All Forum Posts by: Mike Rethis

Quote from @Chris Shon:

Quote from @Mike Rethis:

How do these properties compare to yours as far as condition and amenities?

2174 Juanita St, Decatur, GA (3/2 SP:390,000)

2091 East Dr, Decatur, GA (3/3 SP:416,500)

2200 Juanita St, Decatur, GA (3/2 SP:340,000)

These are all in your immediate area, closest comps within 6 mo sold timeframe. Keep in mind this is just a quick zillow comp- so I can't really see every detail and condition to tell you how well they would compare. But- Price, SQ/FT, Bed/Bath, Location is all comparable.

What does your agent think?

Where's the bathroom going, master suite? 

Also, how much would you save by forgetting the 4th bedroom and just adding the extra bath? That's more important. If it's not much more expensive, 4th bedroom could definitely be worth it, especially from a consumers perspective. Since there's a lot of competition on the market in your area (mostly 3 beds), the 4th bed could help.

From a quick search, I don't see why you can't get close to your projected sale price if you do it correctly. But there's a lot of unknown on my end.

In my market, things slow down in August and come back up in Sep. Could be different in your situation but worth noting.

2336 Mark Trl, Decatur, GA - ON MARKET $370,000

Thanks for taking the time to look into this Mike! The 6 month comps look good, but IMO the market looks like it's trending downwards and the 2336 Mark Trl property has been listed for over 90 days. I hope we can get close to what these comps are asking for. One concern is that the finish quality isn't what we were expecting, which will definitely impact the final price. But these are better than what I'm seeing currently listed. 

The bathroom and closet will go in the bonus room to turn it into a master suite. 

My agent thinks it's worth listing as 3/1 to see what the market will pay for and re-listing once the additions are complete as a 4/2 w/ patio. If that doesn't sell by early Sept, we're either going to 1) sell and take the loss or 2) refinance and do Mid-Terms rentals to hold until the market goes back up.

 The fact that it's gonna be a master suite is great. If you look at 2091 East Dr, it sold for a good amount considering the other sold comparables. It was also sold in the same timeframe that other similar properties sold for less. Buyers really like open concept, master suites, high ceilings, other luxury features. They will pay a premium for stuff they like. The closer you can compare your property to that comp, the higher chance you have reducing the hit you're going to take. It was also sold in the same timeframe that other similar properties sold for less.

I personally would at least add the second bathroom before listing. Do it once and right, dont give anybody the indication that your home cant sell (agents can see when you relist it-zillow i think can as well).

I agree that it looks like your market is pretty soft. When i took a look at the area, there's a ton of homes for sale in that neighborhood (mostly 3/2).It's important to put your home in a position that even if buyers go and see the other listed homes in the neighborhood- the features yours has outweighs all others, or they're gonna want the cheaper ones. Make them feel like the value yours is priced at is worth it, considering the other options. 3-4 Bedrooms isn't as big of a difference in terms of adverse buyer interest (in most situations) as opposed to the difference between a 2 and 3 bedroom. But, 4 will still give you the best shot. Staging will help as well.

IMO, look at the data- does the market in your area slow down in july/august and pop back up in September? If so, what's the point of listing it unfinished?? Staging will help as well.

Do it right, and do it once; take your best shot and if you still lose money, at least you tried. Don't give any buyers a scent of desparation or that you're having trouble selling. If everything goes wrong, it will at least be a learning lesson. Based on your numbers you had entering the deal, the margins were way too tight to begin with.

Ask the right questions.

It’s wild how much you can learn from someone just by asking the right things.

Get the seller’s emotions flowing. At the end of the day, it all comes down to motivation and figuring out why they’re selling; and using that insight to get them to work against their own initial expectations.

Instead of leading with the typical, “Here’s why my offer makes sense,” they need to feel like they’re winning. Like you’re doing them a favor. Yes, showing data can help, but too many buyers put themselves in an overly analytical position. Most sellers don’t care about comps the way we do. Their price usually isn’t backed by facts, it’s backed by emotion and their own idea of what they think the house is worth.

So dig deeper:

Why are they selling?

Do they need to sell now?

What underlying stress is this property causing them?

Are they behind on payments or dealing with other financial pressure?

Where are they moving to and why? (Is it urgent? Exciting? Stressful?)

Are there repairs they can’t or won’t do? (Deferred maintenance = apathy or overwhelm.)

How do they talk about the property? (Pride = sentimental value. Bitterness = emotional detachment.)

Is the home tied to a divorce, death, or family dispute? (Emotionally drained sellers just want to move on.)

Once you tap into those answers, you’re no longer just making an offer, you’re solving a problem. And that’s when you can land a deal way below market value without the seller feeling like they lost.

The art of this is building rapport, finding out these answers (without blatantly asking these questions), flush out smokescreens, and giving yourself as much info as possible to connect with them on a personal, emotional level. The person with the most information wins the negotiation.

