How to sell a house despite lower comps
Lancaster, CA · Member since 2011 · 20 posts · 4 votes
How to sell a house despite lower comps
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Residential Real Estate Broker · Sedona, AZ · Member since 2017 · 751 posts · 504 votes
3yQuote from @Bruce Woodruff:
Quote from @Chad McMahan:
Quote from @Bruce Woodruff:
@Scott Jensen has a good idea! Also, consider paying a private appraiser to tell you what the property will eventually appraise for.
If you know it will be tricky, I recommend you independently hire an appraisal, maybe toss some strong comps to them, to encourage good numbers, then, with private appraisal report in-hand, proceed with the lender's appraiser, get their report turned in- and if it is low, forward the private appraisal to the lender who can forward it to their appraiser for a "reconsideration of value".
Great ideas^^^ Chad knows more about this since he is a Realtor. I do know that a lot of good Realtors will even meet the Appraiser and hand them a bunch of comps and reasons why the number should be higher....
Bruce Woodruff = 5 Stars
#TheBruceMeister
34 Replies
- 3yJoe HomsBusiness MemberFlipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
@Eric Noble you're possibly looking at a big tax issue? Are you speaking with someone who has knowledge of your goals. As for your principal residence, it sounds like you are in a "Functional Obsolescence" issue. This is where your home is "Functional," but may not fit for the area. Example: A two story home in a one-story neighborhood. Since this is your principal residence, you can shelter $250K per person or $500K per married couple.
Your investment properties are a different story. The only way to shelter them from taxes would be a 1031 exchange. Which means you would have to buy something else in AZ and put in all the money from the sale. There are other ways to sell the investments like with seller financing (love to discuss) where you can defer your capital gains for a longer period of time.
There are many different was to sell or even keep your homes that you should explore with a professional.
Good Investing...
- Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes3y
Hey Eric,
If I'm understanding your concern, you are saying that your house is worth more than sales in the area, is that correct? Is there something unique about your property that warrants the higher price? Keep in mind Sellers want to sell high and Buyers want to buy low. It is the compromise of those two expectations that gets properties moving. Is it that you need a certain net cash in your pocket to make the move?
- Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
Quote from @Joe Homs:
@Eric Noble you're possibly looking at a big tax issue? Are you speaking with someone who has knowledge of your goals. As for your principal residence, it sounds like you are in a "Functional Obsolescence" issue. This is where your home is "Functional," but may not fit for the area. Example: A two story home in a one-story neighborhood. Since this is your principal residence, you can shelter $250K per person or $500K per married couple.
Your investment properties are a different story. The only way to shelter them from taxes would be a 1031 exchange. Which means you would have to buy something else in AZ and put in all the money from the sale. There are other ways to sell the investments like with seller financing (love to discuss) where you can defer your capital gains for a longer period of time.
There are many different was to sell or even keep your homes that you should explore with a professional.
Good Investing...
@Joe Homs - my personal residence includes a pool and guest house, and although everything is a bit dated, there are no comps. It concerns me to base my selling price on homes with no similar benefits. The 250K shelter is sufficient to absorb most of capital gains. I wonder how to market the property in a way which justifies a higher price. I spoke with a local realtor who just shrugged and suggested I take the hit.
I'm leaning heavily toward donating the highly appreciated rentals to a CRUT. In 2020 I spent many hours looking at 1031 options, including DSTs. They are excellent options for accruing investment wealth. I am getting old and want to liquidate everything. A 20 year, single life CRUT make this simple while providing both income for me and a benefit to humanity.
With that said, I would greatly appreciate a consultation if you have time.
Thank you - Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
Quote from @Rick Albert:
Hey Eric,
If I'm understanding your concern, you are saying that your house is worth more than sales in the area, is that correct? Is there something unique about your property that warrants the higher price? Keep in mind Sellers want to sell high and Buyers want to buy low. It is the compromise of those two expectations that gets properties moving. Is it that you need a certain net cash in your pocket to make the move?
@Rick Albert:
Thanks, and correct, yes. This house includes a guest house and pool and there are simply no comps. So, how do I market it and to whom ? Earlier, I was wondering if some version of seller financing would open the possibilities. The moving cash would be nice, but is not necessary.
I want to exit the business of land-lording and focus on life's other experiences for the remaining 20 years (or more...).
