4913 Nebraska Avenue Las Vegas Nevada 89107
Okay so here is my challenge. Purchase Price $90,000 in a great Las Vegas Spanish neighborhood. Had a tenant for a year, cash flowed positive. Tenant moves out, do a complete rehab top to bottom including a new roof with my crew, no detail is untouched. This house is gorgeous inside and out. As always we pay for an appraisal so we have an appraisal in hand when we market the property. We are in the rehab $21,000, appraisal comes in at $140,000. We list on the MLS for $147,999. Bang within four days we open escrow with an $143,000 FHA deal. Then again bang two days later, we get a second offer, FULL PRICE Conventional offer. In less than a week we have two offers but because we took the first offer and escrow is open we are looked in and $5,000 shorter.
So, the question is, "How long to market before we even look at offers?" I know with many Bank REO's (HUD) we had to wait until they had listed for 30 days before even submitting an offer. Should we perhaps follow that philosophy?
Maybe not 30 days, perhaps on the MLS, "hey we are taking all offers and will review them but will not respond for XXX days or by a certain date"
Has anyone done this or had any experience in methodologies of maximizing the offer price? Any input on this would be greatly appreciated. Don't get me wrong, I am very happy with what we accomplished. It's just that $5,000 covers the unexpected new roof for the house. It hardly ever rains in Las Vegas. We had inspected the roof it looked okay. But after we had painted the interior and of course it rained a few days later, I noticed a slight discoloration. We could have done a patch job, but in this instance it would not have been the right thing to do.
So do you take the first offer (assuming you still make money) and run? Or, do you at least wait 30 days and see what walks through the door?
I say list at a realistic price, accept the first offer you are comfortable with and take it off the market. Dont look back. Move on to the next deal.
I agree with Rob, you know the bird in the hand, don't look back. You could also tell perspective buyers who are interested that they have certain amount of day to make a legitamate offer.
This is done with reasonable frequency in Las Vegas, but it usually isn't 30 days and it doesn't always work out for you. I put in an offer on a condo for $67k some months back and the owners played this game - waited a week, asked for highest and best. In the mean time, I found a comparable condo in the same complex for $65k and bought it. Two or three weeks later, the 1st condo realtor approached me and said they were interested in the $67k now. Too bad, I said, I'm not interested in pricing games. During this time, I met another investor and he told me he put in an offer on the property at $64k and I told him I wouldn't bid against him. Their greed ended up costing them $3k + a month of holding costs.
So the lesson here is - price the property right and accept the first qualified bidder that comes along. Enjoy your profit and move on to the next sale.
Same thing happened to me. First offer came in 5 days from listing at 4500 less than asking then two days later a second offer came in full price after I accepted the first offer. Either way I was still going to make a solid profit, just 4500 less. Then I started looking for the next project. I look at it as the old saying goes a bird in the hand is worth more than two in the bush. Maybe accept the second offer as a back up in case the first one falls through?
I don't know the Las Vegas market very well, so I am basing this answer off the Colorado market. Having worked with flippers, this is usually what I recommend to them. In a competitive market like we are currently experiencing, put the home on the market on Tuesday or Wednesday, allow showings through the following Monday and review offers on Tuesday. Set a defined offer review period, in which interested buyers will know they have to bring their best offer to the table. Especially if there are multiple offers. This is one possible approach. The fear I would have letting it go for 30 days is an interested buyer might find something else in the meantime and be out of the game altogether.
I think a good approach might be to assess how quickly appropriately priced properties are on the market before accepting a contract and allowing yourself a showing period in that relative timeframe, and offer review period immediately following. In Colorado, homes that are priced right are averaging 6 active days on market.
One question, do you feel an appraisal is necessary before you list? In a fluid market an appraisal can change in 30-60 days and you may leave some money on the table as the result. Just a thought! Cheers!
Las Vegas is likely much different than my market (Bay Area, CA), but properties here are generally listed on a Thursday after which two weekends of open houses are held and following that offers will be due on Tuesday. Competition is fierce here though and we have multiple offers on almost every property. Might be worth trying this tactic if you can stand to hold the property for two weeks, though I wouldn't recommend staying on the market for 30 days.
I agree with a few of the earlier responses. It really depends on how hot the market is that the property is in. If you have a good realtor, ask them to pull at least these three pieces of info:
1 Average days on market (shorter is hotter)
2. Average selling price vs list price (higher is hotter)
3. Average # of offers. (Higher is hotter)
If all three point to a hot neighborhood, your risk of allowing approximately a 1 week offer review period is lower. Why leave money in the table in a hot market? It won't always be that way. I would list 5ish percent below market to get a lot of eyeballs and interest, counter the top few offers to meet the top price so that you have a couple of solid offers to choses from. And I would take back up offfers in case the first falls through. By letting the chosen offer know that you have back ups you reduce your chances of them playing renogotiating games in escrow.
Here is a ploy I have used to some success. Do a "Grand Opening". That is, have your Realtor place it in the MLS with the caveat that showings begin at the open house on such and such date which is usually about a week after it is entered into the MLS. That builds anticipation and you may have a line of folks at the open house. You may also wind up with multiple bids in some cases. Just be careful. if you are saying that showings do not begin until the open house date, then do not show it, and certainly do not accept any offers beforehand or you can have some very angry agents and buyers.
Hey Guys!! Thank you so much, you have all contributed some really awesome ideas, which I will implement immediately. On this particular deal we left $5,000 on the table. Ouch! It could have gone the other way. I am still very thankful though.
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