Resell Strategy?

Question

Just curious here... How many of you who are flipping properties use a realtor on the back side vs. using other methods to sell the house (i.e. do it yourself MLS, For Sale Signs, etc).  While I do see the benefit of using a realtor, I still see the 6% cost as lost profit on the deal... Thoughts?  Pros and Cons???

Simon Campbell · Answer

If you are looking at a pretty high volume here, you should consider getting your real estate license. The requirements are not that difficult. Yes there are upfront costs and membership fees, but these will be offset by receiving commission plus profit on every home you flip. It will also give you direct access to the MLS. When it comes time to buy, you will also receive commissions on your accepted offers. What's not to love about that?!

Matt Stewart · Answer

I use a flat fee listing service to get my properties on the mls.  Had one odd ball last year that lasted 45 days on market, but generally under 30 days til I accept an offer.  The last 5 properties were less than a week on the market until I accepted an offer, with multiple offers on 3 of them.

My profit ranges from 18-22%

Every market is different and every business model is different, but in my case it would be a waste of 3% profit to use a listing agent.

Bill Gulley · Answer

Right on J. Scott, if you list you need to have 3% for the selling agent, many won't spend thier inventory of buyers for a 2% deal unless it's a high dollar deal. I've only seen listing agent/brokers take 1% if they get 100% of the commissions and that will be hard for the average priced home. Remember that most agent have to split with the listing brokerage house and a broker probably won't agree to .4 or .5% as costs and liabilites won't break even, 1% will usually fly so paying 2% on a listing may work much better. You'll get what you pay for.

At least in our area, flat fee brokers really give a lower level of service IMO. Depends on how many deals you can feed them.

If you have a good FSBO website in your area, that is certainly an option.

Competition for the property is another issue, if you have no real competition in your price range for a 4/3/2, you can try it yourself, if there is stiff competition for that property, you'll be ahead by listing it.

You can also exclude buyers known to you on your listing, allowing you to sell without a commission, if your list isn't too long. Really, a listing agent that allows the seller to sell may not get much traction in many markets. That would be put on the listing and selling agents may not be keen on the idea of bringing thier buyers, especially repeat investor buyers as thier client will obviously be on the seller's radar in the future for other deals. Good Realtors do thier due diligence on properties listed including the seller. :)

J Scott · Answer

When we sell in our home market, we list ourselves, but we're licensed, so technically, we have a listing agent.  When we sell in other markets, we ALWAYS use an awesome listing agent.

In terms of the 6% (or whatever the commission is), half of that goes to the buyer's agent.  If you want to save that half, you're going to have to avoid listing on the MLS.  If you're selling retail and avoid listing on the MLS, you're not going to be successful long-term (my opinion).

So, you're really only talking about the other half the of the commission paid to the listing agent.  Personally, I think a great listing agent is the most important part of your team, and if you aren't willing to pay 2-3% to a great listing agent, you're probably losing money long-term.  The only reason we do it ourselves in our local market is that my wife is better than any other agent we've met -- if we knew of a better listing agent, we'd outsource it in our own market in a heartbeat.

Btw, you shouldn't have to pay 6%.  If you can provide the agents some volume, you should be able to get that down to 4-5%.

John Moore · Answer

I utilize both, the sales commission is built into the selling price.  We attempt to sell the property as quickly as possible as carrying costs and advertising cost are signigicant.  Our agreement with the realtor is we are allowed to sell the property without a commission to the Agency.   We attempt to flip and acquire another propety quickly in order to keep our momentum.  A question on the same issue, have you encountered any problems with lenders who question the spread between acquisition price and selling price

Steve Babiak · Answer

The alternatives to listing with an agent for 6% when it comes to selling are FSBO and flat-fee listing.  Search for these topics  - threads already cover them.