- 3yAshley UndercufflerPro MemberReal Estate Agent · Los Angeles, CA · Member since 2019 · 80 posts · 25 votes
Quote from @Eric Noble:
I'm planning to liquidate my rentals and my personal residence - move to AZ. I'm looking for creative options/agent support for my personal residence as it does not align well with the comps of my area.
Thanks
SSeller financing would be one option. Also, when listing a property with new adequate comps, your real estate agent must be very creative in the listing. "First single-family home with an ADU within 30 miles!". Needs to have a tagline like that to grab attention. Also marketing to investors is a strong concept. Obviously, you're an investor so maybe selling it off market is your way to go.
- 3yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Eric Noble:
Quote from @Rick Albert:
Hey Eric,
If I'm understanding your concern, you are saying that your house is worth more than sales in the area, is that correct? Is there something unique about your property that warrants the higher price? Keep in mind Sellers want to sell high and Buyers want to buy low. It is the compromise of those two expectations that gets properties moving. Is it that you need a certain net cash in your pocket to make the move?
@Rick Albert:
Thanks, and correct, yes. This house includes a guest house and pool and there are simply no comps. So, how do I market it and to whom ? Earlier, I was wondering if some version of seller financing would open the possibilities. The moving cash would be nice, but is not necessary.
I want to exit the business of land-lording and focus on life's other experiences for the remaining 20 years (or more...).
I suspect your fear is legitimate. The two items you listed *** very little value without comps that demonstrate the added value. The value you believe the property is worth is not necessarily what the property is property is worth. The property value is based on appraisals.
Even if you find a buyer that is willing to pay more than the comps would dictate, you will have issues with the appraisal associated with any buyer financing. If this was a year ago, you could have received an offer without an appraisal/finance contingency. In the current market, it is unlikely to get an offer without a finance contingency.
You will need to decide if you desire to keep the property or accept an offer that is justified by the comps.
Good luck
- 3yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@Eric Noble, If the market isn't speaking the way you like another option might be to not sell the primary residence yet. If you've lived in it for the last two years then you could move out and rent it for up to three years before selling it. You'll still qualify for the tax free primary residence exclusion.
This also doesn't have to get in the way of your plan to sell everything else and move to AZ. Maybe you do a 1031 exchange or two. Buy a really nice property in AZ and use it also for investment for a year or two. Then move in. The conversion of a property from investment to your primary is not a taxable event.
If you did this option then when you finally do sell your primary the market will hopefully have advanced. You'll get a higher pride and three more years of appreciation and cash flow. And best of all the profit will still be tax free under the primary residence exclusion. And even better, since you're moving into one of your old investment propertys from the 1031, you won't have to reinvest any of that money in new real estate. You can do anything you want with it.
You've at a very strategic crossroads where a little planning and patience can reap you a lifetime of advantaged dollars.
The 1031 Investor5137 Reviews - Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes3y
Quote from @Eric Noble:
Quote from @Rick Albert:
Hey Eric,
If I'm understanding your concern, you are saying that your house is worth more than sales in the area, is that correct? Is there something unique about your property that warrants the higher price? Keep in mind Sellers want to sell high and Buyers want to buy low. It is the compromise of those two expectations that gets properties moving. Is it that you need a certain net cash in your pocket to make the move?
@Rick Albert:
Thanks, and correct, yes. This house includes a guest house and pool and there are simply no comps. So, how do I market it and to whom ? Earlier, I was wondering if some version of seller financing would open the possibilities. The moving cash would be nice, but is not necessary.
I want to exit the business of land-lording and focus on life's other experiences for the remaining 20 years (or more...).
Your question "so how do I market it and to whom?" is a question for your real estate agent.
Have a conversation with a qualified agent who is an expert in the area. They will get you the most out of your home.
- 3yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
Whatever your reasons for selling, here are six ways to sell a house quickly.
1. Find the Right Real Estate Agent
If you want to sell your home fast, the first step is to hire a real estate agent. The ideal person will know the local market and have a sales record that proves they know how to sell. Keep in mind the seller is often responsible for paying the commission for both the buyer and seller agent. In exchange for the convenience of an agent, you're likely on the hook for a selling commission between 2%-4% of your selling price.
