All Forum Posts by: Lynette Braun

@Clint Weir Sorry to take your thread off-topic Clint!! Hope you get the answer you're looking for here. 

@Jody Schnurrenberger Of course it's okay to ask! That's often part of the listing presentation of an agent. If it's not you can ask them to prepare that for you before you meet with them. @Jonathan Minerick is correct! The initial price that the property is listed for makes a big impact on the ratio.  If you start with an over-priced listing, it may sit on the market until you get a fair market value offer.  But, if the property is priced appropriately from the start, it should sell for close to asking. Knowing how to competitively price a property is also a skill of a good listing agent. My ratio is a mix of higher-price points that take longer to sell which will drag my ratio lower and lower price points that I price aggressively and get over asking.  For example, I just recently listed a condo and my sellers were looking to get $469,000. They trusted me enough to list it for $449,000 and we got 16 offers in 4 days. We countered and the got $479,000, $30K over asking. Listings that sell over 100% of asking drive the ratio up. 

@Clint Weir haha! Thank you Clint! No plans to move to Texas anytime soon but thank you for your kind words. Feel free to DM anytime if I can help with anything. 

@Jonathan Minerick Thanks for sharing Jon! In the interest of full disclosure, I think it's fair to share with the forum that you are one of those MLS entry only brokers here in San Diego. So, I totally understand that you believe in your business model, just as believe in mine. Thank you for also correcting me about the data aggregation. I am aware that some companies like yours are able to aggregate to a handful of sites. Currently my listings will go out to over 1,100 sites internationally, translated in to the local languages. I don't think it's necessary for me to share the entire comprehensive Global Luxury marketing program that a powerful brand like Coldwell Banker can offer. What I can say is that when sellers are shown the differences between almost no marketing for their property and what agents like me can offer, there is one reason why they are willing to pay a 5% or 6% commission; it's because they see the value.

The job of a larger, traditional brokerage is not to just be more expensive. But, to provide more exposure, which leads to more potential buyers, more offers, and a higher closed sale price. In some markets, as many as 30% of buyers are coming from another country, especially in higher price points. Without international marketing, you're missing exposure almost a 1/3 of potential qualified buyers. Your company only charges $95 to enter the property in the MLS. Which, might seem like a great deal. But, since you don't have any marketing budget built into the commission, how will you pay for $1,500 it cost to put it on sites Juwai? China has an internet firewall against sites like Zillow so not all buyers are shopping online that way.

Also, to clarify your statement that the listing agent never brings the buyer and just put it in the MLS and let the buyer's agents do their job... First, most agents are not strictly buyers agents OR listing agents. Most take listings as well as work with buyers. Some tend to lean in one direction or the other but unless you're on a team that dictates you job title, we work with both. Yes, it's a statistical probability that when a listing agent puts a house on the market that they will cooperate with another agent that brings the buyer. But it's more common than you may think that a listing agent is the one to bring the buyer. I don't know the exact statistic, that's a personal observation from watch the closed listings in the MLS hotsheet daily. Probably 1 out of every 10 that I see is dual agency.

Either way, I believe it's the listing agent's responsibility to drive traffic to the listing through their marketing efforts. In today's global market, I don't believe the MLS and a handful of websites is doing a seller justice to get them maximum exposure and therefore the highest price. One way a potential seller can gauge whether the listing agent is worth their commission is to ask about their list to close price ratio. Mine is currently 98.1%. Which means when I list a property that it closes, on average for 98.1% of the asking price. If you're talking to an agent that usually only sells property for 91% or 93% of the asking price (which is the average here in San Diego) then you can see they would they house for 5-7% more with a traditional agent. They don't have to do the work of an agent and still end up netting more from the sale.

There are times that I have actually recommended companies like yours to people. Like in the case of an experienced flipper that wants to quickly list a house in a hot market and it will get multiple offers within a few days just by being on the MLS. But, most sellers have full time jobs and aren't doing themselves a favor by taking on the time consuming and constant work of marketing, showing and negotiating the sale of a home only to end up selling for less. Not to mention the skills & experience it takes to negotiate the highest price and best terms. When other agents or a potential buyer sees my listing in the MLS, they can call me and I'll always answer the phone or be available to meet them on short notice because this is my full time job. The sellers who are doing showings themselves take on a lot of stress and potentially miss showings that need to happen on short notice. Just like in the case of a For Sale By Owner listing, if the buyers agent knows the seller is not having to pay commission to the list side, they will often reduce the offer price by the amount of that commission to result in the same cash-at-close as if you would have hired an agent.

If MLS entry only or discount commission brokerage models were effective in every situation and market, I'm sure I would be out of a job by now because everyone would be using them. But, I believe that what I offer is pretty valuable.

Off my soap box now... :) Thanks again for your feedback. Have a great week! 

