*** Official Real Estate Forum *** (2 Viewers)

I’ve casually browsed this thread a few times but never posted until now. I’ve been trying to sell a house for a while and now have a potential opportunity to lease or lease option. I’m looking for advice on the merits of this alternative given the state of my local real estate market.

The interested party contacted me a few weeks ago. It’s a family relocating from another state. They own a home but say it’s impossible to sell there right now so they want to lease my home now with the idea of buying my home or another area home in 1-2 years.

After I first showed them the home back in mid June I was hesitant. I had a low-ball offer going south that I was trying to resurrect following a failed buyer inspection gambit plus a couple of other potential buyers had recently viewed the home multiple times. Prime buying season was in full force. I really wanted to just sell it and it was prime selling season. So after serious consideration I declined starting any negotiations. I told them my perspective would be different if showings were slow or it was mid August or later. I asked them to keep my number in case whatever they did later didn’t pan out.

This week they called. They haven’t signed a lease yet. They couldn’t come to terms with anyone that made their short list. I’ve got no hot prospects pending; just first time showings happening at a steady 1 to 4 per week. They wanted to see if I’d reconsider.

Here’s some background on my situation. I moved last fall and this home is sitting vacant. The local market is a definite buyers market. I’m in a very desirable area with great commute times and the best area schools. There are many area homes built in the past 10 years up for sale but not a lot in my price range. Most are larger and priced $100-250k more. My biggest price range competition is nearby new construction. I’m priced under builder base prices on much less desirable lots.

Sale rates and prices are not much below 2005 market levels. There’s just a lot of inventory available. The local area hasn’t had the spectacular appreciation over the last 5-10 years seen in other markets so I’m guessing prices aren’t going to plummet either.

The guy looking to lease is VP of a condo developer. He is not changing jobs. He has money tied up until completion of one or more development projects. His family will be living here and he will be commuting. His teenage kid got recruited to play for a sport team nearby. That is their reason for moving. The story seems weird so I’m leery if they have good intentions. Given his construction/real estate experience I’m assuming I am dealing with an expert. This guy is building 20 story condo’s selling for $750K a unit. Why is he so cash strapped that he needs a lease option? I’m concerned I’m being setup for failure to pay, bankruptcy, eviction, etc.

Prime selling season is soon ending for the year and I’m thinking if I can be cash flow neutral net of the mortgage/HELOC, taxes, insurance, and depreciation, it might be a good strategy to lease for a year or two.

I’m concerned that structuring a win/win lease option could be complicated. My impression is that they are hoping to pay a competitive lease rate and get the option to buy at my current asking price included for no additional premium. I’m thinking something like an upfront 3-5% option premium in lieu of a security deposit. Then they may treat the home like it’s their own and if there is little or no price appreciation they still may be inclined to actually buy the house.

Looking for any comments, opinions, tips. Thanks.

Click to expand...

I’ve casually browsed this thread a few times but never posted until now. I’ve been trying to sell a house for a while and now have a potential opportunity to lease or lease option. I’m looking for advice on the merits of this alternative given the state of my local real estate market.

The interested party contacted me a few weeks ago. It’s a family relocating from another state. They own a home but say it’s impossible to sell there right now so they want to lease my home now with the idea of buying my home or another area home in 1-2 years.

After I first showed them the home back in mid June I was hesitant. I had a low-ball offer going south that I was trying to resurrect following a failed buyer inspection gambit plus a couple of other potential buyers had recently viewed the home multiple times. Prime buying season was in full force. I really wanted to just sell it and it was prime selling season. So after serious consideration I declined starting any negotiations. I told them my perspective would be different if showings were slow or it was mid August or later. I asked them to keep my number in case whatever they did later didn’t pan out.

This week they called. They haven’t signed a lease yet. They couldn’t come to terms with anyone that made their short list. I’ve got no hot prospects pending; just first time showings happening at a steady 1 to 4 per week. They wanted to see if I’d reconsider.

Here’s some background on my situation. I moved last fall and this home is sitting vacant. The local market is a definite buyers market. I’m in a very desirable area with great commute times and the best area schools. There are many area homes built in the past 10 years up for sale but not a lot in my price range. Most are larger and priced $100-250k more. My biggest price range competition is nearby new construction. I’m priced under builder base prices on much less desirable lots.

Sale rates and prices are not much below 2005 market levels. There’s just a lot of inventory available. The local area hasn’t had the spectacular appreciation over the last 5-10 years seen in other markets so I’m guessing prices aren’t going to plummet either.

The guy looking to lease is VP of a condo developer. He is not changing jobs. He has money tied up until completion of one or more development projects. His family will be living here and he will be commuting. His teenage kid got recruited to play for a sport team nearby. That is their reason for moving. The story seems weird so I’m leery if they have good intentions. Given his construction/real estate experience I’m assuming I am dealing with an expert. This guy is building 20 story condo’s selling for $750K a unit. Why is he so cash strapped that he needs a lease option? I’m concerned I’m being setup for failure to pay, bankruptcy, eviction, etc.

Prime selling season is soon ending for the year and I’m thinking if I can be cash flow neutral net of the mortgage/HELOC, taxes, insurance, and depreciation, it might be a good strategy to lease for a year or two.

I’m concerned that structuring a win/win lease option could be complicated. My impression is that they are hoping to pay a competitive lease rate and get the option to buy at my current asking price included for no additional premium. I’m thinking something like an upfront 3-5% option premium in lieu of a security deposit. Then they may treat the home like it’s their own and if there is little or no price appreciation they still may be inclined to actually buy the house.

Looking for any comments, opinions, tips. Thanks.

Click to expand...

Really not enough information to offer advice, but I will add some comments.

In my state options aren't valid unless they're recorded at the court house. Be sure to use a real estate attorney. You need to understand your state's eviction laws/proceedings. Obviously if you set the price at today's market rate, you're putting them in the driver's seat. They can sit back and make this a winner for them regardless of what the market does. A neutral or negetive cash flow situation is not good in a stagnant market.

