This my second post regarding our experience helping my in-laws sell their house.
Selling a house from 300 miles away has its challenges. Not the least of which is finding a good real estate agent. My wife and I have bought and sold a few houses in our days, so we have met good and bad agents; and we have learned a few of their tricks.
In our search to find a real estate agent for selling my wife’s parents house we did our due diligence and shopped around.
We found the agent(s) who never called us back, and ones who called us back months later. Yes, we even had one returns our very first call after we had closed on the house!
We found the agent(s) who spammed us with emails about everything we did and did not want to know about selling and buying a house plus how they were the “very best” at what they do and we were so fortunate to have found them.
And, we found the agent, who we ultimately went with, as a referral from a trusted neighbor. We had actually met her months before any of the others on one of our three “moving” trips up to NY. She gave us her card, wasn’t too pushy, and basically waited until we were ready to make a decision. This is what ultimately made us choose her over all the others.
We could have signed the paperwork way back then and there to use her as our agent but we were not ready at that time – remember my mother in law saved everything and felt that she had to see and try to fit everything from her three story, 4 bedroom colonial into a 2 bedroom apartment. Hence the multiple moving trips.
As you can probably tell, we never go with just one choice, one option, and we believe in comparison shopping – even with real estate agents and especially when selling a house.
Tip: Do your homework.
Just as we did with finding an agent, we researched the real estate market to get an idea of what the current market and neighborhood prices were like.
- We found that many homes which had been upgraded were going for about $150K more than those which had not. My wife’s parent’s house definitely fell into the latter category.
- There were a couple less expensive “fixer upper” type listings, mostly foreclosures, which had been on the market at least a couple weeks. These were our competition.
- So we had a pretty good idea of what price points we were looking at for selling this house.
First the Pro’s and Con’s of the house we were trying to sell.
- It was on one of the best and largest lots in the neighborhood.
- It was in a desirable neighborhood
- There was only one listing from that neighborhood currently on the market
- It was already a good size house with lots of “potential”
- It was definitely and fixer-upper and needed to be sold as is
- There was a lot of “clean up” renovation work as well as a lot of required “code” work that needed to be done
- Add to that the “nice to haves” of renovation like marble counter tops and real tile and hard wood floors and this fixer-upper suddenly can become quite expensive
Having done renovation work on previous properties before, we had a pretty good idea of what was needed to be done and a ball park idea of cost.
To come up with a target listing price we did the following:
- Took the top end price point of the really nice homes
- Subtracted what we estimated the renovation costs to be
- Took out what we thought a reasonable profit margin a flipper or investor might want
The end result was a listing price about $200K less than the top price point and about 10-15% under the current foreclosure listings.
Yes, it was a bargain to be had. But hopefully not at a price that would signal “too good to be true”.
So we signed the listing agreement with our agent and sat back and waited.
Fast and Furious (No not the movie)
As it turned out, we did not have to wait long. We got a call from our agent the next day.
Congratulations! I found a buyer! And it is for asking price and an all cash offer! Isn’t that Great!
I thought to myself – Yes, yes it was.
Wow!, that was quick. Who was the buyer?
Remember that investor I said I knew, well I showed him the property and he made an on the spot offer.
Great. We will have to let my in-laws know. When do we need to get back to the buyers?
As soon as possible.
Well, needless to say, an all cash offer for asking price is really nice. This was so quick that we did not even get a chance to see what the listing actually looked like on line. As it turned out, there was no listing that we could find.
That was odd. Maybe it took 24 hours to cycle up to the internet.
So we contacted my wife’s parents about the offer and waited over night to see if the listing showed up.
So we called the agent and asked about the listing.
Oh, I didn’t list it. Once I got the offer from my contact I didn’t think it was necessary.
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Remember we signed a listing agreement with the agent? Something everyone who sells through an agent should do by the way. Well the agreement clearly states:
Upon signing, the agent agrees to immediately list the property on the MLS.
To put it mildly, we were upset.
Why wouldn’t the agent live up to the letter of the listing contract?
By going with her contact and getting a done deal for full price, she gets to collect 100% of her commission.
Otherwise, she risks having to share up to a third of her commission with another agent.
And, the same tactic would work on the back end too.
When her investor is done remodeling the property he or she would contact our agent to sell it. Having advanced knowledge that the property would be going on the market and at what price, she could line up a buyer in advance and collect full commission on the back end.
Part of me does not blame her for trying but really there is a legal obligation which needs to be upheld here AND we purposely priced the house low, but hopefully not too low, to attract attention.
It has been our experience that better properties in better neighborhoods get lots of attention and in decent markets tend to become a bidding war between buyers.
So we told her to list it.
We want to see if we get any other offers over the weekend. If we don’t get any other offers, then we can go with your investors offer.
Of course she did not like that answer and tried to talk us out of it but her hands were tied.
To cut a long story short, we received 10 offers over the weekend and were up to 12 by Tuesday when we told everyone to give best and final by Thursday. Our final offer was an all cash offer for $30k more than our asking price; and it was not her investor friend’s offer.
It was from a pair of foreign investors who were in the flipping business here in the states.
Even we were surprised how much traffic the listing got and our agent certainly had her hands full juggling so many different offers by so many different clients.
She certainly worked a lot harder for her money.
This experience reinforced what my wife and I have always known about real estate transactions and realtors.
- It pays to do your homework and know the market.
- Never make impulsive decisions.
- Comparison shopping and getting multiple offers is always a good thing.
- Everyone is looking out for #1, which is themselves. And you should too. In this case, we were looking out for my in-laws best interests too.
- Expert advice is valuable and should always be sought out. But as the ol’ Russian political proverb says, “trust but verify“.