Need Help With Creative Financing
Not sure if this is the proper forum, but I need some suggestions. Long story short. I have a house that hasn't sold. Started out at 320 have reduced it to 249, has been 5 months, no offers. I am thinking of renting it out to offset the holding costs (1300-mo) but don't really want the landlord status. Any creative suggestions toward selling the property to minimize the loss here? To date, I have 275K into this deal. I could sure use some creative advice on this one.
Thanks
Dave
I always say that I can sale any house in a good area in less than three days. How will I do that marketing and price.
I am going to guess that you want more than what I would get you so lets start from the beginning.
What have you done to market the property?
How did you arive at your asking price?
How is the curb appeal?
Is it really in top condition?
Is it listed with a top selling agent?
Are you offering terms?
Unless your in a cold market or the property is not in good condition I don't see why you sould have to sell for 70K less than market.
LAcashman
Thanks for responding. First, we are in a luke warm market. Second, yes it is listed with an agent, but this is where the story gets long. This house was originally purchased by way of an REA who convinced us that we could "force appreciation" on it through upgrading the house tremendously. It is a 4BR-2.5 bath, in move in condition. It is in wonderful condition. EVERYTHING major has been rehabbed. New huge eat-in kitchen, great master bath with whirlpool tub/shower. Stone countertops, hardwood floors, new patio and curb appealing landscaping. The house looks great. Problem is, the REA did a CMA originally on it that showed us we could resell at around 320K. So we paid 192K for the property, factored in the holding costs and rehab costs, which brought us to a total investment of around 270K. However, after rehabbing, the vast majority of agents said we over improved the property and should not expect any more than 240-250 K from it. The original agent was fired after repeatedly telling us that we would get close to 320K and provided no prospects to offer us this. (As a side note, we are considering filing legal action against her and her brokerage)Based on the advice of the new agent handling this house, we lowered the price from 319 to 299. Then from 299 to 279. Now we have lowered the price to 249 again per his recommendation based on a realtors tour and feedback,, but still have no offers on it. We are not currently offering terms with the sale. What would you suggest in this regard to help us minimize our losses? I appreciate any help you may offer us. This was our first attempt at something like this and we have learned a very hard lesson. We
A. won't be trying to force appreciation on any more houses.
B. We won't be nearly as willing to accept any REA's opinion as to resale value based on any comps they provide. We will go back to concentrating on buying undervalued houses and raise them to neighborhood standards to make our money. But in the meantime, we MUST stop the bleeding on this one.
Thanks again
Dave
Two things I would try.
First try some staging. An empty house looks well empty. Rent enough nice looking furniture so that people can image it as a home.
Have you ever seen the tv show "Designed to Sell" on HGTV? It does make a difference.
Also offer a bonus to the seling agent if they get you a offer within a certain time.
Perhaps $1,000 within 15 days, $500 within 30. Or perhaps weekend stay at a resort close by. Its cheaper than another month of negative cash flow.
Deside on your bonus and have your agent fax every office in town that the seller is flexible and is offering the following bonus.
Dave,
First, to minimize costs, I wouldn't use an agent if I didn't have to. You are already over-leveraged in the property and paying an agent for advertising would definitely put you deeper into the hole. If I were you, I would do my own advertising, for a lease option instead of straight selling the property. The headaches w/ lease options are far less intense than with straight rentals, mainly b/c the tenants are responsible for their own maintance. Maybe you can do this for a year or two, and depending on how fast properties are appreciating where you live, maybe the home will be worth what you're asking for it now or more. And at least with lease-options you are making money 3 ways: 1) the upfront option fee-which is non-refundable; 2) the monthly cash flow from rents, and 3) the back-end profit when you sell. I would definitely pursue this option as opposed to having to pay money out-of-pocket to sell a house. And from what I hear, the lease-option market is even bigger than the retail market due to most people's imperfect credit! I know that when I've had houses for sale in the past, I usually got more calls from people wanting to rent it out or do a lease-option than those wanting to do a straight purchase! Let us know how it turns out for you. :-D
It's been my experience that waiting on a real estate agent can be a costly mistake. Their powers of marketing are quite limited. Mostly: (1) listing in the MLS, (2) holding the Open House, then (3) getting the seller to reduce price when there is no quick sale in the offing.
