I need a realtor's help!!!

[Poohs Pal]

I have a realtor coming to my house on Monday. The neighbor has known I wanted to sell my home for awhile. He came over last week and said that he and his wife want to come over and look at my home. His wife has never been in my house since the building stage(about 1994). Anyway they want to buy my home if it works for them and turn it into an elder care home. They have a group home next door. My home allready has H/C access and could have 5 bedrooms. Now here is where I need help. He wants for us NOT to use a realestate agent and just use the free attorneys provided by GM for the contract and utilize the expertise of the bank. Ok, I have no clue about the in's and out's of selling my home. I want to make sure everything is done properly. I know I would benefit his way by cutting out the money spent to the realtor(over $17,000) and he could possible benefit by asking me to lower the cost of the house to reflects my savings. Is this is good idea to sell his way. He is a nice person and I know wouldn't purposly do anything shady. Susan

 

[figment52]

While it sounds good to save him some money ask yourself "who is looking after my interests" - you can bet it isn't someone brought to the table by the buyer, no matter how nice of people they are. At least get an attorney to represent your side of the transaction.

 

[kristen821]

I would get you house appraised so you get the money you deserve and hire and attorney for yourself. There isn't a need for a realator, but you definately want your own attorney, which doesn't cost much.

 

[mickeysgal]

He wants for us NOT to use a realestate agent and just use the free attorneys provided by GM for the contract and utilize the expertise of the bank. Ok, I have no clue about the in's and out's of selling my home. I want to make sure everything is done properly. I know I would benefit his way by cutting out the money spent to the realtor(over $17,000) and he could possible benefit by asking me to lower the cost of the house to reflects my savings. Is this is good idea to sell his way. He is a nice person and I know wouldn't purposly do anything shady. Susan

Susan, you can still list with a real estate agent of YOUR choice. You can, if you want, specifically exclude these potential buyers from your real estate contract so that if you do sell to them you are not obligated to pay any fees to the agent since they approached you prior to listing with the agent.

That said, if you do decide to FSBO with them, I would contact a lawyer of YOUR choice, not theirs, to represent you and help you through the FSBO process. Yes, they're probably trying to lower their bid price by the amount of the real estate fees by encouraging you to not list with an agent. Also, remember, that they may not ultimately want the house and if you don't list with an agent (per their request), you've now tied up your house and have wasted time getting the house listed. If you're serious about selling, nows the time to list as spring is traditionally the height of the market. Do whats in your best interest, not someone else's. If they want the house, they'll buy it regardless of how its listed.

With these potential buyers wanting the house for a commercial business, the inspection process, and stuff they have to do to make it compatible for that business, you may want to seriously consider gathering professionals (lawyers and RE agents) around you so that you're not navigating this alone.

Good luck to you!

 

[The Mystery Machine]

I am not a realtor but I would get a house appraisal first. Or do you know what homes are selling for in your area? Is it a "hot" market or are houses sitting?

Second a realtor is coming to "look" for them...hmmm....and no one on your side? That is a little rough considering they want this for commercial use.

Were you planning on selling this season? If you were I would still call in a couple of realtors to interview to keep your options open.

I would certainly sign a contract and have them put down a non-refundable "good faith" deposit if you were planning on listing. You will be losing out on valuable high-market timing.

 

[honeymom]

You can interview realtors to help you get an idea of the price of your home (they will show you comps). You don't have to sign anything with them (they may push you to sign a listing contract on the spot, but just don't do it and say you need to think it over). You can also use the approach where you exclude these buyers specifically from the contract with the realtor.

Definitely get your own attorney to make sure you are protected. I don't think the other side is necessarily trying to do anything nefarious. I think that they just want a lower fsbo price on the home. But, you still need to protect yourself.

As to appraisals, I don't know that they are always a good idea before you put the house up for sale. They tend to come in at contract price (once you have sold) and can sometimes be a bit off base (too high/too low) when there is no contract on the house. The appraiser's data doesn't always move as quickly as the market does.

