Failed offer analysis, aka how do you help seller understand the real value of their house?

[Rafael Floresta]

This is a "help me"/ post-mortem of a offer I presented to a homeowner today.

I toured her House, and they are living there, but the house is not even rent ready. They started many projects and didn't finish. (Trims missing, flooring is mess, needs paint all arround, mismatched cabinets in the kitchen, missing gutter, etc). All surface, all the mechanicals look good.

I called her to present the offer, and I told her the house would sell for 135k-145k after rehabbed. My next line would be to explain the cost of commissions, closing costs and repairs, but she interrupted me saying she expected to sell for 135-145k "as is". She was nice, no hurt feelings.

I should have figure it out on the phone, before I even went there. I asked her how much she was willing to sell, and she preferred to talk numbers in person. On the phone she kept saying she wanted a "fair price", and my response was that it would be a fair price for both of us, but yes, I am expecting a discount because the house needs repairs.

I know homeowners are delusional sometimes, but I believe it is my job to help them understand the real value of their home.

She just now started to look into selling the house, and my letter arrived before she called the realtor. She is motivated, and has equity. I have a feeling I am letting a good deal slip thru the cracks of my inexperience...

Should I even bother keep mailing her letters? And what do your letters say for those houses the price was a completely miss?

How do you usually present your offer?

[Patrick Parry]

@Rafael Floresta my advice is to meet her again and bring a contractor. Explain comps and the difference between turnkey and what it would take her home to become turnkey. Show comps, repairs, and closing cost. She wants to sell as is so she does not want to hastle with much or any of the work involved in selling her home. She wants top dollar she will have to take the steps necessary herself to get it. I would not waste too much time because it sounds like she is in no rush and quick cash will not be a life saver for her.

Also, advise her to consult her own contractor to see what repairs would cost for her own knowledge.

Most importantly understand there is a good chance the Realtor will take the listing at the inflated price. I myself being a Realtor, do what I can to price a home according to the market. However, if the seller will not budge I will explain what I can do at that price, and then analyze if it is worth taking the listing at the overpriced number. (we can still get many leads on a sign posted in front of a house no matter the price) I guarantee she will find a Realtor who not only will take the listing at the overpriced number but guarantee that price.

I would make the offer and also explain what she will pay in commission. (6%) So the difference in the total net. If she does not take it explain that she should give her Realtor 3-4 months to sell the home and exclude your name from the contract. Also she needs to explain that the Realtor has to sell her house at a net sale of more then what your offer will net her. This can all be included in the contract. If the Realtor is legit he will agree to the terms. You may not get anything from the extra effort, but you would have helped her, and I am sure she will refer anyone she knows that may need a quick sale.