How do these properties compare to yours as far as condition and amenities?

2174 Juanita St, Decatur, GA (3/2 SP:390,000)

2091 East Dr, Decatur, GA (3/3 SP:416,500)

2200 Juanita St, Decatur, GA (3/2 SP:340,000)

These are all in your immediate area, closest comps within 6 mo sold timeframe. Keep in mind this is just a quick zillow comp- so I can't really see every detail and condition to tell you how well they would compare. But- Price, SQ/FT, Bed/Bath, Location is all comparable.

What does your agent think?

Where's the bathroom going, master suite? 

Also, how much would you save by forgetting the 4th bedroom and just adding the extra bath? That's more important. If it's not much more expensive, 4th bedroom could definitely be worth it, especially from a consumers perspective. Since there's a lot of competition on the market in your area (mostly 3 beds), the 4th bed could help.

From a quick search, I don't see why you can't get close to your projected sale price if you do it correctly. But there's a lot of unknown on my end.

In my market, things slow down in August and come back up in Sep. Could be different in your situation but worth noting.

2336 Mark Trl, Decatur, GA - ON MARKET $370,000

Quote from @Allison Park:

Thanks for this info.  We ended up lowering the price to the appraised value and basically splitting the difference.  I was working with an agent and unfortunately a lesson learned for me.  She did not come for the appraisal or the inspection.  The buyer actually bid $5K above my sale price and my agent made it sound like she let them know that if it didn't appraise they would need to make up the difference, but it was clear she did not set that expectation because they came back to negotiate it. I will definitely make sure that the language is included in the contract going forward.  I would not have accepted the offer if I had known they would not cover it.

 The listing agent doesn't show up to the inspection, that's the buyers agents job to go with their buyers.

However, appraisal is a must for the listing agent. They should be bending over backwards to make sure they represent your best interests and get you the best deal. Unfortunately, it seems like you had a lazy/inexperienced listing agent. How naive of them to take a buyers word for it. For next time, you know what to look for in an agent now!

The next time you're hiring an agent, you can always send me a message and I will give you some tips on what to look for when choosing one. 

I too find myself losing out on a lot of opportunities due to the fact of using hard money. If you have the cash, that's always the best. But there's advantages for either way depending on your situation, plan, and goals.

The 70% rule is just a guideline. Every deal is different, and every person is looking for different margins

After Repair Value (ARV) - Rehab Costs - Purchase Price - Fees (holding costs, closing costs, selling fees) = Net Profit (before taxes).

Are you ok with the net profit based on how long it's gonna take from start to closing? 

Its also gonna depend on how much work you have to do. If you have a project that you're doing all the flip work and you are projecting $5k a month, is that really worth it to you? Or are you making $5k a month just to manage contractors? That's a big difference

I know flippers that will only take a deal with $100k spread, and others that are ok with $30k-$50k.

Did you have multiple offers, or was this your only offer?

You can try and negotiate somewhere in between the $9,000 difference and have the buyers come up with extra cash at closing to make up for it- but chances are they are gonna want it at appraised value; especially if they're the only offer. This is also gonna depend on how strong the buyer is financially if its even possible for them to pay the difference.

If you get multiple offers on a sale in the future and the price goes over asking, make sure the offer includes some type of language waiving a portion or all of the appraisal gap.

If you tried to fight the appraisal already and didn't get anywhere, you don't really have much recourse. It's not typical the appraiser will admit they are wrong and bring it up. Also, is it even worth the headache?

Are you working with an agent?

In the future if you're representing yourself in the sale; meet the appraiser at the property and give him the comps you came up with to justify the price. highlight any inferiorities to your property on the comps so they can see.

If you're working with an agent and they're not doing this: drop them immediately. It's not enough to just show up to the appraisal as an agent. They should do everything they can to make the home appraise! Some agents don't even show up they have the appraiser use the E-KEY.

If you have any questions reach out, I'm happy to help!

Quote from @Jay Hinrichs:

Quote from @Mike Rethis:

Quote from @Jay Hinrichs:

Quote from @James McGovern:

Quote from @Bill B.:

If you have other/better offers you take those offers instead. If their offer is the highest/best, you are being paid, or at least offered, that much more to work with them. It should never come up unless their clients are constantly offering you much more than other agent’s clients. Maybe they are bad negotiators and that works to your advantage. 

 Highest offers with a painful agent after inspection periods is the challenge. How do you know which agents are going to be painful at the end?

 you dont a good agent repping a buyer is going to go to bat for them not U keep in mind many sellers lie about all sorts of things.. not saying your that way but it is common the industry. If you want to buy rehab and flip homes.. then this is part of the process. if you to thin skinned to deal with it then maybe flipping is not for you.. U think @Russell Brazil or @Steve K. are not going to be there at the final walk through to make sure their clients are protected ????

 I agree. The buyers agent is acting as a fiduciary for the BUYER. If the buyer wants to back out, it's the agents job to make sure they protect the buyers interests over their own. When I represent buyers, it's extremely important to me that they're 100% satisfied with their purchase. It always comes back to you the right way when you do right by your clients.  

