Developer · LA, Nashville TN · Member since 2015 · 295 posts · 75 votes
I'm. Probably looking at a loss on my first flip considering realtor fees. If there were no realtor fees, walla, I'm profitable. Is that a reason to just do fsbo? Seems really sucks to hand over all your profit and giveaway your house to a realtor... I know that's how it works. Just wondering if anyone has decided to fsbo due to low margin and how it turned out.
Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
9y
My decision would depend on days on market in the area as well as the layout of my home. If days on market is > 30 days or my layout is substantially different than other houses in the area, I would have to consider using a good realtor. If days on market is < 30 days and my home is of similar size, layout, and finish to the other homes, I'd sell without a realtor.
Also, do you really mean fsbo, or are you talking about a low cost broker? You can pay a low cost broker $500 in my area and get some of the benefits of a listing agent, including the primary benefit, which is being listed on the MLS. That is a must.
Also keep in mind, many agents are ready and willing to hold an open house at your home for the benefit of networking with potential buyers. Get your house on the MLS, and let a relatively new agent hold the open house - that should get you some decent exposure without having to list with an agent.
Rental Property Investor · Fayetteville, NC · Member since 2014 · 884 posts · 670 votes
9y
@Leland S. - have you considered switching to a "Plan B" with your flip? Maybe you could turn it into a rental for a few years, allow the tenants to work on some principle reduction, and possibly benefit from some appreciation. You can then sell after 3 - 5 years and take advantage of the tax benefits. You could also look into a 1031 exchange.
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
9y
I have sold all of my flips FSBO. Honestly, it is very easy to do. Most buyers come with their own realtor. Out of maybe 30 showings I have had, I have needed to be at only a handful 3-5 at most. I set up a lock box, make certain the realtor is legit and allow them access. I have a good RE Attorney if I have any questions, which have been few and far between. The inspection requests come right to me not through an agent on my end.
From my experience the money I would be giving to a realtor to sell for me, is well worth keeping in my pocket for the minimal amount of work it has been.
Developer · LA, Nashville TN · Member since 2015 · 295 posts · 75 votes
9y
@Brian Pulaski Thanks.. i will find a attorney through my RocketLawyer subscription. I do have a lock box, but I'm out of town and can't check in...how can I ensure the person is "legit" as you say? Send drivers license? Agent license? Call agency?
@Justin Tahilramani I have thought about it, but since I put so much on credit to pay for the rehab, I'd have to refinance and get most of that out on loan again. The amount I put in is very close to the sell price - basically I'll be making nothing with a 3% commission. But worth taking another look at the numbers. I was also thinking the "new" rehab factor would help sell, but maybe it doesn't matter so much as that it's maintained new.
Flipper/Rehabber · Alexandria, VA · Member since 2014 · 461 posts · 262 votes
9y
I know the feeling. I lost money on my first flip and was staring down the same question.
If you are already in line to take a bath on the flip then get a good Realtor and sell it. If you make even one mistake with your FSBO you are going to end up taking even longer to sell it and the longer it takes to sell the worse it looks to potential buyers. Not to be rude but if this is your first time you will make a mistake.
Look at this as an education. Your loss, and lack of profit, is the tuition.
I lost money on my first and have made money on all the rest.
Best of luck to you.
Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
9y
My decision would depend on days on market in the area as well as the layout of my home. If days on market is > 30 days or my layout is substantially different than other houses in the area, I would have to consider using a good realtor. If days on market is < 30 days and my home is of similar size, layout, and finish to the other homes, I'd sell without a realtor.
Also, do you really mean fsbo, or are you talking about a low cost broker? You can pay a low cost broker $500 in my area and get some of the benefits of a listing agent, including the primary benefit, which is being listed on the MLS. That is a must.
Also keep in mind, many agents are ready and willing to hold an open house at your home for the benefit of networking with potential buyers. Get your house on the MLS, and let a relatively new agent hold the open house - that should get you some decent exposure without having to list with an agent.