Hi Clint, 

Ah, I see! I thought you were looking to list a property that you flipped. I don't know of any service like that, at least not here in California. Have you considered getting your real estate license just for that purpose? If not, I would still partner with an agent that help you with comps. You can reach out to a couple that work with developers, meet them for coffee and "interview" them about what they can do to help you. Not only, It can be risky to make an investment based on the ARV if you don't have access to all the information you need. But, you might also be surprised on the value a real "go-getter" of an agent might be able to bring to your business. I partner with developers to help them find off-market property. They pay for the marketing pieces that go out and I do the work of door, knocking, cold calling, following up, etc. When a good lead comes up they can flip, I send it to them to analyze first. If there is a "retail" seller (a home that doesn't need to be flipped and wants to get top dollar on the MLS) then I will take that lead and help them sell in exchange for the work that I have been doing. You might suggest a similar arrangement with some of the agents that you meet with and set up a couple geographic farms. While the agent is out door knocking like they would normally do, you invective them to keep an eye out for distressed properties and so they are bird-dogging for you and everyone wins. A good title rep might be able to help with access to recent sold comparables based on the tax assessors records. But that will still be limited. I haven't tried some of the other sites that you mentioned to know how reliable their data is. Hope that helps! But, yes, to protect your investment in the property, knowing comps is crucial. Especially in a cosmetic rehab where profit margins tend to be relatively low. It doesn't take much for you to be off in your value on the purchase or the resale or for anything to go wrong during the project to put you out of business. I realize a lot of investors resist working with agents to avoid paying a commission when you buy. But, there are a lot of ways to structure a deal so everyone wins. If I find one of my developers and off-market property and the seller is not able to pay me a commission without it breaking the deal, the developer and I will create a joint venture partnership agreement and I will get a percentage of equity on the backend when they re-sale instead of a commission.

Happy Investing! :)

 Thank you so much Jody! I've been reading the forums for a long time but just recently started contributing to forums.  I appreciate your kind words! :D

You can do a Google search for companies that do "MLS entry only" listing companies in your area. These are licensed brokers that only put it in the local MLS. They usually charge a flat fee to put it in the MLS and 1% when you accept and offer. You do all the showings, marketing and negotiating. It's not the best way to get maximum exposure directly to buyer because they see the house online first. Those MLS entry-only companies don't aggregate their data out to sites like Zillow or Trulia so you will want to create a lot of listings on those sites yourself if you decide to go that way. You might want to consider partnering with an agent and asking if they will do it for a reduced commission. You will end spending money on other marketing anyway if you do it on your own. Hope that helps!

Hi Chad, 

There has been a lot of news recently about there being a "bubble" happening or about to happen in certain markets, especially in California.  But, the most important thing to remember is that real estate historically has cyclically patterns of up and down markets.  But, if you buy your property with equity going into it, meaning you're paying less than full fair market value, then you're short term market appreciation is not the only way to leverage the property for equity.  Of course finding a deal to buy for less than full fair market value is not easy.  There are a lot of different ways to do it: Networking with wholesalers and agents who work with investors, getting to know title reps and getting lists of distressed properties to market to, door knocking, etc. 

The point is that there is always a way to make money in real estate if you recognize where you are in the cycle of the market, adjust your strategy to buy/sell accordingly and get equity from the start.  Don't let the news scare you away from hustling for deals! Feel free to DM if I can ever help with anything :)

Happy Investing, 

Hi Nero!

It's a great idea to leverage the properties that you have to invest in others. Like the others are saying here in the forum, as long as you do it carefully.  While it's important to educate yourself by reading investment books and getting yourself familiar with the terms, processes and ways to analyze investments. It's also very important as an investor to build your team of quality people around you from the beginning , or partner with someone that already has that team in place that you trust. 

There are 3 big ways to lose money when you first get started investing in real estate. 

1. Get caught up in a "get rich quick" type of seminar scam.  You can easily pay tens of thousands of dollars for coaching programs, seminars, boot camps, workshops, CD's, online courses, and on and on. While those programs may have value and a lot of great information, there is no need for you to buy into those systems when all the information is available to you for free if you're willing to do the work.  Partner with a great real estate agent like myself :) that specializes in investments or partner with an experienced investor and offer to do some work in exchange for an apprenticeship. Like any other profitable business, it does take a few years to get your feet under you and get your own systems in place before it's worth the liability for you to do a project on your own. 

2. Is after you're able secure a deal and actually buy it.  You could either analyze the deal incorrectly and lose money from day 1 by buying the wrong project. Or just as likely, the profits get devoured by bad project management or lack of knowledge.  When you are working on slim profit margin, like a cosmetic rehab flip, it doesn't take much to go wrong for your profit to go out the window when you get stuck in city permitting, have a water leak, discover unexpected mold, etc.  Analyzing the deal correctly before you buy and have the established, experienced team in place that can go in and complete the job quickly.  

