Case Study: Use a Real Estate Professional!
A couple years ago, Reel Property Solutions LLC sent out a direct mailer to homes with a bad roof. One of the homeowners replied back to us 2 years later! By this time the roof was fixed, yet there were other areas of the property that needed to be fixed up. This is a case study of why it is vital to use a real estate professional when determining a selling price.
During the initial phone call the seller states the home needs to be updated, the basement bathroom needs work, the basement could be finished, yet this is not a functional space for the occupants of the home. Reel Property Solutions, LLC went on a tour. This is what was found:
- Basement is not able to be finished due to low ceilings (lowest point was about 6’2.5”) and no egress windows. Not worth the time nor money for egresses nor finishing the basement since Rochester Building Codes states the ceilings must be 7 feet with 6’4” at the lowest point to account for the duct work, headers, and so on.
- Basement bathroom has 3 complete walls with 1 wall that is studs and electrical wires. This cannot be claimed as a bathroom due to the wall.
- Hardwood floors need to be refinished.
- Kitchen needs to be overhauled- very outdated. Cupboards were scuffed, counter tops worn down. Appeared the kitchen was about 30+ years old.
- Laundry in the basement not convenient since all the living spaces are on the main level.
- Upstairs bathroom needed to be updated and have new fixtures for the next homeowner.
- Unattached garage in good condition, close to the house, but needed a carport type of roof since homeowners said water may overflow the gutters and cause ice build up on the concrete.
- Small yard, needed a landscaper to come in and clean out the bushes/trim/dig out and put in new.
- Overall very solid structure and no foundation issues.
With this in mind, when asked what the homeowners were thinking about the selling price they stated “195K!” The homeowners were extremely enthusiastic about this price, so when asked how this was determined, they said “A flooring guy came to the house and said that’s about what we could get.” Then when Reel Property Solutions, LLC asked the name of the flooring guy and what flooring company, the homeowners suddenly had no idea who the person was, when they came over, how they found out about that person… yikes…. 
This is a classic example of why to use a real estate professional when assessing the selling price.
Why a real estate professional will aide in the smooth and successful transaction:
- Comparative Market Analysis (CMA): will give a breakdown of the surrounding neighborhood with what other properties have sold/pending/listing was removed, including other houses most like the subject property and the selling price, how long on the market, and other key features to determine the appropriate selling price.
- Can give advice about how to sell home. For example, if a homeowner doesn’t want to juggle having someone in the property for a showing at any given moment, perhaps have a few open houses and have the property be sold via auction (very different than a foreclosure auction!)
- Will be able to answer questions or to direct to the proper people to answer questions. For example, the flooring guy may not know what the market is doing therefore, they just guessed. A real estate professional, such as an agent, will have logical facts as back up for the answers.
- A real estate professional has access to the MLS which gives information about all homes on the market. The flooring guy has access to what type of beautiful tile for the bathroom. Clearly not the same thing.
- A real estate professional has almost every type of people in their contacts for a real estate transaction. Need a title company? Having issues with a lender? Got a sticky legal situation and need a reputable attorney? Remember, it is ultimately up to the homeowner to decide which resource they want, the real estate professional is not allowed to steer one way or another just because they suggested.
Reel Property Solutions, LLC wasn’t able to come up with a WIN-WIN scenario for this property. Fortune Builders has taught us that it is people first, profit second. Since the homeowner felt they could sell for a better price, they chose a national brokerage to represent their transaction. Remember, that even though the property ultimately sold for $172,300, that is not what the homeowner will actually pocket. If the commission payout was 6% of the sale price, that is $172,300×0.06=$10,338. Then there are the transaction costs which could be about another $7,000 depending on local, state, and national costs or if there was a split with the buyers for closing costs. If there is a cloudy title, that will definitely cost more than a free and clear title to be transferred. Then the amount leftover is not what the homeowner would pocket if they must pay off a mortgage debt. Take the remaining balance, which is approximately $155,000 and subtract the mortgage and (hopefully there is a surplus), that is the amount the homeowner would have. Compare this transaction to what Reel Property Solutions, LLC could have offered at $145,000. Sure, the homeowner would have gotten an extra $10,000 by listing on the market. BUT!… the angle to consider is did the homeowner REALLY gain anything from that extra 10 grand? There was the time to hire a real estate professional, they do their research, stage the property, have people come over to tour, the offer/counteroffer, etc. During that time, had the homeowner agreed to the $145,000, they could have been in a different home sooner. Also keep in mind the ending sale price didn’t come close to the $195,000 that some random flooring guy suggested. Now the homeowner is disappointed all around, no matter who they go with, because no real estate professional should accept a listing that is overpriced just to appease the homeowner. This will backfire! This is when properties stay on the market until the homeowner drops the price to a respectable amount. Always do your due diligence and always use a real estate professional for advice.
Reel Property Solutions, LLC is a real estate professional resource for many aspects, including how to price a property to sell. The process is straightforward: Contact us with any questions at 507-218-8788 or info@reelpropertysolutionsllc.com. Then a series of questions will be asked to determine if the property fits into our criteria or if there is another real estate professional resource that would be more appropriate. A tour and take pictures will happen. After that, sometimes the seller determines they have another avenue to sell, therefore we part ways. Sometimes Reel Property Solutions, LLC will put together a packet of information for the seller to determine how to proceed. Sometimes the offer is accepted. Sometimes both mutually rescind. Whatever the case, the mission is to CATCH A WINNER!