Click to expand...

Knowing your location (at least state) helps a lot.

Your last statement is standard leasing - it is a Non-Refundable Option Consideration, or NROC. ("En-Rock"). 3-5% down - not refundable - to move in. If / when they buy, the NROC is applied to the purchase price.

The purchase option should build in appreciation - pick a % increase and go with it, or settle for an appraisal.

Best option for you is to put in the going % appreciation (or higher - you're in the driver's seat and leases are less common). So if your house is worth $500K today, 10% appreciation is $550K so they can buy the house for $550K any time within the next 12 months. Then add 1% a month thereafter.

Also - add in a clause that allows you to get an appraisal if you wish and that they have to pay you the appraisal price (if higher than the 10% rule above). That covers you if the market heats up. This will tell you if the buyer is really savvy. If he is, he won't allow this. That's ok - take 10% and run - but at least you now know he's a smart guy in real estate AND you get something to use in negotiation (i.e. "I'll drop that clause if you put down 5% instead of 4%).

BTW - when I say add in - have the attorney do it.

Good luck, and add your locale next time.

Click to expand...

Really not enough information to offer advice, but I will add some comments.

In my state options aren't valid unless they're recorded at the court house. Be sure to use a real estate attorney. You need to understand your state's eviction laws/proceedings. Obviously if you set the price at today's market rate, you're putting them in the driver's seat. They can sit back and make this a winner for them regardless of what the market does. A neutral or negetive cash flow situation is not good in a stagnant market.

Click to expand...

Knowing your location (at least state) helps a lot.

Your last statement is standard leasing - it is a Non-Refundable Option Consideration, or NROC. ("En-Rock"). 3-5% down - not refundable - to move in. If / when they buy, the NROC is applied to the purchase price.

The purchase option should build in appreciation - pick a % increase and go with it, or settle for an appraisal.

Best option for you is to put in the going % appreciation (or higher - you're in the driver's seat and leases are less common). So if your house is worth $500K today, 10% appreciation is $550K so they can buy the house for $550K any time within the next 12 months. Then add 1% a month thereafter.

Also - add in a clause that allows you to get an appraisal if you wish and that they have to pay you the appraisal price (if higher than the 10% rule above). That covers you if the market heats up. This will tell you if the buyer is really savvy. If he is, he won't allow this. That's ok - take 10% and run - but at least you now know he's a smart guy in real estate AND you get something to use in negotiation (i.e. "I'll drop that clause if you put down 5% instead of 4%).

BTW - when I say add in - have the attorney do it.

Good luck, and add your locale next time.

Click to expand...

Thanks for both your responses. The property is in the Detroit suburbs. Recent historical appreciation rates are no where near 10%, more like 0-5%. In the past year probably actually slightly negative.How common are strike prices determined by appraisals in lease option deals? Seems likely that the buyer wouldn't trust the objectivity if the seller obtains the appraisal. Is there a standard practice to obtain an true independent appraisal or do real estate attorneys have contract terms that address that?

Click to expand...

Foundation is there, starting from scratch on everything else. You name it, it needs fixed. This also includes a french drain around 75% of the structure and the place is actually about 330 square feet. I am getting a stainless steel fridge, stove, etc.  You could surely buy them yourself cheaper???

Here's a breakdown, one in more detail should arrive by e-mail sometime tonight or tomorrow and he was the cheapest (in fact someone I know pretty well here who has fixed up over 20 houses thought it was about as cheap as I could get):

Description of work to be performed:

--Dig and install french drain on north and east side

of building

Are you sure you mean French Drain??  A French drain is inside the structure, and is just a "Troth" around the walls to catch water that is allowed into the structure, and then channels to a Floor drain.  This is not the system you would want inside a Finished space.  If it is truly a French Drain, it is not something you would want.

--Cut hole in small piece of wood at side to run drain

pipe to correct drainage problem

--seal cracks in water proofing along bottom of

building

--Install new rain gutters on East and South side of

building

--Install new down spouts where needed

--Demo old flashing on top of patio cover

--Install new flashing on top of patio cover and caulk

and water proof

--Prep Exterior wood

--Paint Exterior wood

--Remove 3 windows

--Install 3 new windows and trim out

--Demo remaining wall paneling

--Remove old electrical wiring,plugs and switches

--Install new electrical wiring ,plugs and switches

--Repair hole in east wall

--Install new insulation in exterior walls

--Sheetrock walls with 1/2" Sheetrock

--Tape,float and sand walls

--Scrape popcorn ceiling

--Prep ceiling

--Spray texture on walls and ceilings

A thought on Texture.  It's cheap and easy, but requires a Pro if you ever need to make a repair to match it back up.  I understand how much easier it is for the contractor, but down the road, flat walls and ceilings are so much easier to deal with because countless people can repair flat drywall, even you (You will need a Spanish lace pro to make repairs if you texture), and cost you much less long term if you ever have any repairs.  If you were Flipping, and YOUR MARKET would support Texture, then ABSOLUTELY!  (The trend here at least is away from Texture, and it would be foolish to texture ceilings and walls as it is not a Selling point, only something to correct).  Renting, Flat walls and Ceilings are easier to deal with long term for repair.

--Paint ceilings and walls

--Install new baseboards throughout interior and paint

--Install new door trim, window sills and paint

--Demo old shower and cabinets

--Install new water resistance Sheetrock in shower

area

Make sure this is "Green board"

--Install new 6x9 ceramic tile in shower

--Grout and seal ceramic tile in shower

--Install new shower fixtures

--Install new bathroom accessories (towel bar,tp

holder,small vanity mirror

--Install new toilet

--Install new vanity in bathroom

--Install new sink and fixtures in bathroom

--Install new light fixtures throughout interior

--Install new ceiling fan

--Clean floor and repair cracks and holes

--Stain floor

--Install 1 new sink base cabinet

--Install new sink, plumbing and fixtures

--Install 3 new wall cabinets

--Install new stainless steel fridge

--Install new mini electric stainless steel stove

--Install new vent less microwave range hood

--Install new window a/c/heater unit

I would STRONGLY recommend that you have it installed into the wall as a permanent structure.  In a Window, it is a safety risk, the window is lost for use, it's tacky, and they are dealing with walls anyway.  Just do it better right up front.

