How To Sell a Million Dollar Home in a Weekend

How To Sell a Million Dollar Home in a Weekend

Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes

People have asked me for an update regarding the million dollar home I tried to sell during last weekend. Well, instead of giving you just a boring update...I want to share with you what I've learned. My hope is you can use what I learned... in marketing and selling your properties. But first, little background...

The home is worth $1.1M in a Lake Forest community in Illinois. It has 4 bedrooms, 4.5 bathrooms and over 4,900 square feet of living space. For the rest of the background, here's the posting on BP Marketplace:

http://www.biggerpockets.com/forums/517/topics/120093-i-am-giving-away-a-mercedes-benz-sl-with-a-million-dollar-home

Here are the results so far:

1. We were able to get 333 people attend our Open House last weekend (from 2-5 pm). That's almost 1 attendee a minute! It was crazy.

2. We received 21 offers from prospective buyers, some of which are cash offers with no contingencies.

The real estate agent who worked with me on this "property launch" called some of the prospective buyers as late as 9 PM last night to get a little "bidding war" going. The price has been BID up close to where I like it to be (not there yet...but pretty close). We will still make more phone calls today so I hope the price will be bid up to where I want it to be.

Regardless of the outcome, I want to share with you some of my secrets that enabled me and my real estate agent to get over 300 people (and over 20 offers) in an Open House when the average Open House is lucky to get 5 people. Here they are:

1.Put the property on the MLS. The MLS is a powerful marketing machine. Investors, don't be cheap. If you buy or control the property at the right price, paying the 6% commission is a small price to pay to get the house exposed to as many buyers as possible.

2. Give buyers' agents 4% commission. These are the ones who sell your house so reward them generously.

3. Massive marketing works. Massive marketing equals massive exposure. Massive exposure means massive amount of Open House attendees. Massive number of people walking through your house means massive number of offers. And massive number of offers means, you will likely sell your house.

4. Bandit signs is the best offline marketing for an Open House. The quality of attendees pulled by the bandit signs is not that good (meaning, they are lookers rather than serious buyers). But that's OK - getting a lot of people in the Open House created an atmosphere of "competitive bidding frenzy". We put out 100 bandit signs over 2 weekends.

5. With regard to online marketing, a lot of people who attended the Open House saw the property listing on Redfin.com.

6. Instead of listing your property at the highest possible price it can command, list it for half the market value. By doing so, you get into a multiple offer situation and the price will be driven upwards.

7. People procrastinate by nature. You have to give them an incentive to submit their offers by a certain deadline. We are giving away a Mercedes Benz SL as a BONUS. You don't have to give away such an expensive bonus. It was just appropriate since we are selling a million-dollar home. Maybe offer a BIG screen TV, or an iPad Air or something with high perceived value.

8. Put out marketing in multiple media. You don't know where your buyers are going to come from. We got calls and Open House attendees as a result of the following marketing media:

- the MLS, Craigslist, Facebook, Realtor.com, Zillow, flyers, and of course, Biggerpockets

9. Organize a good team to help you do this. I have a good real estate agent who basically did most of the work. I really helped out in the marketing. I got a mortgage broker involved who in turn got some of her people to help us out. I have the following team members:

- Greeter (she greeted the people walking through the door)
- 1st Floor, 2nd Floor and Basement "Tour Guides"
- Closer (the real estate agent who encouraged people to bid)
- Sergeant at arms or people who control the crowd and also acts as security

and

10. We gave people who attended the Open House the Comparable Market Analysis showing what the property is worth. This reminds them that they are getting a property at such a BIG bargain. We also gave them detailed Property Features' list so they will remember all the little details about the house when they leave. People commented that this Open House is so organized and professionally done.

Those 10 things above are the strategies that work in getting massive number of people in our Open House and we get a lot of offers as a result. I hope this is helpful BP Nation!

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Contractor · Valparaiso , IN · Member since 2013 · 604 posts · 327 votes
12y

6. Instead of listing your property at the highest possible price it can command, list it for half the market value. By doing so, you get into a multiple offer situation and the price will be driven upwards.

I just can not agree with this under any circumstances. Especially when Half market value would mean listing at a significant loss for most flippers. Then you have a risk of someone coming in with a cash/non contingent offer of list price that you can not refuse.

Not every area is going to have the desirability and result in this much action from buyers.

Listing at a lower price to create action is fine, but 1/2 price?

Congrats on the action and I hope you get the price you want !

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    12y

    That is a fantastic marketing idea! We once offered free pizza coupons each month to rent our student rentals and I think it helped quite a bit. That kind of marketing seems to be really effective.

  • Josh C.Pro Member
    Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
    12y

    @Wendell De Guzman

    Boy, you are catching a lot of flack for doing a great job. Nice work and thanks for the inspiration!

  • Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    Thanks for the kind words @Josh C. . BPers are skeptics by nature but that's OK. A healthy skepticism is needed to ensure this community does not get taken over by the "guru's" or anyone who makes bold claims they can't back up :)

  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    12y

    @Wendell De Guzman I know you are taking lots of heat for this but I don't think the low initial price violated any broker/MLS requirements. You provided great disclosure and it is no different than what banks do to move foreclosures. Most times they don't even provide disclosure. It happens all the time and in every market. People need to get off their soap boxes. Agents don't like it because it takes away one of their key values to a deal (getting the price right). I would say that using a 10 year old car (even if it is a SL) seems like a bit of hype if I was a buyer for a $1.1 million home. It would make me skeptical of other parts of the deal rather than encourage me to bid.

    I have done this type of selling and it absolutely works. Everyone worries about only getting one offer at your initial price. It NEVER happens if it's properly marketed. If it does happen you messed up and that's what the property is worth in that market. Better to know that the first weekend rather than after sitting on the market for a year or two. People who are skeptical don't value or understand marketing. You can do this nearly every weekend of the year with the same results that you experienced. It's lots of work, but in the case of your property, there are the funds there to make it worth while for everyone.

    Great job.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Chris Adams @Wendell De Guzman

    You can always refuse to sell... What you are liable for in the scenario your describing with a Valid listing and a full price non contingent cash offer comes in.. Is your obligated to pay the RE broker their commission.. But you are not bound to sell the home to the buyer.. Now if you go into contract with the seller and both seller and buyer have a fully ratified contract with all contingencies signed off by both parties and the seller then tries to back out you can then sue for specific performance.. as for the buyer there is usually liquidated damages clause that allow the seller to keep EM if the buyer flakes.

    Listing low to create bidding war is very common practice on the West coast's ultra hot market.. But not 50% low... say you had in this case a million dollar home.. and you know its worth that an aggressive agent may list it for 850k expecting a bidding war.

    But if Wendell got 300 people to an open house in one weekend that is utterly phenomenal you would usually need a reality show to get those kind of numbers or be giving away a free Mercedes.

    As for paying the Selling broker a bigger commish this is a great strategy that I personally have employed for 35 years. As I am selling my own properties I may even offer the selling broker a full 6%.. And then in the private remarks I tell the broker hey make half a years income on this one transaction that will get your place sold if it can be sold pretty quickly.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Dylan M.

    Dylan SF peninsula circa 2002 when you had the same thing going on where properties were being purchase over ask in almost all cases. The brokers would have an addendum signed by the buyer stating that they new they were buying for over market.. As the brokers did not want buyers coming back on them when prices corrected.

  • Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    Thanks @Bill S. for your support. Yup: it's marketing 101. You offer to sell something low enough and all of a sudden, you get a ton of people bidding way above asking price. But as I said, we did it properly by talking with our real estate attorney and implementing the disclosures and the right contract for us to do this with no liability.

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