Keep in mind that a real estate agent will help with the entire process. They'll oversee the professional photographer who will take top-notch photos of your home as well as negotiate the best price. They also will write up a real estate listing that sells, schedule and host showings, and market your property to get it seen.
2. Price It to Sell
One of the most effective ways to sell your home fast is to price it competitively. If you price it too high, you detract prospective buyers out price out potential bidders. In addition, it make take longer to settle the negotiation process if prospective buyers want your price to come down.
Your real estate agent (or realtor) will research comparable homes (aka “comps”) in your area to set a realistic price. If you really need to sell fast, then consider pricing your home a little lower to attract interest (and maybe even spark a bidding war). If you haven’t received any offers by a certain date, your agent can further reduce your selling price.
It’s also helpful to think about the price points that buyers search for in your area. If you list your home for $302,000, for example, then you’ll miss all the potential buyers who are looking for homes under $300,000. It’s probably not worth asking for the extra $2,000 if it means fewer buyers will see the home.
Just-below pricing is a popular pricing strategy as $299,000 has a different psychological effect on consumers than $300,000. This pricing strategy is employed throughout supermarkets and online retail.
3. Clean, Declutter, and Depersonalize
Buyers need to be able to picture themselves in the space, but they won’t be able to if your house is a mess. Give your home a thorough cleaning from top to bottom, get rid of clutter, and hide the family photos and other personal items. It's fairly standard industry practice to hire external cleaners especially prior to a major showing.
Rearrange the furniture so your home looks inviting and so buyers can move through your home without bumping into anything. If necessary, put bulky items in storage. A crowded room looks like a small room.
Consider hiring a stager to help you showcase your home's best assets, impress potential buyers, and sell it quickly for the best possible price. Staging isn't cheap, but the National Association of Realtors (NAR) estimates that, on average, staged homes sell 88% faster and for 20% more than non-staged homes.
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4. Boost Your Curb Appeal
If you want to sell quickly, it’s essential to make a good first impression. The first thing a buyer sees is a home’s exterior and how it fits into the surrounding neighborhood. To boost your home’s curb appeal, give attention to both the house and its surroundings.
It may be too late to do major renovations. If a sale is urgent, consider minor repairs and maintenance to the outside of your house such as touch-up painting, window washing, and fixing anything broken. If repainting your entire house doesn't fit in your timeline, slap a coat of paint on just your door. You can also swap out your address numbers or door handles for newer, more attractive replacements.
If applicable, make sure the pathway from the curb to your porch is clean and safe to walk on. This includes straightening any uneven paths and pruning overgrown bushes. In addition to being a safety hazard, you want to make sure prospective buyers can see and focus on the appearance of the house as they approach.
Don't forget the lights! Swap out exterior and interior lightbulbs especially if you are showing your house later in the evening or during winter.
There's plenty to do with your surroundings as well. Plant flowers or sprinkle bark mulch to give your yard a freshly-landscaped feel. Lay out a welcome mat and make sure your mailbox is clean. Dust away spiderwebs and debris from windows, eaves, and porches.
Not only does a positive curb appeal welcome prospective buyers, it signals to the market that you've cared for the home and they can believe the rest of the house has been well-taken care of as well.
5. Take Care of Quick Repairs
You won’t have time for any major renovations, so focus on quick repairs to address things that could deter potential buyers. Survey the house and take care of the easy fixes including:
Fix all loose tiles in the bathroom or kitchen.
Fix all loose hinges on doors or cabinets.
Unclog or replace stuck drawer tracks.
Repair any leaky faucets and ensure all plumbing systems work.
Remove carpet stains or refinish hardwood floors.
Depending on how much time and money you want to spend getting the home ready, you might also want to update fixtures, buy new appliances, install new hardware on the cabinets, and give the interior a fresh coat of (neutral) paint.
If you want your home to sell fast, consider only working with cash buyers or buyers who have secured financing pre-approval. Buyers who have not been approved may delay the process and end up not qualifying for your home.
6. Sweeten the Deal
Another way to make the home and deal more attractive is to offer something to sweeten the pot. Buyers love financial incentives, and if you are pressed for time, consider how you can make your offer attractive. Examples include:
covering all closing costs.
accommodating move-out/move-in schedules with the buyer's preference.
agreeing to all inspections.
agreeing to pay for known items of concern to a buyer.
offering a transferable home warranty that provides discounted repair and replacement services for household appliances and systems.
