I recently got a call from a couple (I’ll call them Mr. and Mrs. Smith) after they had their home listed with a real estate agent for six months. During that time they only had a few showings, and they didn’t get a single offer on their property.
Now they were in a jam. They needed to sell the property because one of them had received a job promotion that required them to move to another city. They had less than 30 days before they absolutely had be out of that house.
But it’s still a buyer’s market, and the buyers know it. They know they are in a stronger bargaining position than the sellers. What do you do when the buyers just aren’t interested in looking at your house?
The reason Mr. and Mrs. Smith contacted me was about leasing the property for them. But it wasn’t their first choice. Their house was beautiful, completely renovated. They had heard horror stories, and they didn’t want some tenant tearing up their home.
I told them the truth. Every time you lease out your house, you risk a tenant tearing it up. But careful screening, you can vastly reduce the chances of a tenant causing significant damage. And with a carefully worded lease you create ground rules for responsible tenants to follow.
I had a good solution to solve Mr. and Mrs. Smith’s problem with this house. But it wasn’t just leasing the property.
It wasn’t Mr. and Mrs. Smith’s fault. Every homeowner in the Oklahoma City metro area has taken a hit from the housing bubble. We all have lost some of the equity in our homes due to the decline in the market.
If you bought or refinanced your home during the housing bubble (2001 to 2007) and have tried to sell it, you were probably in for a shock. You may have gotten some pretty bad news from the real estate agent, like probably having to come to the closing with a check to pay someone to take your house.
What a slap in the face. After all, our home’s value is supposed to go up. You are supposed to MAKE money on the sale of your home, not lose it! The problem is that home prices went somewhat backwards between 2008 and 2010. Home prices in the Oklahoma City metro area are going back up again, but if you bought or refinanced your home within the last seven years, chances are that you haven’t built enough equity in the property to sell it the traditional way without taking a big hit at the closing table. That’s because when you sell a house the traditional way, there are four major costs you MUST pay when selling a home.
1. Discount – Yes, this is a cost. The average house sells for 3% lower than the price at which it’s listed. So if a house is listed for $150,000, it’s going to sell for about 3% less.
2. Sales Commission – Real estate agents generally charge a 6% commission on the sale of the property. Sorry, but you always end up paying the middle man one way or another.
3. Closing Costs – You’ll always have some closing costs. In addition, if you are selling to a first time home buyer, you will typically also pay some of their loan closing costs.
4. Repairs – Whenever you sell a house like this, there is going to be a home inspection. Even brand new homes almost always get a home inspection. Any home inspector is going to find repairs, I don’t care that it is a five-year old home.
But wait – we’re not done yet. We haven’t accounted for any sprucing up you have to do before you try to sell the house. It’s probably going to need at least a fresh coat of paint, and possibly all new carpet.
Here’s another. If you had to move out of the property (let’s say to move to another city for your job), you are going to be making payments on the house you just moved out of AND the house you are just moving into. Ouch. How long will the house have to sit vacant? That’s anybody’s guess.
As you can see, it can be a very expensive proposition to sell a house. I’m not trying to say that real estate agents are bad. I have a real estate license, and own a property management company, OKC Home Realty Services, LLC. More often than not, the traditional way is the best way to go. But there is more than one way to skin a cat. And if you have a home that doesn’t have much equity or one that hasn’t sold the traditional way, you owe it to yourself to get a copy of the FREE report “Get Out From Under Your House without Listing it for Sale with a Real Estate Agent, EVER taking a call from a Tenant, or Giving it to an Investor for Pennies on the Dollar”. To get the FREE REPORT, call my office at 405.232.5800. Give your mailing address to my receptionist, and I’ll be happy to send you the FREE REPORT right away.
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