Selling a house

[Danny]

Negotiate hard on this deal and try to slow it down to allow other listings to come in. Ignore what your realtor's advice is; he or she is working for the sale, not for you.

If this first buyer wants to pay $10K more for the house than you're asking, insist they pay any resulting increases in your costs because of this. For example, since your realtor commission is maybe 6%, make them pay you 6% of $10K.

Regarding all of the "seller pays for" vs. "buyer pays for" items, that's all just blowing smoke in your face. At the end of the day you'll walk away from the deal with $X in cash. Seller pays/buyer pays just moves $X up or down by a few hundred or thousand dollars. Focus on $X. Decide on what you think $X should be / is fair / represents a good deal and compare it to what you're getting offered.

good luck,

malakito

P.S. -- There's a chapter about real estate agents in the book "Freakonomics" which is a new book out. It basically says that the added benefit to the agent of waiting for a better deal is only 6% of the delta, which probably amounts to only a couple hundred bucks. But when realtors sell their own houses, they're more likely to hold out and get a substantially better deal.

malakito - I've slowed it down - had our Mn lawyer look over purchase agreement today - nothing jumped out at him, except he doesn't like the arbitration dispute resolution paragraph even though it looks standard - monday he will call our Ca. lawyer to get his take. So, I pushed back on the realtor and told her to let the buyers look at the house and I'll get back to her on monday. Having a weekend for potentials to get a look couldn't hurt, and gives the couple a chance to find out if they really want to do it and also gets our comfort level in place.
I didn't think about the extra $500 (5%)commision! I'll make a point of bringing it up. I should send you a check for $250 for that?

I get the feeling that my realtor wants a fast deal.
Yesterday: Realtor: Today, I received a very good offer on your Acacia property
This Morning: R: The offer is what I consider a very "clean and straightforward offer". The fees and inspections that the seller is to pay is normal and customary for our area. Your closing costs should run approximately 1% (this includes fees, inspections, disclosures, etc.). The $10,000 credit to the buyer is fairly common -- they are just wanting to finance their costs and this is reflected in the purchase price. Since the property is tenant occupied, buyers can only inspect the interior with an acceptable offer
Later - Me: Are you saying they can't look at the property until we accept their offer?
R: I've left a message with the buyer's agent to go ahead and set up a showing prior to acceptance ......Thanks malakito!

 

[Danny]

You might want to consider what your cap gain would be as the offer stands now and how much more % you would get by the above approach. 5%? 10%?

How much harder are you willing to work for those higher offers? I don't mean slaving and sweating, I mean the hassle of offer/counteroffer negotiations, tenants, & Sunday open houses. Plus your realtor will be audibly pouty & fussy when they bring in an above-market offer and you just nod & smile to wait for more...

Or you could just take the money and RUN!!!!!

Exactly, I'm retired now. I want to take it easy until its time to Take the Money and Run!

 

[Danny]

Feels to me like the buyer doesn't have much of any cash.

In my area, custom says no commission on any cash back to the buyer.

Otherwise, take the money and run.

If you are in the mood to negotiate, put a cap on the amount of cash you have to pay to comply with inspection reports.

$20,000 down and $314,000 30 year 6.25% 1st and a $81,000 9% 2nd. 10,000 financed for closing costs
That would never be allowed "back in the day".
I'll remember about taking out the take back from the commission. I like the idea of a cap on complying...thank you

 

[Nords]

I didn't think about the extra $500 (5%)commision! I'll make a point of bringing it up. I should send you a check for $250 for that? 

Nah, just send it to Dory for the server upgrades.

Carlton Sheets is a sharp guy. Never bought his program (I know it all already) ........................But, I can tell you for dead solid certain that he knows his RE, inside and out. JG

Oh, he's sharp all right. Here's what John T. Reed thinks of Sheets. (This below text is text only. The website's text contains many more links which may be of further interest.)

Carleton H. Sheets a.k.a. Carlton Sheets, Carleton Sheets, Carelton Sheets (Stuart, FL): I do not recommend.