--Final clean and walk through

--Remove all trash created by this job

--Remove all trash already on the job

Click to expand...

Since this is a real estate forum, I thought I would throw out a question:

Does having a pool help or hinder the resell value of a home?

We have a big pool in our backyard. It is an old pool and in decent shape. However, the foundation surrounding the pool is cracked and some areas in upheaval (nothing that would affect the pool though).

We got an estimate to fix the foundation and put flagstone around the pool, replacing the current "pebble" concrete. Also, we would update the interior of the pool with PebbleTec. It would come out to $15,000.

Another option would be to fill the pool. That would cost $15,000 as well.

We are considering selling the house in a few years and moving somewhere with less maintanence (the house was built in 1957). It has been updated but it is still one thing after another.

Any advice is appreciated. If we get the work done, it wouldn't be until fall. So we have a couple of months to figure it out.

TIA

Click to expand...

Interesting and my limited take is that it's a crap shoot. While some people must have a pool some do NOT want them. My wife and I with having a kid < 1 and another on the way specifically did not want a pool. Plus, why put up with maintenance and we have plenty of parks around us with pools. Opposite, I know someone who specifically wanted a pool.I think if you have a place, spending a bunch putting in a pool is a waste of money or if your place has one, why spend the money covering it up?

Click to expand...

It is a crapshoot.I have little kids - I didn't want a pool. Other families want other things.

You want to get the most amount of POSSIBLE buyers when you resell.

Do the minimal amount of work to keep it in the "either or" case to attract either buyer. Allow $15K towards EITHER filling it in (THIS SOUNDS VERY HIGH) or repairing it.

In the interim, cover it and leave it that way when you want to sell it. That way it will have minimal impact on the buyer (they won't see a big hole that looks like crap in the backyard). They WILL see a nice cover and $15K.

Click to expand...

What is the standard commision for a Real Estate agent representing the buyer.....?????????

Im in NJ, AC area if it matters.

I have another more important question.. but dont have the time now...TIA

Click to expand...

As a buyer, you don't care.They get 1/2 of the commission paid by the seller (typically).

Usually 50% of 6%, or 3%.

Click to expand...

I’ve casually browsed this thread a few times but never posted until now.  I’ve been trying to sell a house for a while and now have a potential opportunity to lease or lease option.  I’m looking for advice on the merits of this alternative given the state of my local real estate market.

The interested party contacted me a few weeks ago.  It’s a family relocating from another state.  They own a home but say it’s impossible to sell there right now so they want to lease my home now with the idea of buying my home or another area home in 1-2 years.

After I first showed them the home back in mid June I was hesitant.  I had a low-ball offer going south that I was trying to resurrect following a failed buyer inspection gambit plus a couple of other potential buyers had recently viewed the home multiple times.  Prime buying season was in full force.  I really wanted to just sell it and it was prime selling season.  So after serious consideration I declined starting any negotiations.  I told them my perspective would be different if showings were slow or it was mid August or later.  I asked them to keep my number in case whatever they did later didn’t pan out.

This week they called.  They haven’t signed a lease yet.  They couldn’t come to terms with anyone that made their short list.  I’ve got no hot prospects pending; just first time showings happening at a steady 1 to 4 per week.  They wanted to see if I’d reconsider.

Here’s some background on my situation.  I moved last fall and this home is sitting vacant.  The local market is a definite buyers market.  I’m in a very desirable area with great commute times and the best area schools.  There are many area homes built in the past 10 years up for sale but not a lot in my price range.  Most are larger and priced $100-250k more.  My biggest price range competition is nearby new construction.  I’m priced under builder base prices on much less desirable lots.

Sale rates and prices are not much below 2005 market levels.  There’s just a lot of inventory available.  The local area hasn’t had the spectacular appreciation over the last 5-10 years seen in other markets so I’m guessing prices aren’t going to plummet either.

The guy looking to lease is VP of a condo developer.  He is not changing jobs.  He has money tied up until completion of one or more development projects.  His family will be living here and he will be commuting.  His teenage kid got recruited to play for a sport team nearby.  That is their reason for moving.  The story seems weird so I’m leery if they have good intentions.  Given his construction/real estate experience I’m assuming I am dealing with an expert.  This guy is building 20 story condo’s selling for $750K a unit.  Why is he so cash strapped that he needs a lease option?  I’m concerned I’m being setup for failure to pay, bankruptcy, eviction, etc.

Prime selling season is soon ending for the year and I’m thinking if I can be cash flow neutral net of the mortgage/HELOC, taxes, insurance, and depreciation, it might be a good strategy to lease for a year or two.

I’m concerned that structuring a win/win lease option could be complicated.  My impression is that they are hoping to pay a competitive lease rate and get the option to buy at my current asking price included for no additional premium.  I’m thinking something like an upfront 3-5% option premium in lieu of a security deposit.  Then they may treat the home like it’s their own and if there is little or no price appreciation they still may be inclined to actually buy the house.

Looking for any comments, opinions, tips.  Thanks.

Click to expand...

Thread is dying a bit!

Ok, so I have picked out the GC I want to restore my garage apartment. Had three bids and he was not only the person I felt like knew what I wanted but also the cheapest bid out of three. Great guy and he said that when he starts (mid next week) he would like 50% down then when completely done in 6 weeks, the other 50%. Is this standard? I can't compare it to getting help while redoing my place in NY since I had illegals and would simply pay them end of each week.

Click to expand...

I do Draws based on work output for Jobs over a few hundred bucks. If it's under say $300.00, then I expect that the person I am hiring has some reserves, they can do the work, and get paid.As an Example, I have my Electrician doing a $3K breakout and upgrade right now. We did a Grand draw to get started, and I have paid two $500.00 draws as we have gone along with me seeing forward progress. We are in the final stages, and I am holding the last Grand for completion.

