This is a follow up to last week’s post on selling your home fast to flippers or vultures. Based on some of my own experiences, it covered the worst way possible to sell your home fast and also explained what’s driving those economics. There was actually way more material on this subject than I could comfortably pack into a single blog post. Hence, this follow up where I cover a few other options – some better than others.
Realtors Who Guarantee They Will Sell Your Home Fast
I won’t spend any time on this because I’ve actually covered it in detail before: Guaranteed Sale Programs: Real Estate Agents That Buy Your Home If They Can’t Sell It. Suffice it to say this is a pretty bad option.
New Real Estate Business Models
This is a variation of the flipper/ vulture buyer. Everyone and their uncle is jumping into the business of buying homes on the spot for cash – both established real estate players and new entrants via hundreds of millions of dollars of venture capital. Just to give you a sense of who some of these players are:
- OpenDoor
- OfferPad
- Zillow Instant Offers
- Redfin Now
OpenDoor and OfferPad are examples of some of the new “quick cash” business models being funded by venture capitalists. I’ve previously written about how they operate: Hundreds Of Millions Pouring Into New Real Estate Business Models. As I explained in that post they are going to try to buy your home at some kind of discount but, presumably, not as bad as a vulture. I also pointed out that you could try to take advantage of their model if you have an outstanding grasp of what your home could get on the open market.
Zillow Instant Offers and Redfin Now are similar in their concept. It’s less clear how their offers compare to what you could get in the open market but, let’s face it, they are in this to make a profit. Zillow doesn’t go into a lot of detail yet, but, as Redfin explained in an August 9 press release, “All 17 of the Redfin Now purchases in the first quarter are now sold, and every Redfin Now home has sold for a higher price than the company paid for it.” While that may be true they are currently losing money on this business segment, which could just be a function of the fact that they are operating sub-scale with overhead.
Selling Your Home The Old Fashioned Way But Pricing It Right
If you need to dump your home really, really fast – like get cash in your pocket in 2 weeks – then there is a good chance this may not work unless you can get a cash buyer. There are plenty of cash buyers out there but if a good buyer comes along and needs a mortgage that can add 45 days to the process. However, if you can tolerate a financed buyer then putting your home on the market can be a really good option. And it doesn’t mean it has to take a long time to sell. Remember, I recently posted on how, earlier this year, 30% of new listings went under contract in the first two weeks: Chicago Real Estate Market: How Fast Homes Have Been Selling In 2018.
I have no doubt that the homes that sold in the first two weeks were priced either close to or below the market. I can assure you that homes priced well above the market usually linger. On the other hand many realtors intentionally or unintentionally price homes too low and are dependent on de facto auctions to bail them out. The hope is that multiple bidders will hit the market price. However, I think that hope is a really dangerous strategy.
Let me give you the recent example of a house we sold at 4854 W Cullom for $577,000 in 21 days after initially listing it for $599,850. All the other agents the sellers spoke to had suggested list prices between $450 – 490K. I don’t know if they just got it wrong or if they were intentionally looking for a really fast sale but if it had been listed at even $490K do you really think that multiple bids would have gotten a $577K sale price? Although it’s possible what is more likely is that buyers would have looked at that list price as something near what the sellers were looking for, thinking that a 10 – 20K premium would do the trick. A $550K list price might have worked but anything lower than that would have just been way too risky.
A better approach to getting a quick sale at the highest price is to list the home just above what you think it will sell for – which should be at the upper end of the range of suggested list prices. Then analyze the data and feedback that comes in and be brutally honest. Don’t waste time in deciding to cut the price if it appears that nobody is going to make an offer any time soon. This is a little different than holding out for the highest price but it strikes a reasonable balance between timing and price.
#HomeSelling #RealEstate #Flipping
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.