Article of the Month for October 2003
Since dealing in foreclosures is a wholesale approach to acquiring real estate it makes sense to follow that orientation throughout each step of the deal - from beginning to end. There are some substantial savings to be had if you can resell the property yourself or at least cut the commission in half. Here's our tried and true reselling stratagem:
- FIX EVERYTHING BEFORE ATTEMPTING TO RESELL. Don't try to resell the property to anyone before it's fixed up. Most buyers will want to discount your sales price much too much in its raw state. So don't advertise it or put up any signs until it is completely finished and ready to show.
- GLITTER REALLY PAYS OFF. At first it might be difficult for you to spend good money replacing functional but worn-looking door knobs, strike plates, drawer pulls, thermostats, towel bars, toilet seats, medicine cabinets, light switches, electrical outlets, etc. But if you just spend $500 and replace all of that stuff your house will really sparkle and shine - and that is a critical component in a successful sales campaign. We even use bright white paint everywhere-it adds more sparkle.
- ESTABLISH A RESALE PRICE THAT YOU CAN DEFEND. Interview two or three local real estate agents and inquire what they would do to market the property, and at what price, if you chose to give them a listing (if you're not successful selling it yourself as a FSBO). Make sure they give you a free, computerized CMA (comparative marketing analysis) report, which is a list of nearby comparable houses and their sold prices. The CMA is a real help in convincing your prospects and other real estate agents that you have priced your property fairly.
- MARKET THE PROPERTY YOURSELF, AT LEAST INITIALLY. With your local market data in hand try to sell the property yourself for the first 30 days (we're successful about 60% of the time). Put up signs, advertise in the largest local newspaper, hold week-end "open houses" and circulate your door-hanging flyers throughout the neighborhood.
- SAVE THOUSANDS VIA A FLAT FEE BROKER. If you don't have a buyer in hand at the end of 30 days then get the property listed in your local Multiple Listing Service (MLS). If you use a "flat fee" ($250) broker to put it into MLS you'll just pay a member agent a 3% selling commission to find the buyer - otherwise you'll pay a full 6% commission. Here's a recommendation for an accomplished flat fee broker who services 24 counties in CA (Bill Fliflet @ 877-633-3657).
- OPEN HOUSE ROUTINE. We try to have all of our prospects (ad callers, referrals, etc.) visit the property during our open house (that way we can generate a crowd). We generally set the open house for Sunday afternoon, from 1 pm to 4 pm. We turn on every single light in the house and really make an effort to show off the quality of it all, starting right at the solid oak front door and continuing throughout our tour. We make sure to highlight or brag about some extra or feature in each area as we guide our prospects through the house, yard and garage. We have "touch and feel" samples of the thick pad we use under the carpet, a piece of the new carpet, a sample of a vertical blind vane, ceramic tile, name brands, etc. Make sure to practice your "tour" a few times and you won't be so flustered or nervous in the beginning.
- HAVE A GOOD, PRACTICED ANSWER FOR EVERYTHING. Especially the dumb questions, like: are you open to negotiation; what did the property originally cost you; how long you've been on the market; why you're selling; is your price the lowest you'll go; etc.
- PURCHASE OFFER PAPERWORK, etc. We execute two formal pieces of paperwork with the buyers before opening escrow. One is a filled-in copy of the Property Condition Disclosure form and the other is the two page Purchase Agreement you can find at foreclosureforum.com under the Fillable Forms link. We tell the buyers that the escrow instructions which we mutually dictate to escrow, and respectively sign, will also constitute part of the formal purchase agreement between us.
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InnoVest Resource Management, 4569-A Mission Gorge Place, San Diego CA 92120-4112
(619) 283-5444, Fax (619) 283-5455