I have a CHEAP but great part time painter that is just flat out FAST. $200.00 a Unit to paint out. I expect him to do the work, then we will settle up.

Given that you are not known in the market, Your GC is protecting himself by asking for 50% up front. I WOULD get some references from past customers, and look at some of his work. If he is any good, at least one past customer will be willing to help him out.

Contractors get burned every day of the week by doing work for someone who won't, or doesn't have the ability to pay them. He's doing a CYA.

I would still prefer a Weekly draw over the 6 weeks, where you see ongoing progress that is in line with the completion date, but you might not be able to swing that.

Click to expand...

Contacted references and seen his work, very nice stuff. I'll see how flexible or not he is in regards to payment (so far has been very flexible about everything else up to this point) but to be honest, I don't want to nickel and dime him upfront and create any ill will. Again, I want good vibes going into the later part of this week and don't want him thinking "If this guy is trying to job me down, will I get paid going forward?" Then again, if he has no problem giving up a little and perhaps getting some in the middle (instead of 50% at end) then we will both come out ahead.

Click to expand...

I can't think that if I tell him sorry only $500 up front that he'll go for that. Heck, I wouldn't.

Click to expand...

If you have already agreed, you are probably stuck. I think you said you checked references, so I would not really worry about it. I would try and get partof it tied to an on time completion, tho. Or offer a $500 bonus if all work completed by so and so a date. Time is money and it keeps them from draggiing them out a long time if they get other jobs. Good luck, I checked with my guys and they had not heard of him, but that means nothing- its a big town and my guys don't "network" a lot.

Click to expand...

Nothing "official" yet, he's sending over his final sheet breakdown that totals to his 9,900 amount.Checked and went to two different places he's worked on and they looked great.

Thanks CosJobs...by the way, I may need some info on you regarding lenders

This got me thinking about "bonus for finishing up early" topic. While I don't want him to finish late, why is finishing early a good thing? Wouldn't you be more inclined to do something sloppy if you knew that finishing early would get you more money?

I definitely want them to finish as early as possible but also want it done right. I would hate to pay more money and get it done a few weeks early only to find out they took corners.

Click to expand...

RKMoney,Don't make me read back and remember. Put your Area of operation in your profile. Also, remind me, I seem to think you have a Garage unit that you are fixing up for $10K, will rent out for $400-500 a month, and be repaid in a Year. Right?

About the time issue, if my givens are correct:

Best case: The GC piddles around for at least a week with the holiday, finishes in say 5 weeks, and you have a shot to have a renter by September. Maybe a little late for a College student, but maybe.

Worst case: The GC piddles around for a couple of weeks, runs the 6 weeks, then runs over a Month sending you to the point of break down, and MAYBE, just MAYBE you could rent it by November.

I don't have a "Way Back" Machine, and can't go back in time 2 months. Once those two months have past, you can never go back. Two months rent at $500.00 a month is a Grand that you have lost, and there is absolutely zero way to recapture it.

Would a $300.00 bonus be worth $500.00 with a shot at $1,000.00 to you? It would be worth it to me.

I could give a half dozen personal examples of a Contractor or Sub putting me back a couple of months just off the top of my head were I lost up to a Grand on each one of them. So off the top of my head, I could recount some $6K that I lost and will never be able to recapture.

I'll let some other seasoned investors add their own examples. Any of them are going to tell you that Time is Money. I would bet that Bass and Jeff have some killer stories to tell on this subject.

Click to expand...

Sorry about all that MA, i will update my info, recap:1. Will spend 9900 to fix up garage apartment

2. Should be able now to get ~600 - 700 a month for it

Austin Texas - downtown and near University of Texas

This really is a no brainer. With my location being golden, it would be a crime not to rent it out.

Time is DEFINITELY money for me. I will shoot him an early $300 amount if he can get it done earlier, I want it all down and someone to move in no worse than September. In the same token though if he's more than a week late, I would want to recoup some costs having to wait longer to rent.

Click to expand...

Here is the run down of my 2 applicants so far this month:

Applicant #1:

2 evictions, worst was $2,464.81 in damages

4 Protective orders issued against

Civil court collections of $6K and $1,113.30

Criminal Conversion, non compliant with sentence of home detention

Domestic Battery

Dealing Marijuana

Applicant #2:

**In My County**

Felony OWI

Public Intox

Check Deception

Resisting Law Enforcement

Escape from custody (Guy found a hole in the system, and esacaped from Jail, have to admire that, remember I am not from a Big City)

Grand Theft Auto

Domestic Battery

Protective order against

a Page full of collections, including one from the Court for failure to pay for rehab.

**In his Home County**

Time in Prison with the Department of Corrections

Theft, receiving stolen Auto Parts

2 OWIs

Driving While suspended

Neglect of a Dependent (Seems he was driving drunk with his small child in the car)

It's a great start of the Month!

Click to expand...

I must be the only one posting here tonight, so there is no need to stick around....

Click to expand...

My Wife has found that if she can talk the seller into 8% but raising the total price to cover it, where the Buying agent gets 4.5% (So yes, she makes less than the buying agent) then she can put into the Realtor part of the MLS that the buying agent makes more.

Now, the buying agent is watching the MLS, and sees that instead of the normal 3.5%, they see 4.5%, the buying agents will push her house like there is no tomorrow. The house sells instantly as every buying agent is pushing HARD to sell it. She actually makes a little more than she would have normally, as she still gets 3.5%, but the property is at a greater listing price that it would have normally been at.

Realtors are greedy. Repeat that a number of times. Too many are short sighted, and can't see the big picture. My wife and I talk strategy all the time, and come up with creative ways to go. If you can find a forward thinking Realtor, who understands that you have to give a Carrot to keep the cart going, and understands that it isn't about what the other agent makes, but what she makes, this can work well.

