How to Buy Foreclosed Real Estate by Theodore J. Dallow Don Ayer & Dick Pas

Author:Theodore J. Dallow, Don Ayer & Dick Pas
Language: eng
Format: epub
Tags: ebook, book
Publisher: Adams Media, an imprint of Simon & Schuster, Inc.
Published: 2008-07-15T00:00:00+00:00

CHAPTER 15

Preparing for the Sale

NOW THAT YOU HAVE done the improvements and upgrades, it is time to sell—unless you bought the property as an owner occupant or are holding it to rent. Most folks will not keep the properties they acquire because they knew from the beginning that they would not hold them as rental properties or for sale into a later/better market. (Holding for sale into a better market is the right idea only for highly attractive properties in terrific locations.) So let’s assume it is sell time for your property.

So, how are you going to do it? Will you do it on your own, as a “for sale by owner” (FSBO) deal? Will you use a limited-service broker, or will you use a full-service real estate broker? Here are your options.

For Sale By Owner (FSBO)

The owner puts out a sign and places ads in the local newspaper. There is no commission involved because there is no real estate agent involved. And there is no multiple listing service (MLS) exposure. MLS is the information system owned by a local group of real estate brokers to make that property available for sale by every member broker and sales associate in its membership, according to MLS rules, including sharing or splitting of commissions. If the property is entered in MLS, every member broker and their sales associate in the area has the chance to sell a property and be compensated for doing that.

But with the FSBO option, that exposure is not there. FSBO is for those who will not pay for anything other than the most limited market exposure. Some FSBOs sell, but it generally takes many more days on the market, and it is highly unlikely that very restricted market exposure will produce a satisfying price. The property owner is responsible for all marketing, selling, and negotiating, as well as lending, appraising, and inspection issues, contract forms, drafting, and all aspects of closing. Most FSBO sellers have sold fewer than three properties in their lives.

Limited Service Brokerage

There are many types of limited brokerage available, all at a discounted commission. All put property into MLS for an up-front fee and charge the balance of their total fees at closing. The seller usually does all the advertising, showing, negotiating, and selling except proofing the offer to purchase, which is done by the broker. This system relies on the MLS system exposure to produce a buyer for the property. The seller pays a commission, which is higher if another MLS broker finds the buyer, but is less than if a full service brokerage is used.

Full Service Brokerage

Almost all the high-profile real estate companies are full-service brokers. Full service means those firms do everything to produce a sale. The seller only has to approve the offers to purchase presented and sign documents at closing. Commissions are typically 6 to 7 percent of the final sales price.

The listing company lists at whatever commission schedule it charges, and the selling company, usually called a co-broke or selling broker, gets a split of that commission, usually between 2.

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