Please help need some ideas on selling home

Buying & Selling Real Estate

Please help need some ideas on selling home

Real Estate Investor · Hot Springs, AR · Member since 2009 · 10 posts · 1 vote

Hello all. I have had a 4br/2.5ba house on the market since 10/09 with no offers. I originally had it offered through an agent who basically just stuck a sign in the yard and put it on the mls. I had about 15 people see the house but no offers. The house needs to be updated but all in all is in pretty good shape. I am now trying to do an fsbo with not a whole lot of luck. I am in desperate need of selling this house fast because of my wife's recent job loss and if she doesn't find a new one fast we will start falling behind on payments. Here is some of the details about what I have had it listed for and a strategy I have tried:

1. I had the property listed with an agent for $139900 and then reduced to 136900 and now with an fsbo at $133900. I am a little bit more room to go down but not much
2. I have also placed ads for a two year lease option for $139900 with $5000-$6500 option money and $1050 a month with $250-$350 a month credit but with no luck so far. Market rent in the area for this house is about $850 a month.

I really am just looking for some guidance and believe that this is the best place for it. What kinds of low cost no cost marketing works the best? How should I word the ad? Am I going about this the right way or not? Is there any other strategies that could help me out? Any advice would be appreciated.

Thank you,
Carlos

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Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes

What's it really worth? What you owe or what you want is totally irrelevant. You need to know what its worth. Are there current listings for similar houses nearby? What are those listed at? What have recent comparable sales brought? You need to figure out what it would bring if it were updated, based on recent sales of fixed up, comparable houses. The current listings are your competition, and you have to be better than them. The absolute most you can expect to get is the price for comparable sales, less the cost to update it. In reality, Don is right. Even an owner occupant is going to want a discount from that price in exchange for having to do the work. An investor is going to demand a steep discount.

You also need to realistically consider the "needs updating". That could be anything from "it needs new paint and carpet" to "the baths and cabinets are from 1950 (or 1970)." If its realistically the latter, your probably not going to get an owner occupant unless there is nothing else available. Owner occupants will want something move in ready and up-to-date. If its really out of date, investor type pricing will apply. The rule of thumb there is to figure out the fixed up price, multiple that by 70%, then subtract the cost of repairs.

What else is available? Are there lots of other houses that are in better shape? Or, is this the only thing available.

Ultimately, its all a matter of price. If you're getting showings, and no offers, its priced too high. If its well advertised (it better be on the MLS, even for a FSBO), and you're getting no showings, its overpriced.

If you are getting showings, what's the feedback?

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Don Hines
Investor · Little Rock, AR · Member since 2010 · 628 posts · 251 votes
16y
Howdy Carlos. I will respond since we are both Arkansans. I don't know a lot about the Hot Springs market. But here in Little Rock homes worth $140K are just about as high priced as I would work with. You said it needs to be "updated". That is one item that would work against you getting full price. I would ask for a discount of at least 10% to 15% as an owner occupant. I target my selling price to be 10% below the area comps on a freshly updated home. Plus offer buyer's assistance at closing. These numbers will bring the price down to around $110k to $115k I know.
But, if it didn't sell while the tax incentive was in effect, I suspect the price has something to do with it. You have to be less expensive than the market these days. Times are tough. I am even considering offering tickets to Branson to buyers.
Lease options are something else to consider. It will buy you time if you get a good tennant. But, that to me is one step from being a full blown landlord. I wouldn't do well with that.
Don
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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
What's it really worth? What you owe or what you want is totally irrelevant. You need to know what its worth. Are there current listings for similar houses nearby? What are those listed at? What have recent comparable sales brought? You need to figure out what it would bring if it were updated, based on recent sales of fixed up, comparable houses. The current listings are your competition, and you have to be better than them. The absolute most you can expect to get is the price for comparable sales, less the cost to update it. In reality, Don is right. Even an owner occupant is going to want a discount from that price in exchange for having to do the work. An investor is going to demand a steep discount.

You also need to realistically consider the "needs updating". That could be anything from "it needs new paint and carpet" to "the baths and cabinets are from 1950 (or 1970)." If its realistically the latter, your probably not going to get an owner occupant unless there is nothing else available. Owner occupants will want something move in ready and up-to-date. If its really out of date, investor type pricing will apply. The rule of thumb there is to figure out the fixed up price, multiple that by 70%, then subtract the cost of repairs.

What else is available? Are there lots of other houses that are in better shape? Or, is this the only thing available.