 

[chris1gill]

We sold our house without a realtor, but I would not lower the cost of the home to do so... take a thousand dollars off if you really have to, but why should YOU pay for not using a service you might find beneficial?

Anyhow, make sure you have an attorney who can handle the transaction... the buyer has to set up a home inspection... meanwhile write up a purchase and sales agreement, selling the house as is, set a closing date & be done with it all... that's what we did, worked great

 

[Poohs Pal]

I did have a realestate(remax) agent do an apprasil last October/November. I am getting a new apprasal on Monday from a different agengy(Keller/Williams). The last person kept pushing a"if you want to sell quik price" at me even though I told her I wasn't in a hurry. I don't need to sell quik and I want a good price. This was from a reputable agency by the way. She did tell me a few things I should do to improve my home. They were minor and easy to fix. As far as an attorney both the buyer and myself have free access to General Motors legal service. The only problem here is that no one I have spoke to has been happy with GM's free service, on other matters. Would much be required from these attorneys? Another advantage this buyer would have is I have a spiltable 8 acres and he has a least 10 acres.There is a lot between mine and his property and he owns another seperate 2 acres. It is a narrow section but long enough and wide enough to put in a road(allowable here). He could then split my property and his and have 2 pieces of land to sell of at lest 4 acres each. He had spoke with my son about this about a year ago when he new I wanted to sell and wanted to maybe work out a deal where we could put in a road and then each sell our splits. I never did approach him about this. Susan

 

[CarolA]

Just an FYI. In lots of states a "group home" is not a commercial business that requires rezoning.

 

[Poohs Pal]

I believe there is no special zoning here. The neighbor has a group home for young trainable impaired and down the road someone built a beautiful home for alzeihmers(SP) patient's needing minimal assitance. She couldn't find a nice place for her mom so built her own. Susan

 

[tar heel]

When we sold our first house, we had a friend who did a tiny bit real estate who thought she had a buyer specifically for our house. She didn't normally take listings -- just worked with a few clients that were looking. I guess she was a buyer's agent, but it was 20 years ago before that came in vogue.

We had the house appraised by her and two other realtors. We then entered into a contract with her that was specifically for showing the house to her one client. She would receive a 2% commission and we would reduce the house from the asking price by 2% as part of the agreement.

Her client bought the house. It was wonderful for us, as we didn't even clean out closets much less do cosmetic things to get the house ready for sale. This worked for us b/c we had a very high demand house (small, inexpensive in a place where the houses were big and very expensive). It sounds like you also have a property that this particular buyer wants. This was the first time we had sold property and really needed someone to hold our hands.

 

[honeymom]

I did have a realestate(remax) agent do an apprasil last October/November. I am getting a new apprasal on Monday from a different agengy(Keller/Williams). The last person kept pushing a"if you want to sell quik price" at me even though I told her I wasn't in a hurry. I don't need to sell quik and I want a good price. This was from a reputable agency by the way. She did tell me a few things I should do to improve my home. They were minor and easy to fix. As far as an attorney both the buyer and myself have free access to General Motors legal service. The only problem here is that no one I have spoke to has been happy with GM's free service, on other matters. Would much be required from these attorneys? Another advantage this buyer would have is I have a spiltable 8 acres and he has a least 10 acres.There is a lot between mine and his property and he owns another seperate 2 acres. It is a narrow section but long enough and wide enough to put in a road(allowable here). He could then split my property and his and have 2 pieces of land to sell of at lest 4 acres each. He had spoke with my son about this about a year ago when he new I wanted to sell and wanted to maybe work out a deal where we could put in a road and then each sell our splits. I never did approach him about this. Susan

A realtor can do a comparative market analysis, but it is not the same as an appraisal. However, it might be a more accurate reflection of current market conditions.

