When a house sits on Zillow for 178 days...

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When a house sits on Zillow for 178 days...

Ashley Wolfe
Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes

There's a 3/3.5, 2,250 sf 1959 SFH that I found on Zillow today that is priced at $67K. Its been on Zillow for nearly 6 months. Its in a decent part of town. I would no be opposed to living there myself. The description says its got an updated HVAC and roof. Driving by, the roof looks good. Siding needs to be 100% replaced. The house doesn't have a garage or carport, just a concrete pad in the back. Small but cute yard. Indoor pics show the need for extensive updating. Its next door to a church and within walking distance to the local elementary school and town library. The school district has a good reputation.

In driving the neighborhood there are all different sized houses, some old, some new. Looking at the comps on Zillow (please note: I don't have knowledge of any other market research tools and I don't currently have personal access to the MLS), this house has great potential. There's a 3/2 2,700 sf house priced at $140K on the same street and several others nearby in an adjacent neighborhood that are in the $110-$150K range.

I called the listing agent and left a message.  I want to know why this property has been on the market for so long.  And, why else do properties like this sit for so long?  Would a low-ball offer of $25K be passed up if we had it in cash tomorrow?  I feel like I'd like to get it under contract and start some due diligence.  I would have thought that a seasoned investor in my area would have snatched this one up long ago!

With a house this big, would it be silly to think of doing a rental rehab and trying to rent it out?  On rentometer.com it came up as around $1400/month potential rent rate.

Doing the math on this one is tricky to me because the asking price is already so low.  

$65,000*.65=$42,250

minus repairs of $10000 (only a preliminary estimate) to get it rent ready - $32,250

So, our MAO for renting it out would be half of what they're asking. Does that seem crazy to you?

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Nnabuenyi Anigbogu
Chicago, IL · Member since 2015 · 298 posts · 261 votes
10y
Originally posted by @Ashley Wolfe:
Originally posted by @Scott Carder:

Its probably worth the full 65k, but everyone thinks they can get a deal.

 Let's pretend we paid the full $65K for it, put in $30,000 worth of work and sold it for $110,000.  That would still be a nice little profit of $15K.

So if everyone thinks they can get a deal, how do you structure your deals or what's your approach?  

 You would actually have a lot less than 15K profit. Keep in mind when you sell you pay 5-6% in commissions to both the seller and buyers agents. on 110K that is 5500-6600 dollars. So your profit is now down to about 9K. Once you factor in closing costs (title, attorney fees, transfer stamps, etc) you could be down to 5K in profit. That is probably not worth it. Also all this is assuming you have no money costs.

I point this out because a lot of newer investors make this mistake and end up losing money on their first deal.

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  • Michael Lee
    Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
    10y
    Originally posted by @Ashley Wolfe:

    There's a 3/3.5, 2,250 sf 1959 SFH that I found on Zillow today that is priced at $67K. Its been on Zillow for nearly 6 months. Its in a decent part of town. I would no be opposed to living there myself. The description says its got an updated HVAC and roof. Driving by, the roof looks good. Siding needs to be 100% replaced. The house doesn't have a garage or carport, just a concrete pad in the back. Small but cute yard. Indoor pics show the need for extensive updating. Its next door to a church and within walking distance to the local elementary school and town library. The school district has a good reputation.

    In driving the neighborhood there are all different sized houses, some old, some new. Looking at the comps on Zillow (please note: I don't have knowledge of any other market research tools and I don't currently have personal access to the MLS), this house has great potential. There's a 3/2 2,700 sf house priced at $140K on the same street and several others nearby in an adjacent neighborhood that are in the $110-$150K range.

    I called the listing agent and left a message.  I want to know why this property has been on the market for so long.  And, why else do properties like this sit for so long?  Would a low-ball offer of $25K be passed up if we had it in cash tomorrow?  I feel like I'd like to get it under contract and start some due diligence.  I would have thought that a seasoned investor in my area would have snatched this one up long ago!

    With a house this big, would it be silly to think of doing a rental rehab and trying to rent it out?  On rentometer.com it came up as around $1400/month potential rent rate.

    Doing the math on this one is tricky to me because the asking price is already so low.  

    $65,000*.65=$42,250

    minus repairs of $10000 (only a preliminary estimate) to get it rent ready - $32,250

    So, our MAO for renting it out would be half of what they're asking. Does that seem crazy to you?

    Hello!  Not having curb appeal and at least covered parking can have a negative impact.  It might need more repairs than it's worth or needs extensive repairs that most do not want.  I would have at least a way out of contract and be able to look at the inside.  God luck to you! 

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y
    Originally posted by @Ashley Wolfe:
    Originally posted by @Scott Carder:

    Its probably worth the full 65k, but everyone thinks they can get a deal.

     Let's pretend we paid the full $65K for it, put in $30,000 worth of work and sold it for $110,000.  That would still be a nice little profit of $15K.

    So if everyone thinks they can get a deal, how do you structure your deals or what's your approach?  

    It wouldn't be $15K.  Sales commission on $110K is $6600.  Closing costs about 2K.  Utilities, insurance and holding costs about $2K.  One expected repair issue and you are working for free...or paying to work.