Ultimately, its all a matter of price. If you're getting showings, and no offers, its priced too high. If its well advertised (it better be on the MLS, even for a FSBO), and you're getting no showings, its overpriced.

If you are getting showings, what's the feedback?
3 Reply
Carlos Cockman
OP
Real Estate Investor · Hot Springs, AR · Member since 2009 · 10 posts · 1 vote
16y
Looks like the comps are around $130000 to $150000 with the avg. $ per square foot at $65. The house is not in bad shape just needs some cosmetic repair maybe cabinets and countertops in the kitchen and bathroom and the laminate is about to need to be replaced. I have the house priced at a little less than $61 a square foot and have a little bit of wiggle room.

I can drop the price about $8000 to payoff unless agent's commission is involved. What do you think I should do? Lower it some more with a little negtiation room or take it to rock bottom and be firm on price? Or should I list it on the mls and pay buyers agent 3% commission. If I do this option how would i list it on the mls. Thank you for all of your advice.

The feedback I have been getting is that it needs more work than people want to do and the only warm prospect could not get preapproved for a loan.
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Carlos Cockman
OP
Real Estate Investor · Hot Springs, AR · Member since 2009 · 10 posts · 1 vote
16y
Also what kind of advice do you guys have for marekting an FSBO
0 Reply
Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Have you gone and looked at other houses in the area? If not, hit the open houses this weekend. $130K to $150K is a very large range. When I hear someone say that, I hear "$130K." The comps should be the same style (ranch with basement, two story, tri-level, whatever). The number of beds and baths should be the same. They should be within a half mile and within the same neighborhood. The relationship to good things (parks, schools, etc.) and bad things (busy streets, dumps) should be the same. Square footage should be close.

Dollars per square foot is a bad metric, in my experience. You have to be careful comparing ground floor, basement and second floor footage. They're not equivalent. If your house is identical to another, but 10% more or less square footage, the price will be closer than 10%.

Get the list of solds and drive by and take a look. What's different? Go to the open houses, or, better yet, get an agent to show you nearby, comparable listings. Look at those with a buyer's eyes and look at yours. Cabinets and countertops are not just cosmetic. Now, I know I can replace a kitchen full of cabinets and put in new granite countertops for a few grand. I could have new cabinets and preformed countertops in for $2K in most houses and have it done this weekend, if the cabinet guy has the sizes I need in stock. Most homeowners would pay $10K or more for that job. Plus they would have to do it. If a prospective buyer sees a nicely fixed up house for $130K (or, maybe even $150K) and yours for $133K needing cabinets and countertops in the kitchen and baths they don't stay long. If $130K is the asking price for a fixed up comparable house, you need to be down around $100K.

Here's the thing. A homeowner can buy the fixed up one for $150K, put 3.5% down on a FHA loan, get the seller to give 3% to cover closing costs, and be into that $150K house for $5000. If they buy yours for $100K, they need only $3500 to close. But then they need $20-25K to do all the fixup, paint, carpet, and I suspect a bunch of little stuff you don't see. I can walk around my house and see a long list of stuff I'd fix before I tried to sell. Most buyers would rather pay the $5000 and have a payment 50% higher than deal with the fixup. So, you're looking for a very special buyer who's willing and able to do that.

You must put it on the MLS. You must offer a co-op to the buyer's agent. You must have a yard sign. IMHO, if you're done those three things, you've done everything that sells most houses.
3 Reply
Regan Brookins-Longville
Residential Real Estate Agent · Burbank, CA · Member since 2008 · 10 posts · 0 votes
16y
Hi Carlos, the short answer is that you are asking too much for the home. Sorry to say, if you've had potential buyers view the property without making offers, it's a pretty good indication that this may be the problem. Price is the number one reason for a home that doesn't sell.
0 Reply
Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
16y
Another thread that had a similar topic:
http://www.biggerpockets.com/forums/312/topics/44534-creative-ideas-to-sell-home

I'm kind of partial to the ideas I posted there :wink:
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Anthony Clayton
Commercial Real Estate Broker · Fontana, CA · Member since 2008 · 68 posts · 20 votes
16y
Very simple concept: Price reduction.

Buyers will pay for what they think its worth.

Sellers will sell for what they want the worth to be.