Realtors are greedy. Most will push the house they make more on even if it is not really the right house for the buyer. Most buyers buy a home in an area once in a decade plus. The Realtor isn't looking for return business every year, as they know they can't get it, it's a one time rob the hen house of as many chickens as you can carry.

Give it some thought. This has been extremely successful for us.

Click to expand...

My Wife has found that if she can talk the seller into 8% but raising the total price to cover it, where the Buying agent gets 4.5% (So yes, she makes less than the buying agent) then she can put into the Realtor part of the MLS that the buying agent makes more.

Now, the buying agent is watching the MLS, and sees that instead of the normal 3.5%, they see 4.5%, the buying agents will push her house like there is no tomorrow.  The house sells instantly as every buying agent is pushing HARD to sell it.  She actually makes a little more than she would have normally, as she still gets 3.5%, but the property is at a greater listing price that it would have normally been at.

Realtors are greedy.  Repeat that a number of times.  Too many are short sighted, and can't see the big picture.  My wife and I talk strategy all the time, and come up with creative ways to go.  If you can find a forward thinking Realtor, who understands that you have to give a Carrot to keep the cart going, and understands that it isn't about what the other agent makes, but what she makes, this can work well.

Realtors are greedy.  Most will push the house they make more on even if it is not really the right house for the buyer.  Most buyers buy a home in an area once in a decade plus.  The Realtor isn't looking for return business every year, as they know they can't get it, it's a one time rob the hen house of as many chickens as you can carry.

Give it some thought.  This has been extremely successful for us.

Click to expand...

You are advocating raising the cost of the house and the already inflated fees paid to the agents. GREAT IDEA!!! Who pays for this? Oh yea, that's right, the buyer.Your advice is basically to #### the buyer.

You are also advocating that the buyer's agent #### the buyer as well.

Remind me why anyone should take your advice again on BUYING a house.

Click to expand...

While we are on the subject, I wanted to get some impressions from you guys on an offer I received.

One percent realty (http://www.onepercentusa.com/) has a business model I really like. First off, I always thought 6-7% on selling a home was BS, especially when you get into the 300-500K sales.

This company charges 1% ($2000 min.). They also charge $500 of the fee up front to initiate service. Sellers get reduced selling fees and buyers get cash back at the sale.

I think this is a great new paradigm for the industry. First off, the obscene commissions are a thing of the past and secondly, the up front money means you get paid something regardless of outcome and tirekickers get screened out (only serious buyers/sellers will pay $$ upfront).

Its my feeling this would be very instructive for me to be participating in the local market like this and should help me on my buying decisions as an investor.

I had decided earlier to not get a RE license because of limitations it may put on my REI opps. But it looks like I could circumvent that by having my wife actually doing the REIs.

I think this business model will eventually take over the industry and feel pretty good about getting on board with them. They also have in house mortgage and title services I could possibly use for my own purposes.

It would cost me about 2 weeks and $1000 in educational expenses and licensing fees to do this.

Click to expand...

cos> Is there anything like this in Dallas?

And, do you have to go through their mortgage company?

pre-emtive :fu: to all the RE agents in this thread.

Click to expand...

One percent realty (http://www.onepercentusa.com/) has a business model I really like. First off, I always thought 6-7% on selling a home was BS, especially when you get into the 300-500K sales.

Click to expand...

cos> Is there anything like this in Dallas?

And, do you have to go through their mortgage company?

pre-emtive :fu: to all the RE agents in this thread.

Click to expand...

cos> Is there anything like this in Dallas?

And, do you have to go through their mortgage company?

pre-emtive :fu: to all the RE agents in this thread.

Click to expand...

While we are on the subject, I wanted to get some impressions from you guys on an offer I received.

One percent realty (http://www.onepercentusa.com/) has a business model I really like. First off, I always thought 6-7% on selling a home was BS, especially when you get into the 300-500K sales.

This company charges 1% ($2000 min.). They also charge $500 of the fee up front to initiate service. Sellers get reduced selling fees and buyers get cash back at the sale.

I think this is a great new paradigm for the industry. First off, the obscene commissions are a thing of the past and secondly, the up front money means you get paid something regardless of outcome and tirekickers get screened out (only serious buyers/sellers will pay $$ upfront).

Its my feeling this would be very instructive for me to be participating in the local market like this and should help me on my buying decisions as an investor.

I had decided earlier to not get a RE license because of limitations it may put on my REI opps. But it looks like I could circumvent that by having my wife actually doing the REIs.

I think this business model will eventually take over the industry and feel pretty good about getting on board with them. They also have in house mortgage and title services I could possibly use for my own purposes.

It would cost me about 2 weeks and $1000 in educational expenses and licensing fees to do this.

Click to expand...

I can't think that if I tell him sorry only $500 up front that he'll go for that. Heck, I wouldn't.

Click to expand...

If you have already agreed, you are probably stuck. I think you said you checked references, so I would not really worry about it. I would try and get partof it tied to an on time completion, tho. Or offer a $500 bonus if all work completed by so and so a date. Time is money and it keeps them from draggiing them out a long time if they get other jobs. Good luck, I checked with my guys and they had not heard of him, but that means nothing- its a big town and my guys don't "network" a lot.

Click to expand...

Nothing "official" yet, he's sending over his final sheet breakdown that totals to his 9,900 amount.Checked and went to two different places he's worked on and they looked great.

Thanks CosJobs...by the way, I may need some info on you regarding lenders

This got me thinking about "bonus for finishing up early" topic. While I don't want him to finish late, why is finishing early a good thing? Wouldn't you be more inclined to do something sloppy if you knew that finishing early would get you more money?

I definitely want them to finish as early as possible but also want it done right. I would hate to pay more money and get it done a few weeks early only to find out they took corners.

Click to expand...

RKMoney,Don't make me read back and remember. Put your Area of operation in your profile. Also, remind me, I seem to think you have a Garage unit that you are fixing up for $10K, will rent out for $400-500 a month, and be repaid in a Year. Right?

