Speaking as a Realtor who has is a Real Estate Investor and Real Estate Agent, I have always worked with the houses that no body wants.
When I started out I did BPOs (Broker Price Opinions) for our team that listed 100's of REOs (Real Estate Owned) monthly.
We also purchased a lot of those REO properties as well to fix up and rent or fix up and sell.
I sold a lot of those REO properties to Investors.
Today I don't do a lot of listing of properties, I leave that to my son. But as a team that markets daily to find those UGLY houses that no one else wants we talk to seller's daily who think their Realtor is doing a really bad job or who just don't want to work with a Realtor because they don't want to spend the money.
So I would like to talk to the Realtor's here about how to work with those UGLY houses.
Can I give you an example?
A few years back we had a seller call us with a house that . . . let's just say I though should be torn down. It was a flat roofed home, that had leaked for years, was riddled with termites, loaded with smoke and nicotine and was 100% Original from when it was build in the 1940s or 50s. It was NASTY and falling down. However it was one of those flat roofed houses that was very retro and I bet built and designed by someone famous.
The investor in us said we didn't want to rehab it, but we would buy it and flip it and at most, our best guess was that we could sell it for $10,000. So for us to buy it and sell it, we needed to buy it for $5,000. That didn't work for the sellers, they wanted $20,000.
So they spent a few more weeks and the best offer they were able to get was $8,000, but not with a very solid offer in writing so they came back to us. Could we offer $10,000.
We brought out our real estate agent hats and did some homework and told them, while we still thought the best we could do was $10,000, we would list it for $20,000 and market it to the best of our ability if they would agree that there would be a $5,000 commission. If we could not get $20,000 or something acceptable, they did't have to take the offer and they could go back to their $8,000 buyer.
We listed the house, we took a ton of photos. We tried to get comps but there were not many, but we did find a few other fixer upper flat roofed houses in the metro that were similar - we contacted the buying agents as well as the listing agents. We found houses that were fixer uppers in general in the area, we contacted those agents involved. We emailed out to our buyers list and we marketed it to the real estate investors at the local real estate investor associations.
Everyone who looked at it just about agreed with us, bull doze it or they offered $8,000 to $10,000. Except for two buyers.they got into a bidding war.
We ended up selling the house for $21,500 to a person who understood that the house was built by somebody famous and that the house was a collectors item.
They bought it, tore down the garage and built a new one, put in all new sidewalks and patios, new windows, new roof with a bit more pitch, gutted the inside for new electrical, plumbing and insulation, new drywall, new kitchens and bath, new cosmetics and in about 8 weeks. All in all I bet they spent about $80,000 to $90,000 in renovations, they paid $21,000 and they sold it for $122,000.
This was an example to give Realtors and Idea of how there is money in those junker houses. No other real estate agent would take on this listing.
But back to our sellers we deal with every day who say their Realtor sucks, and we look at the listing and either agree with their seller or tell them the seller seems to be doing a good job, but their price is too high. So I wanted to offer some tips to the Realtors out there.
1. Don't sugar coat pricing, tell them like it is what the price should be. Nine times out of ten that seller who is over priced with you, waits out your 3 to 6 month listing, arguing with you about price all the way. They get so mad that it will not sell and tired of the time spent that that house that they have listed for $100,000 with you gets sold to me for $60,000. We turn around, and sell it for $80,000. We always wonder why the listing agent does not talk the seller down to $80,000 because then they seller would have netted more money and the agent would have made their commission.
2. Market just like a really nice listing. Often we see the junker houses get treated like the agents bad step child. Take the time to take photos, spend more time on mechanicals and structure like windows and basements because that's what the investor buyer is looking at. How much fix up is it going to take and how much space does it have. There are surely selling features. Fill out all the boxes on MLS you can.
We often see houses that we buy that started out with a Realtor once upon a time. But the Realtor posted 5 bad photos. We have not idea what the house looks like on the inside. They do the bare minimum on the listing and they do nothing with it other than put it in MLS and hope it sells. Why, because they are only hoping to get 3 to 6% of the listing price. And that is just too much work for that little money. Well if you are stupid enough to list for just a percent, too bad, you still need to put the time into doing your work correctly.
3. Ask for a Flat Fee Commission. Yes, you CAN do that. You don't have to work for 6 percent. Your broker might have a minimum commission you have to ask for, like 3 to 6%, but that does not mean you don't have to say that you work for 6%, but YOU HAVE a MINIMUM commission of $3,000 or even $5,000.
In my office to get me to list a house, the commission had to be $5,000. Why? Because first of all, I want to offer the buyers agent compensation for their time at $1000. Two I didn't want to really list a house, but if I do, I want to get paid for it and $5,000 is my minimum. Then I am getting paid enough to actually take the time to do my job right and that allows me to go out and post houses on the internet, call other agents, and get the house sold.
4. Communicate with the Seller. Other times we see that the seller has it priced well, they are doing a good job with the marketing and they have asked to get paid. But the sellers say, we are getting a bunch of showings, but nothing is happening. That's when good communication between the agent and the buyer is critical. Share the feedback and give them more suggestions.
5. Helping Grandma Clean Up. The last house we see that comes to us after being listed is the "Grandma House". House is in great shape maybe, marketed and priced well. But because of the good condition the most likely buyer is not me as the real estate investor, but rather a handy home buyer who can do a bit of cleaning and painting. But they need to clear out the clutter.
My in laws home is in this category and when the time comes for my son to list it and sell it we are going to have to spend some times clearing it out as ever flat surface is covered with stuff. You know the clutter that collects after 60 years of life that should be gone through and shared with family or tossed, but for some reason is on display everywhere.
I hope I have given you some ideas on how to work with the seller with the icky houses. If you have an icky house that you need a buyer for, give me a call or to find more buyers who like icky houses look toward your local real estate investment group. There are several in Kansas City, several in St Louis, one in Springfield / Branson and one in Columbia. There are several across the state of Kansas and several others that I probably don't know of in Missouri. Just Google Real Estate Investment Group or Association or Club and your city or state and find the group nearest you.
What can you do with the local REIA group? If you deal a lot in fixer uppers, I would say join and tap into the monthly meetings and take flyers, if you can post houses on the REIA site, post them there. And if you don't deal a lot in fixer uppers, see if they REIA has social media pages and groups that you might be able to share your deal on and go to a meeting and take flyers.