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Hey tom,
I am curious about percentages. What is a good ball park percentage discount you want to buy a property on? Lets say it is 30% below market. That means you will need to pay the real-estate agents 6% of the closing costs. But at the same time, you want to move it fast. So do you list it at market value, or do you leap frog and list it below market to get rid of it?
If you list it (let’s say 10% below market), then that means you are 10% below market and then you’re taking a 6% commission fee as well, so your 30% deal will realize a 15% return.
What is typically your strategy on this? Closing costs really eat into the margins on the sale.
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Cyrus,
The main reason we write letters is to avoid this because you are right these (middlemen) take a piece when you buy and when you sell. But thats okay if there is room for everyone to be happy buyer seller.Agents make big mistakes too and the seller loses and we win. I may have a fantastic example to show you in a week or two as I have that very situation.
Other variables come in to play. I have the pressure of a 1031 and I may settle for a deal that is 20% below market or maybe close to market if the rents can be raised etc. The property matters too if its a rental that barely pencils but is on a magnificient large lot where there is room for more that may work for you.
You have to know that we don’t always get our wish on pricing but when you look and offer enough you’ll either find or break someones will to hold out for the max.
I am getting hammered with offers and complaints of if the house had this or that etc. Well now I am adding those things or fixing those objectionable items using these property hunters feedback to get highest price.
Tom
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