Mark Holocek, Sheets’ associate, was kind enough to send me two boxes of Sheets books and tapes. I put my analysis of them on a separate page.

I previously described Sheets as a former Al Lowry instructor. He wrote me a letter saying he wasn’t a Lowry instructor. The letter also complained about being “lumped with Robert Allen.” I have since learned that Sheets was a pitchman for Nothing Down author Robert Allen, that is, he was the guy who made speeches to get people to sign up for Allen’s weekend seminar. Seems to me Sheets should have mentioned that in his letter to me.

He also protested that he no longer does infomercials from a yacht in Florida, although he admits he “did one scene from a yacht 12 or 14 years ago.”

In his letter to me, Sheets bragged that he recently did a nothing-down purchase. I asked for the address and name of the lender. No response.

Sheets’ letter says he has been a “full-time real estate investor for nearly 29 years.” The phrase “full-time real estate investor” catches my eye. Such people are rare. Most of the real-estate millionaires I know only do it part-time. It’s kind of the nature of real estate: part business and part investment. Sheets’ partner Mark Holocek admitted to me that Sheets now spends less than 40 hours per week on real estate investment, “but that’s all he does.” Well, except for appearing in infomercials.

In his letter to me, Sheets claimed, “I...am buying, selling and rehabbing property on a weekly basis.” I asked him for the addresses of the properties he had bought, sold, or rehabbed in the last three months. No response.

Why would a guru brag to me about his purchases, sales, and rehabs, then refuse to provide addresses, especially when he ought to know I am going to tell my readers about it? It can’t be privacy. All real estate transactions, including lenders, are publicly recorded. Rehab generally requires a building permit, which is also public. Some gurus refuse to provide addresses because they simply did not do the deals at all; others, because there is something about the deal which would embarrass them. I do not know Sheets’ motivation for not responding to my request for addresses and a lender name. I encourage FL readers to try to track down his deals and tell me about them.

I have listed every property I ever owned in the about-the-author section of this Web site. My book How to Buy Real Estate for at Least 20% Below Market Value contains 166 actual case histories and includes the address of the property in question whenever the investor gave me permission to do so. I also include property addresses as well as investor names and phone numbers in my newsletter articles whenever the investor lets me. Whenever a guru brags about a deal, ask him for an address so you can check it out. If he refuses to provide the address, leave.

I am told by someone other than Sheets that he is one of another rare breed. He is not a self-employed guru. Rather he has some sort of partnership or independent contractor relationship with the guys who actually promote and sell the Carleton Sheets home-study course. If that’s the case, he may be able to invest most of the time, but not “full-time.” I guarantee you that no guru who owns and runs his own guru business has time to also invest “full-time.”

As I said in my Real Estate B.S. Artist Detection Checklist article, “Gurus get the same 24-hour days as you. Being an expert takes time. They have to read many trade journals, loose-leaf services, and books to keep up to date. They have to spend hours on the phone interviewing sources for their articles and books and hours in the library researching legal cases and other relevant facts.

“As experts, gurus get interviewed by the media on the phone and in radio and TV studios and they make speeches to investors.”

Although Sheets’ prices seem relatively low, once you order you will find that you are repeatedly pressured to buy more expensive products. His inexpensive products are deliberately left vague and incomplete to get you to buy more expensive products. Here’s an email I got from one of Sheets’ customers about attempts to sell him other things. Here are other emails about Sheets.

A couple of people have told me they made a lot of money in real estate because of Sheets. I don’t believe it. I have read a considerable portion of his material and have yet to find any ideas that would lead to anyone making money.

At worst, the people who have contacted me are simply shills who are lying. At best, they are sincere people who did, in fact, get into real estate and make money, but they are erroneously attributing their success to Sheets. If you truly think Sheets’ advice made you money, please tell me which one of Sheets’ books gave you the ideas you used to make money, and the page and line numbers of the idea or ideas in question. I suspect that if any of these people are sincere, they will be surprised to find that they cannot cite a single specific piece of Sheets’ advice that helped them, other than his general statement that you can make money in real estate. [Note: This request has been on this site for many months. I have yet to hear from a single investor who can point to a quote in a Sheets’ book and say it made him money.]