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
9y
@Doug W. do you have examples of what mistakes he will make? Selling the house yourself is far from rocket science.
@Leland S. I make certain they email me with their information (only once have I trusted it on the phone). I then can almost 100% time confirm they are who they say they are with a phone google search. I have only had a few people who wanted to look without their own realtor, which forces me to be at the house with them. If I ever get to the point where I feel I need a realtor, I will be the first to use one. As it stands now, selling them myself has been extremely straight forward.
Flipper/Rehabber · Alexandria, VA · Member since 2014 · 461 posts · 262 votes
9y
I never said it was rocket science @Brian Pulaski. He is clearly under duress. Why risk making it worse? List it with an agent and move on. It's time to lick wounds and look for flip #2.
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
9y
@Doug W. I would think the cost of a realtor is one of the easiest portions of flipping that can be done by the investor. Even on a $200,000 house your talking $5000-6000. I just can't see what mistakes would be made by an owner acting as a realtor, assuming the investor does their ARV homework, and gets the home on the MLS. To each their own, but if selling by himself saves the deal from being a loss... I'm selling it myself!!
Flipper/Rehabber · Alexandria, VA · Member since 2014 · 461 posts · 262 votes
9y
I don't disagree that it is a huge budget item. I sell my houses for between $400,000 - $750,000 and the Realtor commissions are my largest single cost. I also value my time and I know what I am good at. For example; I can do electrical work yet I choose to hire an electrician. I can do plumbing yet I choose to hire a plumber.
My second largest cost is the interest I am paying on my loans. So selling faster is important to me.
Separate topic: I loathe the hold that the National Association of Realtors has on buying and selling homes. Did you know that the NAR is the second largest lobbying organization, by dollars spent, in this country? https://www.opensecrets.org/lobby/top.php?indexTyp...
Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
9y
@Leland S. I am a Realtor now exactly because of the problem you are experiencing - loss of $$ in my pockets. But that doesn't help you right now. So, are you in a hot area? Advertise "realtors welcome" - let the selling agent do the work of writing the contract and following through to closing. Pay the 3% or whatever. If it is customary in your area for buyers to pay their realtors then that is a bonus. The truth is I had very little success with straight fsbo sales - I had a few - but not many. Realtors shunned my properties, buyers were nervous because they didn't feel protected and the truth is that the MLS is a huge asset... you may squeak by on this one; but in the future factor it in as a cost of doing this type of business.
@Doug W. I would think the cost of a realtor is one of the easiest portions of flipping that can be done by the investor. Even on a $200,000 house your talking $5000-6000. I just can't see what mistakes would be made by an owner acting as a realtor, assuming the investor does their ARV homework, and gets the home on the MLS. To each their own, but if selling by himself saves the deal from being a loss... I'm selling it myself!!
Easiest? I think you are oversimplifying this service. A common rookie mistake selling a home (even by licensed agents) is overvor under valuations a home and another is a lack of negotiating skills. Many problems can arise while in escrow and a good agent knows how to overcome them. I have bought and sold my own properties and about 5 years ago, my wife became licensed so I have had the luxury of both abilities.
On a $5000 commission, I can easily see a fsbo seller losing a $2k-$5k negotiation and there lies the risk.
To the original poster, herevare my thoughts for your specific situation, get the best agent you can, sell it as fast as you can, break even orvtake a tiny loss and consider this thevprice o your real world re nvesting education! What mistakes did you make to get you to the point that your agent fees make or break your deal? Fix them on the next one and be profitable next time.
Reading, PA · Member since 2017 · 24 posts · 5 votes
9y
Leland Smith on your next project I would suggest running your numbers for worst case scenarios.
When we do our numbers we account for everything- realtor fees, seller assist, construction, holding costs (6 months), taxes, transfer taxes, disposition fees etc. Everything. If the numbers work and make sense at worst case scenarios, then they work at best case.