Which is why it is so important to have a competent agent representing the sellers side and limit the risk in any way possible of that being able to happen in the first place.

I get it.. I also understand the OP frustrations.. I have had them as well when home inspectors simply do not know the code and we are butting heads.. Or its worse if the agent thinks they know some detail that again is not correct.. it puts you in an awkward position of arguing with the agent when the buyer is there.

I had one a few months ago were the buyers were uber picky on one of my new builds I mean we go above and beyond and so they come for their walk through and start in again on I mean TINY things that no other inspector buyer would point out I mean somethings cosmetically are to industry standards and we are not painting the moa lisa.. I got hot and just said OK I am done I am not signing and you can tell your movers to take your Van full of stuff out of my development and go find another home to buy..  The agent then calls my wife who is the listing agent .. I am the owner .. And she calms them down and me and well we closed.. But geesh I get the OP frustrations and it can happen to the best of us.. Had another one were me and agent were throwing F bombs at each other while the buyers while was crying

For sure! It's never fun when buyers get overly picky, especially over something so simple like a GFCI outlet. Not to mention at a final walkthrough when the inspection negotiating period is already well passed. The buyer just wanted to get out of the deal, and that was their route of getting out. 

I'm sure you would agree; it's never a dull moment in Real Estate! I bet you were ecstatic when that deal finally closed lol!

Quote from @Jay Hinrichs:

Quote from @James McGovern:

Quote from @Bill B.:

If you have other/better offers you take those offers instead. If their offer is the highest/best, you are being paid, or at least offered, that much more to work with them. It should never come up unless their clients are constantly offering you much more than other agent’s clients. Maybe they are bad negotiators and that works to your advantage. 

 Highest offers with a painful agent after inspection periods is the challenge. How do you know which agents are going to be painful at the end?

 you dont a good agent repping a buyer is going to go to bat for them not U keep in mind many sellers lie about all sorts of things.. not saying your that way but it is common the industry. If you want to buy rehab and flip homes.. then this is part of the process. if you to thin skinned to deal with it then maybe flipping is not for you.. U think @Russell Brazil or @Steve K. are not going to be there at the final walk through to make sure their clients are protected ????

 I agree. The buyers agent is acting as a fiduciary for the BUYER. If the buyer wants to back out, it's the agents job to make sure they protect the buyers interests over their own. When I represent buyers, it's extremely important to me that they're 100% satisfied with their purchase. It always comes back to you the right way when you do right by your clients.  

Which is why it is so important to have a competent agent representing the sellers side and limit the risk in any way possible of that being able to happen in the first place.

Don't mess with the fire marshal...

I know an investor in NB that got a warrant out for her arrest for not completing the punch list that a fire marshal created for her- it was a huge headache.

Especially in buildings with more units, the fire marshals are much more strict. I agree with Sam to see how much they will work with you. Also is the fire marshal citing relevant information? If not, you may have better recourse.

Quote from @James McGovern:

Quote from @Bill B.:

If you have other/better offers you take those offers instead. If their offer is the highest/best, you are being paid, or at least offered, that much more to work with them. It should never come up unless their clients are constantly offering you much more than other agent’s clients. Maybe they are bad negotiators and that works to your advantage. 

 Highest offers with a painful agent after inspection periods is the challenge. How do you know which agents are going to be painful at the end?

There's a lot you can tell about not only the buyer agent but the buyer and it starts before they even put the offer in.
-How quick were they to put the offer in after seeing the property?
-How many offers were there total?
-Did they put a timeline on the offer?
-Did they ask a lot of questions, have 2nd/3rd showings, etc?
-Any other behavior you can pick up on to indicate interest
Then they put in the offer:
-Are they the best PRICE or the best DEAL? Sometimes the best deal isn't the highest price. The contingencies are just as important
-Did the agent write an outline of the email in the offer and tell you why they're a good agent to work with?
-Did you do your due diligence with the buyers lender? Did they call you first?
-Did you do your due diligence with the buyers agent?

Everything that happens throughout the process from the home being listed to the time the offer comes in to the negotiation of the offer can give you an idea of how the deal is going to go. It's much easier to make the situation more favorable for yourself if there's multiple offers on the table.

I understand you use an entry only listing service. I strongly consider finding an agent that is knowledgeable of these aspects and paying them more for the full service. Once you find somebody that is capable of representing you the right way in these scenarios, you will not only make more money but you dramatically decrease your chances of hiccups throughout the process. The most successful investors have a go-to full service agent. From your price/marketing/pre listing --> offer/negotiation strategy, the littlest things make the biggest difference in the sale. Good listing agents also know a lot of the buyer agents from previous deals/scenarios and can give you an idea how easy the buyer agent is to work with.


If you would like to chat, I can give you some dos/don'ts and what to look for in somebody.