3. The 3rd way to go broke in real estate is to invest your own personal capital. Buying a project in cash and paying for all the renovations yourself is one way to do a flip.  You don't pay interest or points to a lender and there is no lien against the property for a loan.  But, that also ties your hands financially.  If you run out of personal capital, the project stops.  You can also do maybe one or two projects at a time, depending on what you have available. If a good deal comes across your desk, you won't be able to jump on because all your money is tied up in your current projects.  An important part of your real estate investing team is both a hard money and some private money lenders. 

Hard money is essentially a bank for real estate investors that lends them a majority of the purchase price and the funds for the renovation.  Most investors use a private individual for the remainder of the funds needed for the project. This means it's 100% financed with little to no money out-of-pocket for the investor.  You can/should still get a line of credit against one of your properties to have cash available.  This private lender could be your Aunt pulling money from her 401K or a savvy business owner you met at a networking meeting that wants to make 10% interest on his/her loan and invest in your project. 

I will send you a DM and see if you want to get together for coffee and talk more about how I can help you get started.  Reading books is a great start. But, it's just as important to build your team! 

Happy investing, 

 Hi Danielle, 

I am assuming that you're looking outside of San Diego markets because of high purchase price and low cash flow that you've been seeing in San Diego.  Is there another reason that you want to look outside your local market when you're starting out? If so, DM me and let me know. But, if that's the case, you can still get the returns that you're looking for while buying locally.  That starts with buying a property that already has equity.  

If you're used to "paying retail" when you buy a property, it can seem impossible to get cash flow locally. When I say retail, I mean that the property that you're buying is listed publicly on the MLS, you're competing with other other buyers and paying full fair market/appraised value. To get the best return on your investment, whether here or in another state, it's best to pay a "wholesale" price and start off with equity. Is that easy to do? No. Is it possible? Absolutely!

There are two ways to find a deal that has equity going into it:

1. Find it yourself: You can identity physically or financially distressed properties and start a marketing campaign to reach those sellers and make an offer to buy it directly to the owner.  

2. Network with someone that can find you the deal. This could be wholesaler, a bird dog, or proactive agent (like myself) that find deals for investors. Agents have access to resources that the general public doesn't. For example, I can go to the title company to a get a list of owners that are behind on their mortgage, have at least 30% equity and have lived there for at least 5 years. We then start a direct mail/door knocking/social media campaign specifically to those sellers until you find one that is interested in selling. It benefits me as an agent to do that for an investor because there may also be other sellers that want to list their turn-key house on the MLS. If it's not right for the investor, I can still help them as agent.

The other way to maximize your local investment is to add value after you buy it.  That could mean improving the operations of an apartment building to reduce overhead, adding a second story to a single family home if the comps support it or building new construction onto an existing structure (like adding a granny flat/creating a duplex from a single family). 

Between buying below fair market value and adding value after you buy, you can often cash flow enough to keep building your portfolio in your local market.  Feel free to DM me if you ever want to meet for coffee to talk about how to find an off market property or have a question. 

Happy Investing! 

Lynette Braun

@Manuel Sarabia I always recommend that my clients use an insurance broker that has helped other investors and know what products are out there specific to your project. Not only does it give you a better rate than going straight to a larger carrier, the agent becomes a knowledgeable part of your team that can educate you and bounce questions off of.  @Parker Cox does a great job so definitely shoot him a message. Happy investing! 

 Great question @Cristina Ruffini 

The best way to find properties below market value, as some others have said here, is to look beyond the retail market. Think of it as "the market underneath the market". This applies to single family just as much as it does multi-unit.  Look for properties that are distressed or poorly run.  You can do this by searching public records for divorce, probate and notice of default filings for both mortgage and property taxes.  

But, to eliminate your competition even further, don't wait until there is a public notice filed. Just make a list of multi-units in a certain area or price point that you want to target.  It's especially productive to target multi-units that are being poorly run or could have a quick value add once you buy it.  You can drive through neighborhoods and look for these in person.

Start a direct mail campaign to let the owners know that you're looking for properties that meet the following criteria (list criteria that matches their property.) Tell them you would be interested in making an offer if they had an interest in selling and to please contact you for further evaluation. ** This is more effective when it does not look like a mass mailer. ** Use the owner's name, reference the property if it's different from the mailing address and hand address the envelope to increase the open rate. 

Send out enough of those and you're likely to get a response from someone who is tired of being a landlord. Then you can do a period of due diligence to determine current and potential cash flow. This is very effective when combined with paid social media ads targeted at the owners. 

Keep thinking creatively and you'll find great deals. Let me know if I can ever help with anything here in San Diego. 

Happy Investing!