    3Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y
    Originally posted by @Ryan Dossey:

    I really don't give all that much thought to the DOM. There are homes that have been on for over a year. The problem is they are overpriced. They are dreamers. 

    I've sent in dozens of offers on homes not selling and there's a reason they aren't selling. Mortgages that are equal to asking price, not motivated, or stubborn. Not to say that deals aren't out there but I wouldn't be surprised if they have turned down offers like yours already.

    Mortgages at or over value is the reason for most long DOMs for properly priced properties where I am.  Then the overpriced and not motivated thing.  Then title flaws or legal issues where the property needs to be listed, but they never accept an offer or it falls in and out of escrow  (probate, BKs, divorces, etc.).

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  • Chris Sukala
    Rockford, IL · Member since 2015 · 343 posts · 95 votes
    10y

    We were told by our realtor that Realtor.com is more update. We have found that they all never show all available properties

    0Reply
  • Sarnen Steinbarth
    Commercial Real Estate Broker · Fort Collins, CO · Member since 2015 · 308 posts · 151 votes
    10y
    Originally posted by @Nnabuenyi Anigbogu:
    Originally posted by @Ashley Wolfe:
    Originally posted by @Scott Carder:

    Its probably worth the full 65k, but everyone thinks they can get a deal.

     Let's pretend we paid the full $65K for it, put in $30,000 worth of work and sold it for $110,000.  That would still be a nice little profit of $15K.

    So if everyone thinks they can get a deal, how do you structure your deals or what's your approach?  

     You would actually have a lot less than 15K profit. Keep in mind when you sell you pay 5-6% in commissions to both the seller and buyers agents. on 110K that is 5500-6600 dollars. So your profit is now down to about 9K. Once you factor in closing costs (title, attorney fees, transfer stamps, etc) you could be down to 5K in profit. That is probably not worth it. Also all this is assuming you have no money costs.

    I point this out because a lot of newer investors make this mistake and end up losing money on their first deal.

     Exactly what @Nnabuenyi said.   Be careful not to forget costs associated to closing, acquiring, and selling the property.  It is not only renovation / purchase costs.

    0Reply
  • Zana Blue
    Investor · Saint Augustine, FL · Member since 2015 · 227 posts · 61 votes
    10y

    Plus don't be surprised if once you can make an offer that another bidder suddenly materializes and makes a higher offer even though the property has been sitting for months and months 

    1Reply
  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    10y
    Originally posted by @Zana Blue:

    Plus don't be surprised if once you can make an offer that another bidder suddenly materializes and makes a higher offer even though the property has been sitting for months and months 

     Another good insight.  Thank you!  

    0Reply
  • Corson Nikkel
    Real Estate Professional · Canton, MI · Member since 2015 · 1 post · 0 votes
    10y

    1) You customers *coming from the marketing side of a real estate firm* always assume a home sitting on the market this long has something "wrong with it", like clockwork. Now, based on the price range, it might, but REALLY 

    2) The owners of the home have a rookie agent. If they had a team you probably wouldn't have learned about that home from Zillow, you would have learned about it from a cold call if you are within a square mile from that house. OR, you would have never learned about it at all, cause the agent picked up the pace and sold it. xD xD xD xD xD 

    Post-Reading Replies: 
    1) On point in regards to people forgetting about commissions 

    2) x2 on Zillow and Trulia having horrible data hahahahaha we get complaints about that ALL THE TIME. KWLS FTW <3 

    3) x2 on everyone thinks they can get a deal. 

    The smaller the price on a house is, the more like a double edged sword house pricing and negotiating becomes. Usually the less an agent wants to work on marketing it *small commission depending on their broker* and the more stingy the actual owners are with the price. 

    If I have a dollar, I don't mind losing a penny or a dime. 

    If I have 2 cents, you bet your *** I'm going to want 1,000 reasons to give you one of my two pennies xD xD xD 

    0Reply
  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    10y
    Originally posted by @Corson Nikkel:

    Totally agree, thank you for your two cents.  :)

    1Reply
  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    10y
    Originally posted by @Account Closed:

    Mortgages at or over value is the reason for most long DOMs for properly priced properties where I am.  Then the overpriced and not motivated thing.  Then title flaws or legal issues where the property needs to be listed, but they never accept an offer or it falls in and out of escrow  (probate, BKs, divorces, etc.).

    Agree.... Some other reasons properties may not sell so fast.... sink holes, foundation issues, need for all new plumbing, need for all new electrical, ghosts, history of a murder on property, bio-hazards, methamphetamine cooking, occupied by squatters or professional tenants, neighborhood violence, noise (airport, railroad, highway), smell (animal farms, slaughter houses, industrial plants), natural disaster danger (flood, landslide, tornado, hurricane, earthquake, volcano), finicky seller.

    Have you been to the neighborhood at all times of the day? (morning, afternoon, evening, night) and visited on weekdays and on weekends? Have you talked with the neighbors? Have you googled the property address to dig up any news? That might be a strategy that would give you some more info.

    1Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    10y

    Sinkholes, of course! 

    This must explain why I can't find a particular property with an out of sequence address.

    0Reply
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