Content of the material
- What is an off-market property?
- Hiring A Real Estate Agent To Sell A Home As Is
- How Much To Expect If You Sell Your House As Is Through A Real Estate Agent:
- Home Selling Tactics
- Holding A Home Auction To Sell A House As Is
- How Much To Expect From A Home Auction:
- Finding the Best in Cheap Properties
- Contact Real Estate Agents
- A Final Word On Real Estate Markets
- Approach Homeowners
- 1. Selling to a family member or friend
- Always sign a contract
- Understand tax laws
- What Types Of Properties make the Best Investments?
- Characteristics of Good Potential Properties to Flip:
- Drawbacks Of Off Market Properties
- Benefits as a seller of off-market deals
- Making Contact with Property Owners
- About Mark
- Selling Below Value
- Rocket Sister Companies
What is an off-market property?
An off-market property is simply a property that isn’t listed for sale publicly on the local multiple listing service (MLS).
There are numerous ways to find off-market deals and, in this article, you’ll learn the top 11 ways to find them.
Hiring A Real Estate Agent To Sell A Home As Is
Realtor’s often take a sales commission of 5-6%. If your home sold for $150,000, that would be somewhere in the ballpark of $7,500-$9000 before other closing costs. In 77% of home sales, the seller pays that commission.
To close a sale with the buyer through a real estate agent, more often than not, you’ll be forced to negotiate repair costs. These can range from 1-3% of the home’s value. Even before selling your home let’s say for the price of $150,000, you could end up spending between $1,500 – $4,500 on repairs.
That said, not all buyers are looking for a move-in ready home. Some see your home as an investment, while others might see this as an ideal and affordable opportunity to move into an area they like.
The majority of buyers will hire a home inspector to find any problems before making an offer. If they find anything major like a roof that needs repairing, there can be weeks or months even of negotiating between the seller performing the major repair or taking the cost of the repair out of the final sale price.
How Much To Expect If You Sell Your House As Is Through A Real Estate Agent:
With all of the factors mentioned above, it would be reasonable to consider that selling a house as is, valued at $150,000 through a real estate agent would be in the ballpark of $136,500.
Home Selling Tactics
If you’re going to sell your home below market value, use a BPO or other value determination and then set a listing price. Starting a below-value home’s listing price at slightly below market to see what interest it generates is a common selling tactic. If you’re really anxious to quickly sell your home below its market value, discount it to short sale prices or even lower. Short sale homes frequently sell at about 23 percent below their market values.
Holding A Home Auction To Sell A House As Is
Home auction companies do exactly what they suggest – they set up an auction for your house without any requirements, concessions, or extra leg work on your end. No negotiations for repair costs to factor in or any other work. Simple.
In a home auction, there’s no ceiling for bids. At the end of the day, buyers have the potential to bid beyond a property’s market value. Sellers even have the final say if they want to accept the final bid or not.
Before the auction, the seller sets the lowest price that they would be willing to accept. This is called the reserve. The recommended amount is 10-15% below the market value of your home.
If your home’s market value is $150,000, your reserve could be $135,000, which would be the lowest accepted bid for that property.
As always, when selling a house as is, it’s important to remember any outstanding costs that will come out of the closing price, such as remaining mortgage payments, closing costs like transfer tax, Homeowner Association fees, etc.
According to Zillow.com, home owners should expect to pay about 2%-5% of closing cost on the value of their home.
How Much To Expect From A Home Auction:
If you wished to sell a house as is, valued at $150,000 through home auction, it would be reasonable to expect a closing price of around $142,500.
Finding the Best in Cheap Properties
Buying cheap properties in this manner is a great way to ensure that you both save money and ensure a high potential profit through buying homes at bargain price. Finding the cheapest house requires a bit of searching, and that's where BankForeclosuresSale.com comes in handy. No matter what you're looking for, whether it's a single family home, luxury property or multi unit listing for rentals and investment, our database is full of cheap homes at low prices.