About the time issue, if my givens are correct:

Best case: The GC piddles around for at least a week with the holiday, finishes in say 5 weeks, and you have a shot to have a renter by September. Maybe a little late for a College student, but maybe.

Worst case: The GC piddles around for a couple of weeks, runs the 6 weeks, then runs over a Month sending you to the point of break down, and MAYBE, just MAYBE you could rent it by November.

I don't have a "Way Back" Machine, and can't go back in time 2 months. Once those two months have past, you can never go back. Two months rent at $500.00 a month is a Grand that you have lost, and there is absolutely zero way to recapture it.

Would a $300.00 bonus be worth $500.00 with a shot at $1,000.00 to you? It would be worth it to me.

I could give a half dozen personal examples of a Contractor or Sub putting me back a couple of months just off the top of my head were I lost up to a Grand on each one of them. So off the top of my head, I could recount some $6K that I lost and will never be able to recapture.

I'll let some other seasoned investors add their own examples. Any of them are going to tell you that Time is Money. I would bet that Bass and Jeff have some killer stories to tell on this subject.

Click to expand...

Sorry about all that MA, i will update my info, recap:1. Will spend 9900 to fix up garage apartment

2. Should be able now to get ~600 - 700 a month for it

Austin Texas - downtown and near University of Texas

This really is a no brainer. With my location being golden, it would be a crime not to rent it out.

Time is DEFINITELY money for me. I will shoot him an early $300 amount if he can get it done earlier, I want it all down and someone to move in no worse than September. In the same token though if he's more than a week late, I would want to recoup some costs having to wait longer to rent.

Click to expand...

I might point out that you still haven't taken the 30 seconds to go to your profile and input your area of operation.....

Click to expand...

A couple of initial thoughts...

YOU don't have to sacrifice your family or faith by being compelled to work late at night or on Sundays. Not sure how I would feel about missing a peak showing day.

I definitely am onboad with keeping my Sundays free for the NFL. I am thinking of making my workdays noon- 8pm, so there's plenty of time after the typical customer gets off work to see some homes, especially in the summer.

$2000 min commission and $349 for upgrade service.That's basically 1.7% on the average $150K house around here. Houses cost more here, so the percentage is smaller, but that still adds up to some significant savings pretty quickly.

The model sounds workable, but it's failed miserably in this market. Around here it's called Help-U-Sell Real Estate. Most of the time I call on one of these properties, it's a day or so until someone calls me back and often I never even get a return call. Something tells me this may be a haven for the part-timer or some one who couldn't make it elsewhere.

Small sample size to make a judgement. I'd say its just as likely a faulty operator as business model.

In most places this industry is going to revolve around buyers and what they want. They want information and access immediately. If the seller isn't catering to that, they're reducing their chance to net their best selling price.

IMO, cutting out the tirekickers (by charging the min $500 fee), allows me plenty of time to service the clients as well as anyone else.

I'd like to dig into this more, but I need to go throw up some lock boxes so potential tenants have access to my listings tomorrow.

Click to expand...

One percent realty (http://www.onepercentusa.com/) has a business model I really like. First off, I always thought 6-7% on selling a home was BS, especially when you get into the 300-500K sales.

Click to expand...

I checked out their website and like what they're about. Unfortunately they are not in my area. Do any of you know of something similar in the DC area?

Click to expand...

While we are on the subject, I wanted to get some impressions from you guys on an offer I received.

One percent realty (http://www.onepercentusa.com/) has a business model I really like. First off, I always thought 6-7% on selling a home was BS, especially when you get into the 300-500K sales.

This company charges 1% ($2000 min.). They also charge $500 of the fee up front to initiate service. Sellers get reduced selling fees and buyers get cash back at the sale.

I think this is a great new paradigm for the industry. First off, the obscene commissions are a thing of the past and secondly, the up front money means you get paid something regardless of outcome and tirekickers get screened out (only serious buyers/sellers will pay $$ upfront).

Its my feeling this would be very instructive for me to be participating in the local market like this and should help me on my buying decisions as an investor.

I had decided earlier to not get a RE license because of limitations it may put on my REI opps. But it looks like I could circumvent that by having my wife actually doing the REIs.

I think this business model will eventually take over the industry and feel pretty good about getting on board with them. They also have in house mortgage and title services I could possibly use for my own purposes.

It would cost me about 2 weeks and $1000 in educational expenses and licensing fees to do this.

Click to expand...

A couple of initial thoughts...

YOU don't have to sacrifice your family or faith by being compelled to work late at night or on Sundays. Not sure how I would feel about missing a peak showing day.

I definitely am onboad with keeping my Sundays free for the NFL. I am thinking of making my workdays noon- 8pm, so there's plenty of time after the typical customer gets off work to see some homes, especially in the summer.

$2000 min commission and $349 for upgrade service.That's basically 1.7% on the average $150K house around here. Houses cost more here, so the percentage is smaller, but that still adds up to some significant savings pretty quickly.

The model sounds workable, but it's failed miserably in this market.  Around here it's called Help-U-Sell Real Estate.  Most of the time I call on one of these properties, it's a day or so until someone calls me back and often I never even get a return call.  Something tells me this may be a haven for the part-timer or some one who couldn't make it elsewhere. 

Small sample size to make a judgement. I'd say its just as likely a faulty operator as business model.

In most places this industry is going to revolve around buyers and what they want.  They want information and access immediately.  If the seller isn't catering to that, they're reducing their chance to net their best selling price. 

IMO, cutting out the tirekickers (by charging the min $500 fee), allows me plenty of time to service the clients as well as anyone else.

I'd like to dig into this more, but I need to go throw up some lock boxes so potential tenants have access to my listings tomorrow.

Click to expand...

Click to expand...

My Wife has found that if she can talk the seller into 8% but raising the total price to cover it, where the Buying agent gets 4.5% (So yes, she makes less than the buying agent) then she can put into the Realtor part of the MLS that the buying agent makes more.

