I am starting a project to subdivide a property I own--in the heart of Silicon Valley and in the CUSD--and plan to sell one of the two homes as soon as possible. At what point should I list it? I'd like to pay off the construction loan asap, so I was hoping to list it shortly after framing starts, sometime late this Spring. I have been advised, however, to wait until it is complete.
And, along this line, is it advised to pay the 2.5% - 3% to a listing agent, with it being a brand new home and (assuming it remains) a hot real estate market. Three much less impressive, nearby properties sold in less than a week for over asking, and currently there are only two other 4+ BR homes listed within a 2 mi. radius.
Finally, what should I offer the buyer's agent in the listing, if I FSBO it?
@Mark Caragio , welcome to BP. This is a social networking site. Fill out your profile and upload a photo (yours can't be any worse than mine). It will encourage other members to reach out to you. It is easier to tailor a good response if we know something about you.
That said, I recently faced a similar problem on my first new construction home. I was also in a hot market. The plan was to list early and try to catch a buyer so we could use their down payment, save expense, save anxiety, blah, blah... I can tell you know what I'm talking about. We were monitoring the market very closely and we saw price increases on new construction weekly. Not only that but our house compared very favorably to what was on the market. The prices were rising fast enough that we thought we might actually short change ourselves if we listed early. We decided to wait until the home was completed before listing and we caught a buyer in a couple weeks at a price 15% above what we were planning to pre-list for. So how confident are you that yours is a hot market and that your house will compare well to the comps?
I never list anything for sale until it is 100% complete. It almost always turns out more profitable that way. While pre-sold units are nice, taking on a customer is a god awful drain on your time and patience.
We'll usually put a sign out with a rendering and a "coming soon" message in hopes of not having to pay realtors commissions. If the project is in a desirable infill area this will work out about 30% of the time, if it's an average area I've yet to rope Ina buyer without an agent.
Like Jeff pointed out prices of everything construction related are going up right now so unless you can be in and out of your projects in <90 days you run some supply side risk.
Thanks for the replies.
I hadn't really considered the pain of taking on a client if I sell during construction. I'll have to keep that in mind, and I'll discuss with the builder to get his input (he's done this numerous times both for himself and clients, like me, as a contractor).
As for the heat of the market, it really is in one of the most desirable areas of Silicon Valley, when you consider schools and commute (only 2 mi. from the new Apple campus and less than 20 minutes to just about anywhere in SV, and in the CUSD). Just this week, two inferior properties came and went over the weekend, and this has happened numerous times in the last few months since I've been watching. The one's I've been watching have also sold above the asking price in every instance. And right now, there is only one comparable home for sale within a 2 mile radius (it just came on the market this week--I'll keep an eye it).
BTW, my desire to sell early is largely to mitigate the interest expense for the construction loan, which I expect to be about $100k over a 20 month expected building horizon. I am also concerned about the risk of a slow down coming before the home is completed.
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