The real-estate world has long been inhabited by thousands of successful people who got into real estate because of some bogus guru, could not make money with the guru ideas they had so expensively purchased, but ended up discovering other, legitimate ways to make money in real estate on their own. Most of these folks are intelligent enough to recognize that they were taken by the guru and succeeded more in spite of him than because of him. But a small percentage of people are sufficiently dimwitted and easily manipulated that they retain their love for their guru long after they should have noticed that his stuff really did not work and they actually made their money using a different approach.

 

[wabmester]

I understand the value of the fee of the selling realtor.  The value of a full fee to the listing realtor troubles me when for about $500 the home can be listed on MLS, a professional appraisal costs $400 and a realestate attorney (who should be involved in any case) costs about $1,000.  Listing realtors out there sell me ....

Well, I'm sure this is no secret to you, but realtors are part of a monopoly. The listing fee/commission has nothing to do with how much it costs them to sell your home. You are paying a monopoly tax. There are realtors who will put your home in the MLS for a relatively low fixed fee, but what you will find is that your listing will basically be black-listed. Your home will be excluded from the insiders' listing tour, and you may find that your listing is not being presented to buyers by other agents. You can still sell your house this way, but you'll basically need buyers to drive the process, and you should ensure that your listing makes it clear that the selling agent gets the full 3%.

 

[Nords]

and you should ensure that your listing makes it clear that the selling agent gets the full 3%.

Shouldn't that read "buyer's agent"? And that should add: ... once the seller has closed on a full-price offer!!

When we've sold houses by owner we've done everything that the Nolo book recommends. We've also put a bunch of offer forms on the table for prospective buyers, although REAL buyers already have their own copies. Most of the people at the open house are clueless, but out of 50-100 lookers you'll suddenly come across someone who asks for your phone number. They usually follow up the next evening with an offer and it's usually all you need to see. They won't use a realtor either.

We've only sold two houses by owner, one in Hawaii and one in CA, and this might not be a typical experience, but the buyers' realtors have been pretty pitiful and the REAL buyers didn't use a realtor. Most of the "buyer's realtors" were actually clientless. They hope that the FSBOs get discouraged and are ready to have a realtor rescue them.

The Hawaii realtors are starting to feel some pressure from the Help-U-Sell types. A realtor's commission can run well over $30-$40K here so paying a guy $3995 for an MLS listing seems to be a pretty easy choice.

 

[wabmester]

Shouldn't that read "buyer's agent"? 

Not as I understand the nomenclature. A buyer's agent represents buyers, whether they buy your place or not. The selling agent is the agent that sells your place. The listing agent simply lists it. Of course, the selling agent may end up being the buyer's agent or the listing agent, or it may be you (in which case, you save 3%).

 

[vic]

Just bought a house FSBO. Easy..... The owner offered to sell it without the realtor and we could pocket the realtor fees. We got the standard sales form from the TREC (Texas Real Estate Commission) website that every realtor uses. Took one hour to fill out the form with the selling party. Took another 30 minutes at closing. A realtor friend asked why I had not called her to 'help'. More than $10K for 90 minutes of work??

Very pleasant to deal with the owner directly. Just a few weeks early an investment property fell through because the seller's agent was dumb as a rock. He had listed the property including the 1/2 acre which was not the seller's property. I find it too much hassle to talk to the owner through two realtors that want to make the deal go through. They tend to translate things in their own words to make sure there is not a dealbreaker.

We will sell our house FSBO in another few months. We will take the flat fee MLS for $500 which includes the MLS listing and a lockbox (very important!). We will have to go with the 3% buyer's agent's commission to get the realtors over h ere. There are so many realtors out there, negotiating a low listing fee with full service should not be difficult either though.