I am a realtor. You should interview several to get a few different opinions. Back when we sold a house in Connecticut, we interviewed 3 agents. 2 agents gave exactly the same pricing suggestion. The other came in $50,000 lower. She was using comping info of houses with some serious structural defects in her CMA that was lowering the price and trying to use them to argue for a quick sale. We went with one of the other two.

At the same time, there is definitely a problem in our industry with realtors who will try to "buy" listings. They will suggest a price that is high just to try to get the listing. Then they will keep lowering your price through price reductions to the point that you have sold your house at the lower price anyway and it has taken you a lot longer to get there.

You are really trying to judge the value of the comparative market analysis done for you by the agents to determine a "fair market value." That is done by looking at the similar houses in the area that have already sold and looking at current market conditions (i.e. competitive listings, a slowdown in home sales, etc.) to come up with that number. Unless the housing market is booming where you are, don't expect to get more than similar listings have gotten recently.

I think that you should look for a good real estate attorney and not worry about the free ones. Many real estate attorneys will charge a flat fee for closings and they aren't nearly as expensive as what you will pay if you wind up paying a commission on the home.

While you don't have to lower your home price to make up for the fact that you aren't using a realtor, fsbo's usually go for somewhere in between what a realtor sold home would go for and what it would cost without their commission. Really, the best advantage to a private deal (even if it is a bit lower than a realtor could get) is that you don't have to worry that your house won't sell. I once sold a coop. I could have put it on with a realtor who was suggesting $100k as a price. I wound up selling it to a friend for $83,000 cash. While it seems like a big difference, I had babies at the time, could not deal with keeping the place clean for showings, had no guarantee that the agent would get the $100k (places were comping around $90 although the market was picking up) and still would have had to pay the commission.

I would want to talk with an attorney re: the land split that the neighbors want to do. I'm not a land expert and don't know anything about your state. Something does sound a little funny there though. I am wondering if the combining of lands, putting in the road, actually makes your piece of land more valuable than you realize. Just something to discuss with your attorney.

 

[kami2199]

A realtor can do a comparative market analysis, but it is not the same as an appraisal. However, it might be a more accurate reflection of current market conditions..

I think you gave very good advice, but I'm wondering if you could explain this comment to me. Mainly, why would you think that an agent might give a more accurate reflection of market conditions. Isn't it an appraiser's primary responsibility to study market trends and support their conclusions based on those trends? And further, what happens if everyone agrees to the price the realtor says it's worth and then it doesn't appraise? I'm not trying to start a realtor vs. appraiser debate here, I'm just curious about your comment.

Ok, I just went back and read about the land issues...I think this is right up an appraiser's alley and most likely an attorney would want to hire one to do a feasibilty study on that. They would be able to determine what the highest and best use (most profitable) for your property is and whether or not the road would add or take value away from the property. I vote for investing some money into both a real estate attorney as well as a very reputable appraiser that has experience in these sort of situations.

 

[mickeysgal]

I think you gave very good advice, but I'm wondering if you could explain this comment to me. Mainly, why would you think that an agent might give a more accurate reflection of market conditions. Isn't it an appraiser's primary responsibility to study market trends and support their conclusions based on those trends?

A real estate agent isn't going to give you an appraisal in the formal sense of the word, but rather a market value assessment. Here's where I take issue with the way real estate agents assess a home. Some agents, not all, will assess your home and tell you what you want to hear - in order to get you to list with them. They dangle the carrot, so to speak. Then, when comes time to list, they may suggest a lower price for the quick sell and their easy commission. Its happened to us. Twice. With us, they've shown us comparibles that they wanted us to see and they conveniently left off those that they didn't want us to see.

Unless you're savvy to whats going on around you, you could very well be leaving money on the table that you had no clue was there. Pick your agent carefully, carefully, carefully.

Let me say that not all agents are like this. I have one that I'd list again with a heartbeat - he's honest, fair and reasonable, and not afraid to work to get you the price you need. The others I've dealt with - I wouldn't touch again with a ten foot pole.

