In some other recent posts I’ve been discussing selling your house in a weekend. This is a continuation of that discussion focusing on using the MLS (multiple listing service).
Let’s take a look at step number six in the process of selling your house in a weekend which is the listing in the Multiple Listing Service (often called the MLS). You probably want to try to get a flat-fee listing. Now let me explain what I’m not talking about and what I am talking about.
I’m not talking about going down to a real estate agent and having them give you a listing on your house to sell where they’re going to collect 6% sales commission that they’re going to split with whoever brings the buyer. I’m not talking about that.
What I am talking about is paying a friendly real estate agent, or there are some cities that will have companies that do this for you (but I still prefer paying an individual instead of a company that does it all the time for reasons I discuss elsewhere). You pay a flat-fee, it could be $300 to $500, I don’t know what it is in your city, but you need to call around and find out. But you pay a flat-fee of $300 to $500, and they actually put your house in the Multiple Listing Service so that other real estate agents and real estate brokers know that you have this house for sale and they can bring their buyers to your open house on Saturday and Sunday and participate in the bidding.
Now, the first thing you’re probably wondering is, “Will I have to pay them a commission on the bid?” and here’s how you need to work it, in my opinion. You need to have all bids be after commissions. So, if a real estate agent wants to have their client bid on your house, you have to explain to them that the bid after commission is currently at $180,000. So if your client wants to bid, you could bid $180,500, but realize that your commission is going to need to be added on top of that and your buyer is gonna need to have to pay you that. I need to net $180,500, if they’re going to bid in this bidding process. So you’re not going to subtract the bid off; you’re going to equalize what everyone is bidding by saying that this bid is the after commission bid. What you’re basically doing is adding the commission on top of whatever they’re bidding.
If you have a real estate agent come to your open house on Saturday or Sunday just make sure that they realize that and you want to make sure that you get paid, but realize that your buyer is going to need to pay your commission on top of what they bid, because the other people are bidding without real estate agents. So we need to have a comparison that’s equal for me. So that’s how you explain it when you do that. So, you do this flat-fee Multiple Listing Service, you’re going to pay $300, $400, $500 – somewhere in that ballpark – in order to have your house listed there and it may bring you a buyer or two from real estate agents that realize that when they’re bidding though they’re going to be adding their commission to it. So you’re not gonna have to worry about the fee in order to be paid from that because you can explain to them that if they’re bidding $180,000, well that’s really $180,000 minus 6%, so their bid isn’t even high enough to compete. It’s very easy to explain, but you do need to take the time to do it when you have real estate agents wanting to come bid in your particular round robin bidding process.
Until my next post,
James
P.S. If you have not yet seen the special free downloads page for real estate investors, check it out now.
The Research Checklist should be used to gather up the information you will need about a property to prepare offers.
This involves fully populating the Seller Property Information File with the following:
- Seller Communication Log
- Property Information Sheet
- Net Operating Income Worksheet
- Public Record Information Sheet
- Property Inspection Checklists (Interior and Exterior)
- Comparable Sales
- Recent MLS Listing Sheets including Active, Expired, Previous Sales and Listing History
- Map to property
- Offers to make
- Credibility Packet
- Blank Real Estate Contract (Buy Version)
- Seller Property Disclosure Statement
Let’s go over what each of the items in the Seller Property Information File actually is used for or why it is in the file to begin with.
The Seller Communication Log is used to keep track of all communication between you and the seller. It is also used to keep track of attempted communications with the seller to document your follow up system. Use it to keep notes about what was discussed and what your thoughts were about the seller, their property and your conversation.
The Property Information Sheet is the sheet that we use to gather all the information about the property from the seller on the initial call. This usually has all the property details like beds, baths, square footage as well as information about the seller like reason they are selling, what they think it is worth, what their potential hot buttons might be and so on.
The Net Operating Income Worksheet is used to calculate what the Net Operating Income for the property is by calculating out all the expenses on the property. Our Net Operating Income Worksheet also allows you to calculate out the maximum amount of debt that the property can afford to support which is helpful for determining acceptable offers for us.
The Public Record Information Sheet is a print out of what is shown on the public records website for our county. It is used to document what the county thinks about the property in terms of features, tax value, previous sales history and so on.