Realize that buyers clue-in to their own agent's limitations pretty quickly and will begin to actively seek out houses of interest all on their own. Then they'll call the agent about them. Realize, too, that buyers scan the newspaper classifieds religiously -- especially on the weekends in their quest.
Therefore, in my theory a seller can get a property before the eyes of every buyer in town by running an advertisement in the weekend classifieds. One needn't even list in the MLS to sell a property. (Agents read these classifieds, too).
When selling using classifieds, I include the words, "brokers welcome," which means I will pay the buyers broker a commission. That's because buyers feel a loyalty to their brokers and also want their explertise in the handling of the contract.
So, in short, I believe an active seller can market better than a real estate agent, just as those active buyers are more adept at finding the homes they like than their agent is.
I am unfamiliar with your area but out here in LaLa land the brokers work work work to sell a house even one , (as are many) over listed for the market. We have a heavy spike, and it is just now wavering with many offers coming in below askiing price which is a bit more normal.
A broker if qualified does not just play the MLS. He is about and sticking his nose into everything. If a Salesperson in that office or another office has a Buyer, the good Broker knows it and contacts the Salesperson but fast. Remember we want to make deals and fast and furious. More the better. Also as a Broker I know structure of offer and I will try them all to effect a sale.
Riight now I am playing in Containers into HOuses but I still check the market every day it is a habit. I have even gone so far as to sign a guarantee agreement where a bad credit is going in on a lease option and does not have enough money to make an option payment. I will still get him into the lease and if he does not perform or cannot perform at end of lease period we will, either on his behalf or to another investor who wants a income stream.
I hope this throws a little light on the subject. Brokers if they are good are very very good ands if they are bad, they are horrid.! Forget the curl in the middle of the forhead.
Cheers Lucius
Quote:
Brokers if they are good are very very good ands if they are bad, they are horrid.!
That just about sums it up!
Good ones are worth every penny they charge. They can quickly get you the best price. However the others ones well lets just say Dave has already paid for that lesson.
Hey, Dave.
I have been following your story since the very begining. I used to have a house in USC, so i know the community very well. It is true it has one of the best school district in western PA besides Mt. Lebanon, But if you have asked me before you purchased that house, i would definitely say "no". The house is in a nice community but for that community and the size of the house you just could not sell it for $300000, period. It is wrong for the realtor to give the comps like that, but as a investor you should know your market. I am new to the real estate thing. I haven't purchased anything yet, so i may not have right to say that. But god it hurts to loose the hard earning money like that. I don't know what is the best way to get out of it. Landlording is not a easy either. There are all kinds of people in this world you don't want to have tendant in and not paying you and you have to end up evicting them!!!
I currently live at Peters township, it is the next community off USC. Good luck on your house.
I do agree to take legal action against her. she should not get away from it!!! but isn't it going to cost you a lot on legal fees?
Sally
Hey, Dave.
I have been following your story since the very begining. I used to have a house in USC, so i know the community very well. It is true it has one of the best school district in western PA besides Mt. Lebanon, But if you have asked me before you purchased that house, i would definitely say "no". The house is in a nice community but for that community and the size of the house you just could not sell it for $300000, period. It is wrong for the realtor to give the comps like that, but as a investor you should know your market. I am new to the real estate thing. I haven't purchased anything yet, so i may not have right to say that. But god it hurts to loose the hard earning money like that. I don't know what is the best way to get out of it. Landlording is not a easy either. There are all kinds of people in this world you don't want to have tendant in and not paying you and you have to end up evicting them!!!
I currently live at Peters township, it is the next community off USC. Good luck on your house.
I do agree to take legal action against her. she should not get away from it!!! but isn't it going to cost you a lot on legal fees?
Sally