I also agree with everyone saying don't risk selling FSBO. Get a good realtor in your market, list the house and don't drag it out for the possibility of losing more money.
Know how to win big, and know how to loose small.
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
9y
@Will Barnard you have far more experience then I do, so I will defer to the general consensus. If the majority of successful flippers are saying use an agent.. hard to argue with that! Sounds like your next step @Leland S. is to start the realtor finding process ASAP! Get a good one, and try and build that relationship.
Developer · LA, Nashville TN · Member since 2015 · 295 posts · 75 votes
9y
@Will Barnard I see your point, but I'd feel foolish for not at least trying to sell by owner. The difference isn't 5k, it's 10k for just the 3%. If I can get someone without a buyer realtor or negotiate to 2% or less on the buyer, it still is worth the try.
I didn't manage the project enough and depended on parents to manage everything without putting a stop to them and taking over myself when things weren't getting better. It's one of those "almost done" and "only this left" things...
Developer · LA, Nashville TN · Member since 2015 · 295 posts · 75 votes
9y
@Jared Franklin I had run numbers, but then when a new sale happened with a much higher price next door, I used that as a comparable errantly assuming I had much more margin. I assumed I would meet it until I paid a bunch of bum contractors who didn't get permits to do crap work, dissapear with my cash, then new bum contractors to keep charging me for redoing their crap work that didn't pass inspection. Then paying again to fix their stuff... I've paid 4 contractors to install light switches in the kitchen ... and the dang light switches still didn't come out how I spec'd them to EACH one on paper.
Developer · LA, Nashville TN · Member since 2015 · 295 posts · 75 votes
9y
@Jared Franklin BTW, I do consider paying a realtor to sell my house (best case sale price) in losing over 10k a big loss as it is. Why sell it if I am just paying to lose money? For that reason I'd like to look into renting, if I can get a equity loan out on all my costs.
@Teri Feeney Styers I've also heard from people who have done their own FSBO and paid no realtor fee's easily on flips. It is a hot market with low inventory. My idea was to pay a simple service realtor to list on MLS and provide some other basic listing services. I've already had a realtor stop by with a customer who was specifically looking for places to buy in my development. They didn't want to pay what I wanted though.
Reading, PA · Member since 2017 · 24 posts · 5 votes
9y
@Leland S. renting the property is something to look into. Just be sure to vet the renters well, dont rush into just putting anybody into the house for you run the risk of getting crap tenets who may destroy the house after you just rehabbed it.
Would you consider a "rent to own" scenerio? I tend to find that if you can find a tenet thats willing to "rent to own" they will do so because 1. they may not be able to obtain financing through a bank so the idea of being able to go this route and secure a home can make sense to renter/potential owner. 2. If someone is renting to own they generally will take more care of the property as they in their eyes believe it to already be theirs.
*^ not always the case and there will always be risk, but also is something to maybe look into.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
9y
Sounds like you feel selling on your own is your best chance to come out even and if that is the final result, then great. I also think selling yourself will also be a good learning experience for you and although you may in fact make some more mistakes there, it should be a valuable learning lesson. I sold my very first local flip by using a flat rate MLS listing service, held my own open house and did all my paperwork. That said, I did that in probably the most easiest time to sell and the buyers agent was very helpful in completing the MLS paperwork for me. I also already had many RE deals under my belt, but never any self listings.
Thanks.. I was looking into the flat rate service. The question I have on that is since the MLS guarantee's a certain buyers agent profit, is it better to not list on MLS and just list on all the websites myself and maybe hire someone to manage appointments to find a non-realtor buyer? Or is that just getting too risky for non-qualified buyers? I can't be the first person in a hot market to not want to pay realtors when there's no need to assist sellers.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
9y
I think you are biting off more than you can chew here just to save realtor commissions. I am all for saving money but put those efforts towards better purchasevprice negotiations, better discounts on supplies and contractors and finding more deals, let the agents do their job (while you watch over them closely).