 

[mickeysgal]

And further, what happens if everyone agrees to the price the realtor says it's worth and then it doesn't appraise? I'm not trying to start a realtor vs. appraiser debate here, I'm just curious about your comment.

When you are under contract, one of five things can happen when the home doesn't appraise out with the buyer's mortgage lender:

1. The appraisal is lower than the contract price. The buyer, who doesn't want to lose the house, comes up with more cash to put down to meet the contract price minus the max mortgage amount that the bank is allowing.

2. The appraisal is lower than the contract price. The seller, who doesn't want to lose the sale, drops the already negotiated price down to meet the appraisal price.

3. The appraisal is lower than the contract price. Neither the buyer or seller will budge and the contract fails due to the buyer not being able to secure financing.

4. The appraisal is higher than the contract price. The sale goes through and the seller realizes they've asked too little for the house and now have left money on the table, but the house is sold and they're done with it.

5. The appraisal exactly matches the contract price. The house was priced dead-on or the mortgage amount is low enough such that the bank feels that in the event of a foreclosure, they will get their money out of the house.

 

[The Mystery Machine]

Since you added the "land piece" I would not go for a free attorney.
I would hire someone good. Your situation is too complicated to go it alone.

 

[SillyMe]

If you want to sell it to your neighbors, have an appraisal done.

 

[kami2199]

As to appraisals, I don't know that they are always a good idea before you put the house up for sale. They tend to come in at contract price (once you have sold) and can sometimes be a bit off base (too high/too low) when there is no contract on the house. The appraiser's data doesn't always move as quickly as the market does.

Geez, I guess I'd better do a better job reading through the posts! This is most likely your answer to what I questioned. I want to address this a little bit though from a different perspective.

First of all, unless you have a cookie cutter with numerous comps that are exactly the same and have sold for the same price and you are in a steady market with little to no decline/appreciation, an appraisal may not be an exact number that your property is worth. An appraisal is an estimate of value based on prior sales and looking at current market conditions. It is much safer to go back in time and see what houses have sold for - typically the last six months unless there is a lack of comparable sales in your area. They will also take into consideration things such as current interest rates, employment opportunities, foreclosure rates, current listings, etc. As far as an appraiser not having the data to keep up with current market conditions - there is no excuse for that and that is why I tell you to find a reputable appraiser. As far as an appraiser coming in at contract price - again, an appraisal is an estimate of value and if an appraiser claims to be good enough to tell you that your house is worth an exact number and not a couple of thousand more or less, stay away from them (unless it is a cookie cutter as I referred to above). I don't care what anyone says, not an agent nor an appraiser are THAT good. Realistically, if the industry didn't put so much pressure on appraisers to get an exact number, most would give you a probable range that your house will sell for. I'm not talking a huge range but a range nonetheless.

To address an appraiser bringing a property in a contract price a little more...it does not mean they are just hitting the value so to speak. Say I did an appraisal for a couple wanting to sell their home. I have a minimum of three comparable sales that when adjusted out say this house should be worth somewhere between 100K and 105K. I put a number of 102K because after looking at the comps I decide it is most like the one that adjusted at 102K. That is not to say that 100K would be too low, or 105K would be to high. But, since I have to put a number on it, I give that comp the most weight, while considering the rest and say your house is worth 102K. Does that mean if a ready, willing and able buyer comes along and offers 104K they are offering 2K too much. NO! Actually, they are the market and the market is what drives the real estate industry. So, they have this offer of 104K and I get the appraisal from the bank for lending purposes. I look through the comparable sales since the time I did the last appraisal, I take into consideration all factors that I mentioned above, I adjust the comparable sales out and I still come up with 100-105K range of value. I go ahead and give them the 104K because they are the market and that is what the market is willing to pay and it falls within my range. Make sense? Now, if they offered 115K for the same property and I still came up with that range, would I go out and try to find different houses to make it worth the extra money? NO! I found the best possible comps out there and I'm not going to search for houses that are not like my subject, or manipulate my adjustments just to hit the contract price. Same could be said if they sold the house for 90K. If that house did sell for 90K I most likely would not want to use it as a comparable sale later though because I know it sold below market value or vice versa if it sold for 115K.

