First Deal 20k Hoarder House, First time Selling FSBO vs Relator

[Alyssa K.]

Little backstory...my husband and I bought our first home in 2015. When we started trying for a family in 2016, my husband got into all things bigger pockets, and read/listened to everything he could get his hands on. When we got pregnant, we knew we’d like for me to stay home with the baby if possible, and so we started putting my entire paycheck (I made good money working for a large university) into savings to make sure we could live off just his income. We figured we’d need to save for quite awhile to get our first property, but were still driving for dollars, running numbers, going to tax auctions etc. to see if we could find anything we had a chance of getting. I drank the kool aid around this time, and started reading/listening to podcasts as well.

A week after reading rich dad poor dad I happened to meet a lady in our neighborhood that was getting ready to loose her house for back taxes. She had completely let it go, hadn't mowed the yard in a decade (no HOA rural neighborhood), and we could see the garage was packed to the brim with boxes. We bought it for 20k cash (sfh, slab, 1400 sq ft, 1/2 acre lot, 3/2). Got in and confirmed what we expected, it was a hoarder house; exactly like the tv show. We flipped it on no interest credit cards, did a cash our refi (147k), paid off the cards before interest was due, and put 70k (20%) down on a new live in flip.

Rented out the hoarder house, and decided to also rent out our current house in the same neighborhood (1 story, slab, 4/2, 2000 sq ft). It's now been a year since we moved into the new flip, both rentals are doing good, cash flowing about $400 and $500 each. However, we need more money to finish the current flip, and will most likely keep it our homestead for a few more years because we really like it and the area, and it will give us a great opportunity to HELOC. Our level "comfortability" has also gone up with the kiddo.

Our goal has always been for long term wealth over immediate cash flow, and the plan has been to buy new rentals every 2 years when the previous rentals fall off the w2. My husbands w2 isn’t as strong as it was a year ago, lots of factors with the business that are thankfully just growing pains, but we’ve decided to start flipping to get extra cash in hand to scale more quickly, and eventually allow my husband to leave his w2 job. To get the cash to do this, we are going to sell our old homestead. Because it wasn’t intended to be a rental, while it’s cash flowing well, it’s “too nice” to be a rental and has a lot of features a buyer would appreciate more than a renter, and would be costly to repair if damaged by a renter. We bought it for 185k, put around 30k into it renovating/updating. Current loan is 153k.

We’ve had great success listing and managing our own rentals, however I’m aware selling is another ball game. My husband, with the recommendation of his mentor (mortgage broker), and considering how confident we are in self managing rentals, would like to give selling the property by owner a shot. Comps put the property at 285-295k. While I’m confident I can sell it, it’s a highly desirable area, I worry about the perception of fsbo driving away qualified candidates, managing multiple offers, logistics of coordinating option money etc. I’ve identified a realtor who is also an investor, she wants to list at 290-295, but wants to pay 2500 in staging (which I’m sure would help but don’t feel would be necessary is our rural market, she specializes in Austin TX, our property is a suburb of Austin), and after all is said and done, we’d walk away with the same as if I just “cheap” sold it for 275k. I’m not worried about the investment of time if I were to sell myself, I’m still home with the kiddo and managing our rentals, and my husbands schedule is flexible enough to watch her on short notice if need be for showings etc.

All of this to say, I’m curious of others experiences selling by owner, and potential hurdles/pitfalls I should be aware of. Or for the sake of ease of transaction/paperwork, would you always recommend using a realtor? I fully believe the Relator we would use is worth the money, however if we have the opportunity to walk away with more cash, it would put us leaps and bounds ahead as we begin flipping. As always, I appreciate yalls insights, advice, and experiences.

[David M.]

@Alyssa K.

Even as a Realtor, I have to honestly say it doesn’t seem to look like you need one. If you can handle rentals all by yourself, why not the sale? You’ve purchased multiple times so you already know the transaction process

At a minimum, list on something like Zillow. I’d recommend at least offeroring to cooperate with realtors who want to bring their buyers, unless you want to try to save that commission as well.

I assume/hope in Texas you have discount brokers out there who will put your listing on the MLS for a small fixed fee (~$500) but won't handle the transaction for you. At least, all the Realtors will see it, but you will have to offer a cooperation commission.

It sounds like you know what you are doing. Real estate isn’t like law where you really should never represent yourself. You appear to know what you are doing, know your market, and I hope can rationally sell/negotiate the transaction. I’ve heard of one couple who takes the arrangement where one is the “seller” and the other is the “realtor.” Or creates that separation to keep an “emotional barrier” that a Realtor provides.

I will say, security/safety should be something to think about. If you have to show property and you have young children with you, you might want to rethink your plan. I don’t know if you guys also use electronic lock boxes — I hear about how some states are still slowly moving to them. They are expensive, but good to have since only Realtors have the app to open them, and they are satellite tracked so you know when they are opened. That being said, investors fsbo all the time...

In short, what are you looking for from a Realtor, and is it worth it to you.

Just my two cents. Take care and good luck