Would you do a private listing with agent on an investment home?

Would you do a private listing with agent on an investment home?

Brandon, IA · Member since 2019 · 19 posts · 3 votes

Sorry in advance for the novel- 

My husband and I purchased a rehab property last fall. We planned to rent out the current home and eventually build a new home on the back 10 acre parcel.  Long story short, our plans have changed and we decided to do a full rehab on the current home and sell the back 10 acre parcel as well. Our realtor that helped us purchase the property will be who will list with, she does a lot of acreages in our area. However, I feel that she is undervaluing both pieces of property. She keeps mentioning that they will "see how much we paid", which in all fairness, was low due to the condition of the property (think large pole barn, garage, house and pasture full of 20 years of junk plus an abandoned mobile home that may or may not have been used as a grow house). This area is hot for acreages and she has two clients currently looking and has floated the idea of selling "as-is" on contract through a private listing with her office. She also knows of someone else looking for land in our area, so potentially has a buyer for that. I feel the prices she is giving us to definitely be on the low end of the market though after scouring this area to find this deal for 2 years and seeing what properties sold for that will be similar to what our finished product is. She also has similar listings that she has listed at the top of market value for the area. I'm wondering if she's putting too much emphasis on what we purchased it for and if the private listings in the "as-is" state would really be in our best interest. Any thoughts? Would you do a private listing to save some headaches with a rehab? 

It should be mentioned we will still be nearly doubling our investment with the prices she is suggesting, but could potentially be missing out on almost an extra 100k in profit should we finish and list at what I think it feel the market would support.  

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  • Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    I would work on it for the next few months and then list it so that it will close after you have owned it for one year or more.

    If you sell it after owning it for less than a year you will pay the higher short term capitol gains instead of the long term capitol gains.

    Listing it on the mls, with an open listing will get you the most exposure and best price.  It does not matter the condition, you get more exposure with open listings.  She may have buyers, but other realtors have buyers too.  If you do list with a closed listing, make sure you are compensated for that, SUCH AS 2 PERCENT LESS COMISSION.

    As far as fixing it up more, see what gives you the most bang for the time, effort, cost.  Sometimes with fixer uppers the best bang is just clean, not redoing the kitchen, etc.

  • Member since 2018 · 259 posts · 159 votes
    7y

    . The private listing is called a "pocket listing" when a broker lists a property, but does not advertise it to the general public. It's a way for an agent to try to get both side of the transaction.

    . I would not do it, advertise it on the MLS so you can possible get the best price.
    . you are in control of the listing, you set the price, if you don't get an offer, you can always lower the price.
    . If she doesn't want to follow your instructions, find another realtor.

  • Brandon, IA · Member since 2019 · 19 posts · 3 votes
    7y

    @Kelly DeWinter

    Thank you very much for the advice. I’m wanting to trust her market knowledge, since we are new to flipping, but I spent 2 years working with her scouring the area for a place like this and know we couldn’t have come close to what this finished product will be with our 250k budget last year. I don’t feel the market has slowed that much and then the pocket listing idea threw me off. I will definitely do some thinking on it!

  • Brandon, IA · Member since 2019 · 19 posts · 3 votes
    7y

    @Lynnette E.

    Thank you, the capital gains was something we have considered and will be doing a 1031 exchange on the advice of our accountant when we sell. Since we didn’t buy until mid October last year, we want to avoid the seasonal market slow down and a possible overall market slow down too by selling before August.

  • Brandon, IA · Member since 2019 · 19 posts · 3 votes
    7y

    @Lynnette E.

    And you are very right, if we could get by with just clean we totally would and are cutting any non-essential projects. It was very tempting to have the possibility of still making a large chunk of money right now.

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