Vicky

 

[Danny]

Bottom line - if you think the offer is fair and accurately represents the value of the property, take it. If you think the property is worth more, hold out for more. The asking price should have been higher if you wanted more though.

Below is a link to the listing. From my Minnesota perspective the offer seems extremely (like insanely) generous, but don't know how the LA market values it yet. I wouldn't mind if more offers developed this weekend-bidding wars do happen there I heard - these people are prequalified up to $500,000.

http://tinyurl.com/apoxr

 

[Mr._johngalt]

Just bought a house FSBO. Easy..... The owner offered to sell it without the realtor and we could pocket the realtor fees. We got the standard sales form from the TREC (Texas Real Estate Commission) website that every realtor uses. Took one hour to fill out the form with the selling party. Took another 30 minutes at closing. A realtor friend asked why I had not called her to 'help'. More than $10K for 90 minutes of work??

Very pleasant to deal with the owner directly. Just a few weeks early an investment property fell through because the seller's agent was dumb as a rock. He had listed the property including the 1/2 acre which was not the seller's property.  I find it too much hassle to talk to the owner through two realtors that want to make the deal go through. They tend to translate things in their own words to make sure there is not a dealbreaker.

We will sell our house FSBO in another few months. We will take the flat fee MLS for $500 which includes the MLS listing and a lockbox (very important!). We will have to go with the 3% buyer's agent's commission to get the realtors over h ere. There are so many realtors out there, negotiating a low listing fee with full service should not be difficult either though.

Vicky

Been in lots of FSBO deals (as buyer and seller). Never had one "go bad"
due to being a FSBO. Can't recall a realtor screwing up a deal, although
a couple of attorneys made things a bit dicey. The worst situation IMHO
is when you have 2 realtors and both parties to the sale have attorneys.
Can you say "gridlock" ?

JG

 

[Mr._johngalt]

Too impatient to read all this but I get the point.

I don't know Carlton Sheets. He may be a crook. Never bought his
stuff and don't know anyone who has. However, I know the
things he teaches work because I have done many of them myself.
There are surely lots of other ways to get the knowledge, many
are cheaper I am certain. I am sure most people buy the program and never
use it (or even use it and fail). However, it may be just what some
folks need to get started. A place to begin and a path to follow.
For them, Sheet's info might be worth it's weight in gold.

JG

 

[Danny]

Nah, just send it to Dory for the server upgrades.

Thanks for the reminder to support dory and his servers from whom all forum blessings flow.
I should really donate at the Sustaining level.
Do you Moderators donate at the Leadership Circle level and have a server named after you?
I need help finding the method to donate..anyone please?

 

[omni550]

DanTien,

dory36 has a "donation location" on his firecalc site, as I recall.

Otherwise, you may want to contact him directly via e-mail.

omni

 

[Danny]

DanTien,

dory36 has a "donation location" on his firecalc site, as I recall.

Otherwise, you may want to contact him directly via e-mail.

omni

Thanks omni, but not seeing it there

 

[Nords]

Thanks for the reminder to support dory and his servers from whom all forum blessings flow.
I should really donate at the Sustaining level.
Do you Moderators donate at the Leadership Circle level and have a server named after you?
I need help finding the method to donate..anyone please?

FIRECalc's donation link is on this page.  Usually you only see if it you run a scenario and view the results.  (Or you could just click on the link in this paragraph.)

Apparently you have a mistaken impression that there's a correlation between the words "leader" & "moderator", right guys?  We moderators get free coffee (we have to arrange our own delivery) and unlimited FIRECalc runs.  Oh, and 2x overtime after regular working hours...  But, hey, the heartfelt appreciation of the rest of the board members is more than enough compensation.  

 

[omni550]

DanTien,

Click on run at the bottom and on the results page you get:

Please help keep FireCalc online!

I hope this was helpful to you as you plan your retirement. If so, perhaps you'd be willing to donate the price of a beer toward the cost of maintaining this website. As an early retiree myself, I don't want to have to go back to work to pay the costs of keeping the site up!

