Two birds, one stone. One down, one to go!

A lot has happened since the last posting. I obtained my realtor's license and signed on with a small brokerage. Additionally, I now have a ratified contract on one of my two investment properties. I must say that the whole experience has been educational on a number of fronts, to say the least.

First, let me start with my realtor's license; had I known then what I know now, I probably would have just steered clear. I initially decided to get the license so that I could access the MLS to find and list flip opportunities with my mentor. 

There was the pre-licensing class, then the PSI exam and the background check, then the license application, then the activation and transfer to the brokerage, followed by the post licensing education... I could go on and on, the broker fees, E&O, mandatory NAR membership and MRIS subscription. Each step of the process incurred a fee, and I still have a ways to go before I can actually open for business. I still need to design and order business cards, a website, and work on my brand. 

Being a realtor is more than just getting a license; you need to learn about marketing and sales and you need to quickly come up to speed on the technologies involved to help you with CRM, document management, and accounting.

While I was waiting for my license to become active, I asked my newly affiliated sales manager to help me sell one of my investment properties. July was already halfway through, my tenants were about to vacate both properties by the end of the month, and I haven't received any sales leads. I was starting to get a little worried. 

Since I previously had this property on the MLS as a FSBO prior to obtaining my license, I decided to retract the listing. Incidentally, this action triggered a new barrage of inquiries from realtors who were apparently watching and waiting... Go figure.

A week earlier, we went to the MLS listed property with a  professional photographer and took a whole new series of photos. The photographer did an awesome job and we compiled all the necessary pieces for a new MLS listing. 

We sat down and reran the comps and came up with amount which was almost 10% lower than the asking price in my original listing, and I left that evening expecting that my sales manager will go ahead and prepare a listing agreement for me to sign and post the new listing on the MLS the following day.

Two days later, after not hearing back from him, I decided to check in and he informed me that he already had an offer from a buyer's agent. This clearly left me wondering whether he had a card up his sleeve. 

When I asked him how is it possible that I sat on a listing for so over 40 days without any leads and he was able to sell the property within 48 hours. Clearly, lowering the price played a big role, but he also told me that realtors simply steer potential clients away from FSBO listings because they feel that they have to deal with an emotional seller who doesn't understand the home sales process and imposes on them to act for both the buyer and the seller. Frankly, I am disappointed with the latter assessment, but only because I had absolutely no emotional attachment to my real estate investments, nor did I believe myself to an uninformed real estate professional who needed representation. 

As an aside; when I began the process of liquidating my investments, I thought I had access to knowledgeable investors with years of experience buying and selling real estate. What I didn't realize was that these investors, in turn, have worked with realtors who specialize in dealing with house flipping. 

So where were we....

As a result of the home inspection, the buyers (naturally) have demanded additional concessions. Considering that we've cut our margin down to the bone and we want to close and be done with this property, we're countering with half of the requested additional concessions and will have to wait and see if they accept. If they don't, we'll simply walk away from the deal and search for another potential buyer who can appreciate a good opportunity when they see one.

In the final analysis, I learned a great deal from this entire experience; 

1) Being a realtor is not a trivial matter, and being a successful realtor requires a serious commitment of time and money.

2) Realtors won't work directly with homeowners on FSBO transactions, and will steer their customers away from these deals because they feel the seller will be unpredictable and they will have to do all the work.

3) What works for one investor may not work for another. Each investor has a strategy that works for their individual needs.

4) If you really want to sell your property, make sure you price it right and list it with a professional, otherwise you may end up sitting on it for a long, long time.

5) Only you can determine the opportunity cost of the bottom line in your deal. If you want to hold out for the maximum dollar, you may find yourself missing out on a more lucrative opportunity while you wait for the right buyer. 

In my next posting, I will share the outcome of this particular deal, and hopefully the result of my effort to sell our other investment property.