So, my new question is this - when saying that an appraisal can be a bit off base, are you saying that an agent will give a number that is not off base? I guess the way I look at it is an appraisal or a CMA are both estimates of what today's market will pay for your property. I agree with the person who said that alot of times agents tell you what you want to hear in a CMA - a show me the money type of thing - just to get the listing. It only hurts the seller as they have wasted valuable marketing time as the home is overpriced. Or, maybe the CMA was underpriced because the agent has no idea that by subdividing your land, it's highest and best use has changed and it's now worth much more. Get an appraiser and do it right the first time. I'm not defending all appraisers out there because of course every profession has their bottom feeders and the appraisal industry is no exception. I'm also not saying that agents are always wrong in their BPO's or CMA's either because there are some that are right on. There is one in my area that I wish I could talk into getting an appraiser's license because she has such a great understanding of it that she would make a great appraiser.

 

[kami2199]

When you are under contract, one of five things can happen when the home doesn't appraise out with the buyer's mortgage lender:

1. The appraisal is lower than the contract price. The buyer, who doesn't want to lose the house, comes up with more cash to put down to meet the contract price minus the max mortgage amount that the bank is allowing.

2. The appraisal is lower than the contract price. The seller, who doesn't want to lose the sale, drops the already negotiated price down to meet the appraisal price.

3. The appraisal is lower than the contract price. Neither the buyer or seller will budge and the contract fails due to the buyer not being able to secure financing.

4. The appraisal is higher than the contract price. The sale goes through and the seller realizes they've asked too little for the house and now have left money on the table, but the house is sold and they're done with it.

5. The appraisal exactly matches the contract price. The house was priced dead-on or the mortgage amount is low enough such that the bank feels that in the event of a foreclosure, they will get their money out of the house.

I realize this but who really wants to mess with these things if it could have been avoided in the first place? And, what does it do to the comparable sales selection when a buyer comes up with the rest of the money to meet the original sales price? It makes it look as if the market is going up when in fact it it is not. As far as it being underpriced, same thing. Makes it look as if market is declining when it is not.

ETA - and a lot of agents will pull that comparable that sold higher due to the borrower paying the extra out of pocket when doing a CMA on a house. Not all, but a lot of them do. So, then you think well, that house is like mine, mine should be worth that much. So they get some sucker to buy it for that much and the appraiser, who is armed with the information about the sale, appraises it lower than contract price. Who is the bad guy then - 9 times out of 10 it's the appraiser. Or on the flip side of that you get some form filling, number hitting appraiser that manipulates the report to attain that value and now you have two homes that have oversold and are polluting the comparable database. A good appraiser will be able to recognize these things and will have interviewed the parties involved with the sale to get correct information. In my case, I figure if it walks like a duck....I won't use it at all.

 

[janey99]

I am a lawyer, although I try not to play one on this or any other site!

Even an appraisal is not going to reflect the value of your piece of property to the particular person that you have mentioned wants to buy it - it sounds like your property represents a donut hole or corridor that, once purchased by this particular buyer, makes all the parts of HIS existing whole much more valuable. A traditional appraisal just identifies a range of value to the average "disinterested" buyer. You said you didn't think this guy is trying anything "funny," but you owe it to yourself to get a good lawyer who can help you negotiate this unique potential sale.

What if you sold to this guy for a song, and you found out that dropping your last piece into his puzzle allowed him to turn around and sell his ENTIRE parcel for a giant profit? You'd be kicking yourself forever!

I DO NOT recommend using free GM lawyers, either!

Good luck -

Jane