I understand that you have had a bad agent, but you need to hire a good agent because 80% of your buyer are working with agents
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Carlos Cockman
OP
Real Estate Investor · Hot Springs, AR · Member since 2009 · 10 posts · 1 vote
16y
Thanks for your advice. I have looked at other houses in the area. The house very similar to mine right next door sold for $145000 about a year ago and needed a new hvac and carpeting but everything else was ok. All other homes in the area are less in sf and have sold for about $140000 for the nicer and $130000 for the ones who needed some work. There are some other homes a few miles away with the same sf and in better shape that sold for about $150000. I could drop the price to $129000 and offer a 3% buyer agent commission and still be able to payoff loan. Does this sound feasible? What would be a good company to go with to list my house on the MLS?
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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
So, it sounds like similar homes in similar condition have sold for $130K. Smaller, you say, but same beds and baths? Similar amount of work needed? Sales a "few miles" away aren't good comps unless you're out in the country and houses are far apart, so you have to ignore those. A sale a year ago is too old.

Not sure where you're getting your comp data. If its from the county, or a source like zillow that gets data from the county, it won't include concession data. Its very common in the current market for sellers to give buyers concessions. Typically around 3%. If you are getting the sold data from the MLS, it should include that. It doesn't affect your listing price, but will affect your bottom line.

There should be "flat fee listing" agencies in your area. Try googling that term and your city or county and state. They will charge you a flat fee, a few hundred, and put the house on the MLS. They typically don't do anything else. You might be able to get them to pull some comps out of the MLS, if you don't have that data.

One thing to consider is that $8000 tax credit. Anything that sold recently is probably eligible for the tax credit. Other members here are reporting very significant slowdowns in sales activity since the credit expired at the end of May. Anything that went under contract before the end of May is effectively $8000 cheaper than the sale price because of the tax credit.

Again, the amount you need to payoff the loan is absolutely irrelevant in setting the price and accepting an offer. Buyers will compare your house to others they could buy and just don't care at all about what you owe. You probably realize you will have closing costs that amount to about 3% of the sales price, mostly title insurance for the buyer and the tax prorations. You're likely to have to give some concessions. If you seriously need to sell soon, you're going to have to get it priced to be the best deal in the area. That means underpricing the competition. I would strongly recommend you find an agent, get them to help you price it right, go see all the current listings in your area, and get it on the MLS. Most buyer's find their houses on the MLS, for better or worse. If yours isn't there, most buyers don't even see it.

Sorry to be the bearer of bad news.
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Account Closed
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
16y
i recommend using a flat fee mls if you're short for cash. this will cost 200 bucks to put on the mls or about that much. then offer a bonus to buyer's agent to get traffic.
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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Let me also ask if you've done all the basics. Have you dejunked and put half your furniture and most of your personal items into storage? Does the place look like people are living there or does it look like a design magazine? Have you painted? All your pictures and knick-knacks gone? Does it smell good? Pets gone? How's the curb appeal? Nicely landscapped and grass mowed? No peeling paint or anything like that out front?

I realize its your house, and a huge pain to dejunk and make it look like a magazine. But that also makes a difference. Ever noticed how an empty house looks huge, and one that's full of stuff looks small? Especially if you actually have something that is smallish and you've managed to wedge in what you need. Lookers will notice that and think "too small". If you've not done it, thoroughly dejunk, clean and paint. Paint is cheap, and a fresh coat makes a big difference. One of the things to consider when looking at the other houses is just the overall feel. Don't fall into the trap of "yeah, but our is better in such and such a way". Buyer's don't love your house, at least not at first. Don't know if you ever watch those H&G TV shows where they try to sell houses, but the situations are almost the same from show to show. The seller is shown comps and the differences are pointed out, and all you hear is "yeah, but...". The sellers come up with reasons why their house is better. The buyer's won't do that. The sellers house is messy and full of furniture, personal items, toys, pets, whatever. They say "its just too much work to get rid of that stuff". What I hear is "we're willing to sell for less rather than clean up". But then I also hear "WE love our house and think its wonderful, so we want a premium price." So the net is "we just don't want to be bothered with selling."
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Brandon Gadish
Real Estate Investor · Pasco, WA · Member since 2010 · 48 posts · 3 votes
16y
Just thinking off the top of my head.

1. You could start to get really creative like $140 sale price, and you provide owner financing for a portion, say $20,000. This will make it more attractive to buyers that are having a little trouble qualifying. Then take your $20,000 note and sell it to a note buyer for $11,000 or so. You will get a total of $131,000 or so.

2. Sweeten the deal by throwing in something like a car.

I don't know, but those are the types things to think about in a market that is difficult.

Good Luck!

Brandon Gadish
Landlord Technology
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Edwin Brown
Real Estate Investor · Chattanooga, TN · Member since 2010 · 151 posts · 59 votes
16y
The absolute best way to get top dollar for your property is to offer Lease to Own. The buyers are in a much weaker position to negotiate. You may be asking for too much down if you are not getting any response to a Lease to Own add.