Contact Real Estate Agents
Finding a traditional, exclusive, off-market home requires a little homework and lots of networking. Once you pinpoint the neighborhood you want to buy in, you’ll need to come up with a list of top real estate agents and contact them about any office exclusive listings they may have.
A Final Word On Real Estate Markets
When buying or selling property, it helps to know where the market stands. As a buyer, you’ll want to purchase a home in a buyer’s market, as there will be an influx of available homes and less competition. But as a seller, you’ll be hoping that you list your house during a seller’s market, so there are fewer properties for sale and a substantial number of buyers interested.
However, regardless of the conditions in your area, hiring a real estate agent is the best way to navigate the housing market. Whether the market is strong or weak, you’ll want to have a leg up on the competition, and real estate agents have the knowledge and skills necessary to ensure that you do.
If you’d like help finding an experienced agent to work with, Rocket HomesⓇ can help you. All you have to do is fill out your contact information to connect with a prescreened partner agent.
If you’re looking to buy a home, a seller’s market shouldn’t necessarily put you off, but it can help you determine your next steps. In a hot housing market, you’ll find that homes disappear as soon as they hit the market. That means that instead of leaving your financing to the end, you should absolutely get preapproved as soon as possible, so you don’t lose out on what could be your dream home.
If there's an area or neighborhood you're particularly interested in, one option is to check in with homeowners directly. You may be able to find a lead by door-knocking or sending out mailers. Though it will cost you time and money—and won't guarantee success—there is a small chance at least one person will respond.
Don't rule out neglected properties, especially if you know you can afford to do repairs. Perhaps there's a homeowner who's so overwhelmed with the costs of upkeep—and one who never believed he could ever sell—that an unsolicited offer would be considered a blessing.
Just so you don't end up breaking the bank, make sure you print mailers that are both cheap and effective. After all, you want to seem as professional in your approach as possible. And you never know until you ask.
1. Selling to a family member or friend
Whether you’re sentimental or generous, you might consider selling your home to someone you know at a slight discount.
Note that even when you are selling to someone you know, it’s still a legally binding transaction. Perhaps the most common family transaction is parents selling their kids a home as a financial favor, but the specifics of this kind of transaction can be complex. Here are some things to note when selling to a family member or friend for less than market value.
Always sign a contract
Even if the buyer is your child and the formalities seem uncomfortable, it’s important to get everything in writing, just as you would with a buyer you don’t know. That includes documenting contingencies, purchase price and closing date.
Although you might not need a real estate agent to handle the marketing or bring you buyers when you’re selling to a family member or friend, you should still hire a real estate attorney to facilitate the transaction, ensuring you’re protected and that you’re following legal protocol.
Understand tax laws
If you sell a home to your child for more than 25% below market value, the IRS views the home as a gift. This means the buyer (your child) could wind up paying a gift tax on the discounted amount. If you’re selling to a child to help them out financially, consider the following options:
Offer seller financing: You can sell the home with seller financing, which allows you to offer better rates or terms than a traditional lender, which can make the purchase more affordable and save your child money.
Plan for future tax-free gifts: To avoid yearly gift tax limits, you might consider selling the house at $15,000 below market value, which is the annual gift tax exclusion limit. Then every year after, gift them an additional $15,000 per year until the amount you’ve gifted is equal to the initial discount you wanted to give.
Transfer property with a quitclaim deed: A quitclaim deed allows you to transfer the title of your home to someone for free. After transferring the home to your child’s ownership, if you want them to pay you a portion of the home’s value, they can take out a HELOC or a home equity loan to pay you back for the agreed-upon discounted purchase price. There are still tax implications with this process, so check with your tax professional before moving forward.
What Types Of Properties make the Best Investments?