If you found FireCalc useful, and want to make a small contribution, please click on either button below. (PayPal is preferred; they charge less for the service. With Amazon, your contribution is anonymous.)

You'll be taken to a PayPal or Amazon website where you can read more and decide what you'd like to do.

Thanks in advance!

Use PayPal
       

omni

 

[Danny]

FIRECalc's donation link is on this page. Usually you only see if it you run a scenario and view the results. (Or you could just click on the link in this paragraph.)

Apparently you have a mistaken impression that there's a correlation between the words "leader" & "moderator", right guys? We moderators get free coffee (we have to arrange our own delivery) and unlimited FIRECalc runs. Oh, and 2x overtime after regular working hours... But, hey, the heartfelt appreciation of the rest of the board members is more than enough compensation.

Thanks Nords.
So what your saying is you're not donating at the LC level?
How about at the next level - Moderator Circle and have a server named Mighty Nords

 

[Danny]

DanTien,

Click on run at the bottom and on the results page you get:

Please help keep FireCalc online!

I hope this was helpful to you as you plan your retirement. If so, perhaps you'd be willing to donate the price of a beer toward the cost of maintaining this website. As an early retiree myself, I don't want to have to go back to work to pay the costs of keeping the site up!

If you found FireCalc useful, and want to make a small contribution, please click on either button below. (PayPal is preferred; they charge less for the service. With Amazon, your contribution is anonymous.)

You'll be taken to a PayPal or Amazon website where you can read more and decide what you'd like to do.

Thanks in advance!

Use PayPal


omni

Thanks omni!

 

[Danny]

I just joined Paypal to do the donation - PP says they will put 2 deposits in my bank account and to check it in 2-3 business days and then get back to them and verify the amounts! Then I can use PP. I'm getting kinda excited.
Hold on dory its going to be a little while longer.

By the way not that this would be a motivating factor, no no believe me, but tell me eh...can I put this down as a ahh charitable contribution...

 

[Nords]

By the way not that this would be a motivating factor, no no believe me, but tell me eh...can I put this down as a ahh charitable contribution...

I think it's a tax-deductible investing expense, right?

 

[Danny]

I think it's a tax-deductible investing expense, right?

Naw, I don't think I could justify that based on your recs MOVI - thats in the gambling losses category... and I'm being charitable...

 

[cute fuzzy bunny]

Dan - belatedly i'm with Nords: take the money and run.

Unless you listed the property below market to stimulate offers that is, or the market prices have moved upwards since the home was listed and you were thinking of raising the price.

The $10k back thing is typical of people with no cash for their up front costs. I did the same thing with my wifes house that we sold earlier this year. Couple that was scraping by to get into homeownership and could make payments but couldnt put together five figures for down payments and the rest of the upfront costs...so not all of these are speculators or people working from scripts bought from tv speculators. In fact I'd bet (with no factual substantiation) that most of the cash back buyers are just trying to buy a house before the prices slip too high for them to afford.

While its worthwhile to watch the pennies, I see way too many home sellers and buyers screw themselves up or screw up the deal over what amounts to pennies. I watched one neighbor selling a house screw up the deal because the buyer wanted him to put in window screens (house had none) and the seller decided he wasnt going to do it. Cost would have been a couple of hundred bucks tops. Saw a guy in my dads neighborhood that played tough guy hardball with his realtor, insisting on how much the house would be sold for, what his cut of that would be, and how much involvement he'd have in the sale (none). Too bad that he wasnt that smart a guy, as he could easily have made 10-15% more on his home sale had he either known what he was doing, or by trusting the realtor. I guess the point is, dont get bogged down by this $100 or that $500 or this .5%. Take the offer, move things along and get your 98% or 99% cash out and simplify your life. If the buyer becomes a problem, lose them and get another one.