Now, the buying agent is watching the MLS, and sees that instead of the normal 3.5%, they see 4.5%, the buying agents will push her house like there is no tomorrow.  The house sells instantly as every buying agent is pushing HARD to sell it.  She actually makes a little more than she would have normally, as she still gets 3.5%, but the property is at a greater listing price that it would have normally been at.

Realtors are greedy.  Repeat that a number of times.  Too many are short sighted, and can't see the big picture.  My wife and I talk strategy all the time, and come up with creative ways to go.  If you can find a forward thinking Realtor, who understands that you have to give a Carrot to keep the cart going, and understands that it isn't about what the other agent makes, but what she makes, this can work well.

Realtors are greedy.  Most will push the house they make more on even if it is not really the right house for the buyer.  Most buyers buy a home in an area once in a decade plus.  The Realtor isn't looking for return business every year, as they know they can't get it, it's a one time rob the hen house of as many chickens as you can carry.

Give it some thought.  This has been extremely successful for us.

Click to expand...

You are advocating raising the cost of the house and the already inflated fees paid to the agents. GREAT IDEA!!! Who pays for this? Oh yea, that's right, the buyer.Your advice is basically to #### the buyer.

You are also advocating that the buyer's agent #### the buyer as well.

Remind me why anyone should take your advice again on BUYING a house.

Click to expand...

You are also advocating that the buyer's agent #### the buyer as well.

Click to expand...

My Wife has found that if she can talk the seller into 8% but raising the total price to cover it, where the Buying agent gets 4.5% (So yes, she makes less than the buying agent) then she can put into the Realtor part of the MLS that the buying agent makes more.

Now, the buying agent is watching the MLS, and sees that instead of the normal 3.5%, they see 4.5%, the buying agents will push her house like there is no tomorrow.  The house sells instantly as every buying agent is pushing HARD to sell it.  She actually makes a little more than she would have normally, as she still gets 3.5%, but the property is at a greater listing price that it would have normally been at.

Realtors are greedy.  Repeat that a number of times.  Too many are short sighted, and can't see the big picture.  My wife and I talk strategy all the time, and come up with creative ways to go.  If you can find a forward thinking Realtor, who understands that you have to give a Carrot to keep the cart going, and understands that it isn't about what the other agent makes, but what she makes, this can work well.

Realtors are greedy.  Most will push the house they make more on even if it is not really the right house for the buyer.  Most buyers buy a home in an area once in a decade plus.  The Realtor isn't looking for return business every year, as they know they can't get it, it's a one time rob the hen house of as many chickens as you can carry.

Give it some thought.  This has been extremely successful for us.

Click to expand...

You are advocating raising the cost of the house and the already inflated fees paid to the agents. GREAT IDEA!!! Who pays for this? Oh yea, that's right, the buyer.Your advice is basically to #### the buyer.

You are also advocating that the buyer's agent #### the buyer as well.

Remind me why anyone should take your advice again on BUYING a house.

Click to expand...

I believe he is spot on, especially if you are in a slow market like I am. He is one of very few agents that would admit this. If he gives great advice like this as a seller’s agent then he would automatically make my short list of buyer’s agents I'd be willing to work with.In my area 6% total commission with 3% going to buyer’s agents is standard. I signed with a flat fee broker to get in the MLS. I still have a full exclusive right to sell listing but I don't have a true commissioned selling agent so no 3% listing agent commissions to pay. I have to hold my own open houses and pay for all my own marketing expenses. Then, instead of paying the standard 3% commission to the buyer’s agent I raised it higher to do exactly what Mike is suggesting. I created an extra incentive to motivate the person who actually has the attention of buyers and has the ability to influence a buyer, the buyer’s agent.

I have had agents tell me that the higher commission percentage won't influence them but I don't believe it. In my recent offer the buyer's agent definitely noticed the higher commission and made a point of verifying it before we began negotiations.

But, who am I to talk. My property is still for sale (see above). I look forward to Mike's comments on my situation.

Click to expand...

While we are on the subject, I wanted to get some impressions from you guys on an offer I received.

One percent realty (http://www.onepercentusa.com/) has a business model I really like. First off, I always thought 6-7% on selling a home was BS, especially when you get into the 300-500K sales.

This company charges 1% ($2000 min.). They also charge $500 of the fee up front to initiate service. Sellers get reduced selling fees and buyers get cash back at the sale.

I think this is a great new paradigm for the industry. First off, the obscene commissions are a thing of the past and secondly, the up front money means you get paid something regardless of outcome and tirekickers get screened out (only serious buyers/sellers will pay $$ upfront).

Its my feeling this would be very instructive for me to be participating in the local market like this and should help me on my buying decisions as an investor.

I had decided earlier to not get a RE license because of limitations it may put on my REI opps. But it looks like I could circumvent that by having my wife actually doing the REIs.

I think this business model will eventually take over the industry and feel pretty good about getting on board with them. They also have in house mortgage and title services I could possibly use for my own purposes.

It would cost me about 2 weeks and $1000 in educational expenses and licensing fees to do this.

Click to expand...

cos> Is there anything like this in Dallas?

And, do you have to go through their mortgage company?

pre-emtive :fu: to all the RE agents in this thread.

Click to expand...

While we are on the subject, I wanted to get some impressions from you guys on an offer I received.

One percent realty (http://www.onepercentusa.com/) has a business model I really like. First off, I always thought 6-7% on selling a home was BS, especially when you get into the 300-500K sales.

This company charges 1% ($2000 min.). They also charge $500 of the fee up front to initiate service. Sellers get reduced selling fees and buyers get cash back at the sale.

I think this is a great new paradigm for the industry. First off, the obscene commissions are a thing of the past and secondly, the up front money means you get paid something regardless of outcome and tirekickers get screened out (only serious buyers/sellers will pay $$ upfront).

Its my feeling this would be very instructive for me to be participating in the local market like this and should help me on my buying decisions as an investor.