An important part of choosing investment properties to flip is being able to locate them by common traits and characteristics. While vacant properties often have the lowest asking price, it is very probable that many non-vacant homes will also fit the criteria for a good deal. Most properties are not so distressed that someone passing by would notice them as a potential deal — unless they are on the lookout! Use the following list of indications that a property is being neglected to spot one in your farm area. You’ll begin to notice homes that probably have owners looking to sell, even if a “For Sale” sign isn’t there.
Characteristics of Good Potential Properties to Flip:
- Weeks or months of mail jammed in the front door or piled up
- Overgrown grass, hedges, and landscaping
- Excessive flaking exterior paint
- Rotted or exposed wood
- Lockboxes on doors, railing, or poles
- Boarded up basement windows
- Outdated exterior design
- Zoning/municipal notices posted on windows and doors
Most importantly, compare the home to the rest of the block. You’re looking for a wide gap in quality between the property and the rest of the neighborhood. If it looks like a good opportunity to add value, write down the address.
Drawbacks Of Off Market Properties
Off market deals are associated with so many benefits, it can be difficult to think about anything else. However, there are a few drawbacks associated with off market properties to be aware of:
Lack Of Availability: In light of the NAR’s new policies, there has been a significant reduction in the number of pocket listings that are bought and sold. While there are exclusions to the rules, availability is simply not what it once was.
Hard To Find: Given the availability changes, investors should ensure they are utilizing multiple lead generation techniques at once. Relying solely on off market listings could slow down your portfolio’s growth rate and make it more challenging to continue securing deals.
Inexperienced Sellers: One of the exceptions to MLS Statement 8.0 is for For Sale By Owner (FSBO) properties. These do not have to be marketed the same way as other listings; however, investors could find navigating an FSBO transaction more challenging depending on the circumstances.
Benefits as a seller of off-market deals
Many people may be asking, “why wouldn’t an agent list a property in the most visible place to attract the largest number of potential buyers and thus the greatest number of offers?”
The answer is often privacy. If the owner of an apartment building is looking to sell, they may not want to spook the tenants into moving out because then the building isn’t performing as well as advertised. If the building ultimately doesn’t sell, then the seller just shot themselves in the foot.
Additionally, many sellers’ agents will subsequently get a lot of interest from buyers, many of whom are simply kicking the tires and are not serious nor qualified to close on their property. Thus, keeping a property as a pocket listing will allow a seller’s agent to pick and choose whom to market the property to, which often makes the job of selling the property much easier for all parties involved.
In no particular order, let’s jump into all the various ways there are to find and source off-market deals.
Making Contact with Property Owners
Now that you have a list of names, addresses, and possibly phone numbers, it is time to develop a marketing campaign.
Below are a few techniques that have proven to be successful.
Send A Letter
For all addresses that you have, send a letter. One of the simplest and conversion-tested letters is as follows:
Re: 123 Main Street, Town, State, Zip
I am interested in purchasing your property. Please contact me.
Your Name Your Phone Number
Pretty simple, right? Most people over-complicate this step and write too many details. Quite simply, if the owner of the property has interest in selling, your letter cuts right to chase and also incorporates a level of curiosity — a key component of good marketing.
If you do not want to send these letters manually (printing and then hand writing envelopes), there are many great mail services that will automate the process for you. You will first need to put your addresses into a spreadsheet (such as Microsoft Excel) and then upload them to a website. Often times the cost is only a few cents over the price of a stamp. Check out Click2Mail.com and make sure to click on Letters & Flyers and follow the onscreen instructions.
I am a Real Estate Agent, Entrepreneur, an author and a Real Estate Investor. I am the founder of InvestFourMore, Managing Broker of Blue Steel Real EstateDon’t forget to follow @InvestFourMore on Youtube
Selling Below Value
Before selling your home below its market value, ensure you’re not selling it below any existing mortgage balance unless you have no alternative. Selling your home below the balance of any mortgage you have on it is a short sale, and you’ll need your lender’s permission for that. Additionally, to determine your home’s actual market value, you may want to obtain a real estate broker’s price opinion. A BPO helps you list your home below-market at a price point that best serves your needs.
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