiated commision rate with the broker is 3%, then your outlay to a broker would be $6,000. On the other side of the equation, if you think you'll need to invest, say 20 hours to do the tasks, the savings you could realize equals $300/hour.
If these numbers are even close to real, then, if it were me, I'd try to sell it myself. Just make sure you do good analysis for what the FMV would be so you don't underprice the house and erase those savings.
Good luck, Mark
Thanks for the reply. I am going to try to sell it myself for a month or so. The house has a pool I just had redone. I thank it will sell better in the spring and bring more money then.
Thanks, Marty
I have done a number of these deals so I have some practical experience.
I also am limited in time right now for a response. Here are some high level things to consider.
1. You need to figure out multiple exit strategies. You are buying something now but can not finish the deal until later. Things change over time. If the market goes up or down, the interest rates go up or down, you get hurt and lose your job, etc. how will you exit cleanly and with a profit?
2. You are not likely to be able to get a loan commitment if the completion date is off into the future. Hence you stand a risk of not being able to obtain financing when you need it (see above). Can you bail and limit your loses?
3. Are there restrictions in the contracts as to re-sales or other such things?
4. If the project is multiple phases and you are in early, you will hit the market when the developer is marketing. Can you use their show units? Can you put up a for sale sign? Will buyers be turned off by the construction trucks, the bits not finished in the area, etc? Does a resale impact the way the developer will handle small defects that surface after the construction?
5. One exit strategy is to not exit. Can you move in if needed to minimize the negative costs? If you wanted to rent the place will the numbers stack up?
Some of my deals were 3 years in advance so you can get some decent price movement, lots of leverage and no running costs. You can also see negative movement in the prices and be left paying full price for something that is worth less (and which a lender will not finance so a larger down payment out of pocket given the smaller loan amount).
John
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