Realtor fees...a disappointing miasma. By the way, in all five states i've lived in, you had a buyers agent and a listing agent/sellers agent. Buyers agent takes the buyer around, sellers agent 'owns' the listing. Unless you have a "true" independent buyers agent that they buyer actually pays out of their own pocket - - and i've never, ever actually seen one of these - - both represent the seller as the seller is paying both of them. I've gotten away with getting realtors to sell a property for ~2%, and I'd try one of the 1.5% selling agents i've seen like help-u-sell. I have found though that offering less than 3% results in a lot of buyers agents not showing your property. A real tribute to the real estate profession. I've gotten away with a 2% sellers fee and 2.5% buyers fee...that half percent doesnt seem to turn them off that much.

As far as FSBO's, I dont see any reason as a buyer to buy one, havent, and probably wont. As a buyer, i'm not paying any of the fees. I would have to deal with what is usually an inexperienced, emotionally charged seller with no financial benefit to me, as most FSBO's dont sell for 5-6% off...the seller wants to pick up the realtors cost premium themselves. I dont want to wade through 20-30 FSBO's to find the one seller thats probably like most of the people on this board, intelligent, educated and not a dickhead (well, some of you might be dickheads... )

Plus at the end of the day, realtors do a half decent job of keeping sellers honest, as the realtor and their broker are both potential targets for a lawsuit if you discover problems with the home after the sale that the buyer should have been aware of and didnt disclose, or if anything is done improperly through the course of the sale.

All that having been said, I think the days of the 6% realtor based sale are coming to an end. It made great sense 20+ years ago when the selling agent had to do carbon paper mimeo's of the listing, glue real photographs to them, and drive around or call around to all the regional agents to let them know about the property. That took real selling skills and time. Buyers agents had to spend days scrounging up listings to show and spent hours every day on the phone.

With modern automation, a sellers agent job is an hour or two setting the price and sticking the thing in the MLS, although a buyers agents job can be a pain in the butt if they have a buyer that wants to look at 50-100 properties before they make a decision. In no case are either of them due 15-20K+ for a few hours of work...in my opinion anyhow.

Its going to be a tough system to get torn down though...way too many people drinking from this trough...

 

[Danny]

() - thanks for that post. I will take it and run if they don't change their minds and move out of state and find out what kinda of house they can get for that kinda of money.
I had approx. market evals done by 3 brokers 2 months ago - 350 - 400.
Chose this broker because it made my life easier - they are our prop mgrs and have the keys. I could envision a disaffected pm who would be not only reluctant to cooperate with another broker, not be motivated to schedule with the tenant and also would maybe lose some motivation to properly manage our apt. building next door. Also, thought 5% commis was a deal - here in MN. 7%!
I agree about not sweating the dollars - I've almost always left money at the table whether it is cars, houses, jobs...makes for good feelings and relations.
There will be a god awful amount of tax to pay and I will now enter into the feared AMT area...
I'm helping Arnold & California out with this deal -right now the prop tax is $225.00.
The new owner will pay about $5,000.
Ca. Income tax will be around $30,000.

 

[Nords]

Naw, I don't think I could justify that based on your recs  MOVI - thats in the gambling losses category... and I'm being charitable...

It doesn't matter what I recommend and you're right-- FIRECalc may be better deducted as a gambling loss. Read the tax code and make your own decision.

Hey, it's only a deduction when I get stopped out of it. I wish I could pick the low price of every stock that I buy but I'm patient with numbers like these. If you don't want the volatility then buy bonds or CDs...

 

[Danny]

It doesn't matter what I recommend and you're right-- FIRECalc may be better deducted as a gambling loss. Read the tax code and make your own decision.

Hey, it's only a deduction when I get stopped out of it. I wish I could pick the low price of every stock that I buy but I'm patient with numbers like these. If you don't want the volatility then buy bonds or CDs...

ah, man. What was it Don Rickles used to say - I only kid you because I love you..well I wouldn't say I love you, but I kinda like you and your posts.
By the way, who picks out your clothes? Stevie Wonder?