I had decided earlier to not get a RE license because of limitations it may put on my REI opps. But it looks like I could circumvent that by having my wife actually doing the REIs.

I think this business model will eventually take over the industry and feel pretty good about getting on board with them. They also have in house mortgage and title services I could possibly use for my own purposes.

It would cost me about  2 weeks and $1000 in educational expenses and licensing fees to do this.

Click to expand...

A couple of initial thoughts...
YOU don't have to sacrifice your family or faith by being compelled to work late at night or on Sundays. Not sure how I would feel about missing a peak showing day.

$2000 min commission and $349 for upgrade service.That's basically 1.7% on the average $150K house around here.The model sounds workable, but it's failed miserably in this market. Around here it's called Help-U-Sell Real Estate. Most of the time I call on one of these properties, it's a day or so until someone calls me back and often I never even get a return call. Something tells me this may be a haven for the part-timer or some one who couldn't make it elsewhere.

In most places this industry is going to revolve around buyers and what they want. They want information and access immediately. If the seller isn't catering to that, they're reducing their chance to net their best selling price.

I'd like to dig into this more, but I need to go throw up some lock boxes so potential tenants have access to my listings tomorrow.

Click to expand...

If I were selling a House and not a RE professional who can do it himself, I would get an "Exclusive Agency Listing"

Basically, this allows for one agent to represent you, put a sign in the yard, put you in the MLS, everything. If they generate the buyer, you pay as normal, no big deal.

However, if you generate the buyer, you pay nothing at all.

Click to expand...

I think I need a definition of Brokerage Houses. Do you mean any broker with agents? How are you differentiating from the "Discount Brokerages" such as the 1% company I am considering joining?

Click to expand...

I think I need a definition of Brokerage Houses. Do you mean any broker with agents? How are you differentiating from the "Discount Brokerages" such as the 1% company I am considering joining?

Click to expand...

I am meaning "Discount Brokerages", just saying it the way it's said in my area. Your wording is better and more accurate.

Click to expand...

If I were selling a House and not a RE professional who can do it himself, I would get an "Exclusive Agency Listing"

Basically, this allows for one agent to represent you, put a sign in the yard, put you in the MLS, everything.  If they generate the buyer, you pay as normal, no big deal.

However, if you generate the buyer, you pay nothing at all.

Click to expand...

I know agents prefer the exclusive right to sell listing. In the real world is it easy/realistic to get the exclusive agency listing form an agent? Seems like his placing it in the MLS would likely generate your best leads.

Click to expand...

I think I need a definition of Brokerage Houses. Do you mean any broker with agents? How are you differentiating from the "Discount Brokerages" such as the 1% company I am considering joining?

Click to expand...

I am meaning "Discount Brokerages", just saying it the way it's said in my area. Your wording is better and more accurate.

Click to expand...

Okay I was getting confused. THe brokerage I am looking at would bill me nothing to act as their agent. All clients pay $500 up front and that is split between the agent and broker.

Click to expand...

I think I need a definition of Brokerage Houses. Do you mean any broker with agents? How are you differentiating from the "Discount Brokerages" such as the 1% company I am considering joining?

Click to expand...

I am meaning "Discount Brokerages", just saying it the way it's said in my area. Your wording is better and more accurate.

Click to expand...

Okay I was getting confused. THe brokerage I am looking at would bill me nothing to act as their agent. All clients pay $500 up front and that is split between the agent and broker.

Click to expand...

Wow, that is not the way I understood it. I understood it to be where the agent Bought into the company, and of course still had E&O insurance, MLS fees, the normal costs you have to take on.From what I THOUGHT I have seen, the agent paid a sum to buy into the company.

Click to expand...

I think I need a definition of Brokerage Houses. Do you mean any broker with agents? How are you differentiating from the "Discount Brokerages" such as the 1% company I am considering joining?

Click to expand...

I am meaning "Discount Brokerages", just saying it the way it's said in my area. Your wording is better and more accurate.

Click to expand...

Okay I was getting confused. THe brokerage I am looking at would bill me nothing to act as their agent. All clients pay $500 up front and that is split between the agent and broker.

Click to expand...

Wow, that is not the way I understood it. I understood it to be where the agent Bought into the company, and of course still had E&O insurance, MLS fees, the normal costs you have to take on.From what I THOUGHT I have seen, the agent paid a sum to buy into the company.

Click to expand...

I would contnue to pay my own MLS fees. They charge $10-15 per sale for E&O. All revenues are split on contracted basis depending on who got original lead (me or the brokerage). It seems this is very different from what you thought it was. I am talking to BnB tomorrow to detail the numbers, we could conference you in if you wnat.

Click to expand...

I think I need a definition of Brokerage Houses. Do you mean any broker with agents? How are you differentiating from the "Discount Brokerages" such as the 1% company I am considering joining?

Click to expand...

I am meaning "Discount Brokerages", just saying it the way it's said in my area. Your wording is better and more accurate.

Click to expand...

Okay I was getting confused. THe brokerage I am looking at would bill me nothing to act as their agent. All clients pay $500 up front and that is split between the agent and broker.

Click to expand...

Wow, that is not the way I understood it. I understood it to be where the agent Bought into the company, and of course still had E&O insurance, MLS fees, the normal costs you have to take on.From what I THOUGHT I have seen, the agent paid a sum to buy into the company.

Click to expand...

I would contnue to pay my own MLS fees. They charge $10-15 per sale for E&O. All revenues are split on contracted basis depending on who got original lead (me or the brokerage). It seems this is very different from what you thought it was. I am talking to BnB tomorrow to detail the numbers, we could conference you in if you wnat.

Click to expand...

I want to understand what the other shoe dropping would be, but from that info, it seems like a solid path.We are under a Broker who gives us a 70% share of any sale, and absolutely thrilled with that as we are just waiting out the time for my Wife to get a Brokers license. I would have to run a few more numbers above and beyond the chicken scratch in front of me right now, but it seems solid.

Where is the catch? Surely you have found a negative?

Click to expand...