NETWORTH BUILDERS5236 Reviews - Rental Property Investor · Tremonton, UT · Member since 2018 · 26 posts · 10 votes3y
I guess I see a gap. Maybe I’m wrong, but do you have a timeline. Have you talked to your financial advisor, tax consultant. We can all offer bits and pieces and I am no expert.
However what at the end of the day is your goal? Is it to entirely leave “landlording” when you move? In one swift move or are you ok with a 2-5 year plan to reap tax benefits/protections?my phone doesn’t like scrolling back but someone offered great suggestions on staging and using a great realtor. I have heard a number of people having incredible luck without good comps to use staging/ home decorating to start bidding battles when the market is a bit bearish. Even listing below original list price and the bidding goes well above list price following that process. A GREAT Real Estate agent will make a great deal.
- 3yScott JensenPro MemberFinancial Advisor · Blaine, MN · Member since 2014 · 477 posts · 387 votes
A pool and guest house make me think this house may be a good short term rental. Is that assumption correct? If so, you can potentially turn it into a short term rental, run it for a year so you have rental history, and then sell to an investor that is building their STR portfolio. As long as you have good rental numbers and positive reviews, STR investors likely won't mind that there are not good comps for this property.
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
@Scott Jensen has a good idea! Also, consider paying a private appraiser to tell you what the property will eventually appraise for.
- Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
Thanks for your considerable reply !
- Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
Yes, I've consulted an array of advisors, and I want to leave landlording altogether. S.ooner is preferred, but not to my own financial detriment.
This thread has been valuable in forming my strategy, thanks to all.
- Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
I like this idea. It would be easy and profitable to rent this house - far better than simply taking a low offer in order to cut it loose.
- Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
It would be interesting to speak with an appraiser. Several years back, while considering the value of adding a carport, I consulted an appraiser forum.
Thanks for your feedback.
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Eric Noble:
It would be interesting to speak with an appraiser. Several years back, while considering the value of adding a carport, I consulted an appraiser forum.
Thanks for your feedback.
I think that would be a good idea! Good luck, and welcome (in advance) to Arizona! Where are you looking? Feel free to PM me as I researched the heck out of the state before we moved here.....
- Rental Property Investor · Tremonton, UT · Member since 2018 · 26 posts · 10 votes3y
Quote from @Eric Noble:
Yes, I've consulted an array of advisors, and I want to leave landlording altogether. S.ooner is preferred, but not to my own financial detriment.
This thread has been valuable in forming my strategy, thanks to all.
Do you have an preferred timeline? I’m no specialist in any department, but good on you looking out for ways to get creative to quickly leave without hurting yourself financially. Where are your properties located. All in California?
If you don’t mind keep or informed or maybe just message me at some point when you have a plan. I’d love to hear how you plan develops and why you choose that path for yourself
- Investor · Pasadena, CA · Member since 2017 · 612 posts · 523 votes3y
Quote from @Eric Noble:
It would be interesting to speak with an appraiser. Several years back, while considering the value of adding a carport, I consulted an appraiser forum.
Thanks for your feedback.
Longtime Appraiser/Broker/Investor here. What would you like to know?
- Member since 2023 · 3 posts · 3 votes3y
Use a lease option strategy or sell it and carry the paper. You can usually get a sizable down payment with either of those. I like the L/O better because if they default its an eviction rather than a foreclosure. If they do default, you get to do it all again =)
- Member since 2023 · 3 posts · 3 votes3y
Oh and also you can usually get an above market value in those situations. You can pretty much set your own price, within reason
- Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes3y
You could consider selling owner finance
- Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
@Zachariah Tuck - My timeline is flexible - could be 3-9 months, but I'd prefer 3 months. All properties are in CA.
- Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
@Brad S. - In assessing a property's value, is it reasonable to combine value of the 'comps' and improvements ? My basis for believing this house is worth more than the next door neighbor's is founded on the swimming pool and guest house. I understand that the property is only worth what the market is willing to pay and that if I price it unreasonably, then it will sit forever. It's a diamond in the rough and I'd prefer to sell the diamond.
- Lancaster, CA · Member since 2011 · 20 posts · 4 votes3y
@Carl Fanaro - Interesting possibility. I've heard of L/O, but do not understand how to manage. Can this be professionally managed (outsourced) ?
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