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Ryan Wilkinson
Real Estate Investor · Southfield, MI · Member since 2010 · 47 posts · 43 votes
16y
Creativity is key. Lease option will help you get a higher price but you have to be able to carry the mortgage which keeps you "in the woods." Do you need cash to move to another home? Is taking a loss an option? Homeowners in transit need to remember that losses taken on their sale can be made up with a good buy on the next purchase, but you have to be capable of sustaining an out of pocket loss. Seems pretty clear it's overpriced but it could be under marketed. Finding that lease to own buyer may require more attention from you. We do a lot of lease options & land contracts and can say 5-6k down is nothing on a 130k home. We get that at a minimum for 40-50k homes in Detroit. If you can't sustain the out of pocket loss that a price cut will result in you have to focus on seller financing or lease option. Or foreclosure.
0 Reply
Diane J.
Real Estate Investor · Aurora, CO · Member since 2010 · 175 posts · 92 votes
16y
We owned a house in Little Rock in the late 80s, bought with seller financing, a retiree wanting her monthly check. It was a fixer at purchase and after rehab was really a beautiful home in a desirable part of town.

The house was listed with a few different realtors for over a YEAR. They loved doing open houses because they got leads but couldn't sell ours. Try having your house spotless for a year with 2 small children.

After the last listing agreement expired, we took a look at our mortgage and realized it was an assumable loan. Duh!

Ran an ad in the newspaper saying the loan was assumable and our phone rang off the hook. Most of the callers had already previewed our home many months ago, loved it, but couldn't qualify for a new loan. Sound familiar?

Doctors, golf pros, airline pilots, recently divorced professionals with ruined credit started a bidding war.

As Jon advised, make it pretty or expect to take a loss and with a little bit of savvy you can market it yourself. The money you save on commission can be used to update the home.
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Diana Aversa Ramirez
Real Estate Investor · Cedar park, TX · Member since 2010 · 4 posts · 0 votes
16y
In terms of marketing, you should check out Postlets and also advertise several different ads, on a daily basis, on Craigslist. Both are free, and the postlets ad can be copied and pasted onto Craigslist, which looks really really good.

All of the advice given so far is spot on. In any market, you need to remember one simple truth - the house is only worth what a buyer is willing to pay. I would also suggest spending a little money in updating some of those not so minor issues you mentioned - a formica countertop costs very little to buy, and with a little experience, is not difficult to install. The box stores have some generic but pleasing to most designs in stock, which mimic the granite and marble look everyone wants these days. Can the cabinet doors be sanded and painted, new hardware put on them? That could also go a long way to getting a sale, as buyers won't see a cheap paint job, they'll just see new cabinets and counters!

In the end, you need to decide what you are willing to do. If you don't want to take a loss, then you may need to become a landlord or try the lease option route. I completely HGTV'd my townhouse last year, and after 6 months of open houses (FSBO w/flat fee MLS commission to buyer's agent w/cash incentive), everyone who came through adored my house, and most people asked if they could rent it! My neighbors hated me, b/c I was priced very low in comparison to what they felt the houses were worth, but I had competition right across the street, and I got the traffic and the offers, she did not. After three offers fell through b/c they couldn't secure a mortgage, even though they had pre-approvals in hand, I decided to just add it to my list of rentals. Put an ad on Craig's List for an "ambitious" rent price, didn't get a thing. Lowered it a wee bit, and I had a ton of folks beating down my door, and picked from a solid pool of renters in three days! With the pet fees, the monthly rent was almost the same as my original post that yielded nothing, but this is how you get creative and still get what you want.

Hope this little novel helped, and best of luck to you on getting some sort of resolution on your property!
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Just Don
Member since 2009 · 499 posts · 117 votes
16y
Biggest help is the little things. Stage the house. Rent a storage space and take EVERYTHING you can there even if you need it next week. Take all the cute pics off the fridge and family pics from everywhere. You will be basically 75% moved out when it is decluttered enough.

Paint neatly everything in site,,even the cabinets if the finish is worn. take appliances off counter. Wipe the dirt and 20 years of grime off the water heater and furnace,,,they LOOK newer and better.

Buy new carpet if stains show. You can make a house shine for little money,,,watch the shows on TV that explain the concept,,namely HGTV.

If YOU dont spend a few dollars sprucing and neutralizing the buyers will subtract 10 bucks or more for each of your dollars spent.

Its a cost of doing business these days.
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