The Property Inspection Checklists are used when we go out and physically inspect the property as an easy way to track the condition or presence of key physical features about a property. We have both an interior and exterior version. You should include both in your file.
The Comparable Sales suggest similar properties that sold recently. We use these sales to determine what we might expect this particular property to sell for. It is important to physically look at the recent sales (ideally before your appointment with the seller) to see just how closely the recent sales match the actual property you are considering buying.
If you have access to the Multiple Listing Service it is very helpful to be able to see Recent MLS Listing Sheets including Active, Expired, Previous Sales and Listing History. This allows you to see if the property is currently listed (active), whether it was listed recently but did not sell (expired), when the previous sales of this property were and for how much. It also allows you to see what features and characteristics were used by real estate agents to describe the property for sale.
With the advent of many GPS enabled phones and mobile devices this is becoming less important, but I still like to include a Map to the property from my office so that I know how to find it.
We use our Offer Generator software to create potential offers, print them out and include them as Offers in the file. If you have software that you use to structure or assist in structuring your offers, consider including that in your Seller Property Information File to give you confidence when presenting your offers.
We usually mail a copy of our Credibility Packet to our seller once we complete the initial call back and fill out the Property Information Sheet, but we like to bring another copy and give it to the seller when we meet them.
You are going there to buy the property right? Bring a blank Real Estate Contract (Buy Version) with you in the file so that you have a copy with you. Of course, if you accidentally forget it you do have spares in your Car File right? If not, you do need to setup a Car File with copies of your key paperwork.
And finally, include a copy of the Seller Property Disclosure Statement which is what the seller fills out to tell us about all known issues with the property.
Until my next post,
James
The Marketing to Sell Checklist is our primarily checklist when trying to sell properties.
It includes the industry best practices for selling houses quickly including ads on CraigsList, yard signs and directional yard signs and, of course, your in-house buyers list. These primary marketing methods will be responsible for 80% of your results for selling a property (unless you decide to add listing it in the Multiple Listing Service as well).
A key component of the checklist is building a buyers list both to send information about this particular property but also to market additional properties you may have to as well.
This list and marketing method is especially important when wholesaling properties. When we are wholesaling we refer to this list as our wholesale investor buyers list.
Until my next post,
James
Buying Investment Properties Through An Agent – Reasons Why Investors Should Use A Real Estate Agent
I am often surprised to learn that many people believe they are paying a commission when they buy real estate through an agent. This is not the case. The seller pays the commission out of the final negotiated sales price of the property.
However, it is true that you may not find the lowest-priced deals buying through an agent because sellers cannot afford to discount the property as much since they have to pay a commission. Just the same, there are still times when using an agent is a good idea.
If you are new to investing, then you can definitely benefit from the knowledge of an experienced agent who caters to investors. It is certainly a good idea to seek expert guidance to navigate successfully through your first few deals. I should point out too that not all agents are real estate investors and having a real estate investing mentor that can consult with you and provide on-going support and training is often extremely valuable as well. You can get more information on our training and consulting for real estate investors if you are interested in that.
Another reason to continue to use an agent, even if you have some experience, is to save you time. Many investors do not invest full-time. They have jobs, families, and many other obligations that all demand large amounts of their time. An agent can sift through the many properties that come onto the market each week and can present you with only those that meet your criteria or that look like a good deal. Beware of agents that ask you for criteria and then just have their MLS dump MLS properties into your email box each day for you to sort through. Just about any agent can do this and it is a disservice to many investors in my opinion (real estate agents reading can consult with me to learn how real estate investors should be worked with).
Finally, even if you have knowledge, experience and invest full-time, there are still good deals that are only available through the MLS. It all comes down to crunching the numbers, if a deal works, then it works, regardless of whether you found it through your own marketing or through a real estate agent.
Regardless of your level of investing experience, do not automatically assume that you will not find good deals through a real estate agent. It is simply not true. Good investors know that their deals can come from many places and they recognize the value that a real estate agent can bring them as one part of their entire plan for finding deals.
Until my next post,
James
P.S. I much prefer to to do marketing to have motivated sellers call me with potential deals and that is primarily what I focus on with consulting clients and training materials. To access over 100 hours of training including a lot of training on how to have motivated sellers calling you with potential deals upgrade to a Bronze Membership now.
