Whether you choose to believe it or not, it is relatively easy to sell a “problem” property in a down real estate market. For that matter, it is easy to sell one in any kind of market scenario. There is a sizeable market for those looking to acquire a “less than attractive” home. Rehabbers, in particular, have a knack for taking one man’s trash and turning it into their treasure. Essentially, the problems that many believe to accompany such a home are in fact selling points for these individuals. In the event your marketing efforts prove fruitful and you find a potential buyer, you need to take the appropriate steps to close the deal. More often than not, they will be willing to take the property off your hands in exchange for attractive profits; you just need to know how to facilitate the sale.
Working With A Local Real Estate Investor
Whether you realize it or not, there are more than likely real estate investors in your area that would love to be involved with the sale of a problem property – your property. However, if they haven’t found you yet, it is time to be proactive. Take the initiative and seek out local real estate investors that could serve as the catalyst for your sale. If they don’t personally want it, they may know someone who does. Their flexibility and local knowledge could be just what you need to sell your problem property for top dollar in a short period of time; you just need to know where to find them:
REIA Meetings
The first and most obvious place to start your search is at your local Real Estate Investors Association. A quick online search will reveal both the locations and the times of their respective meetings. While most of these meetings will not require you to be a member to attend, you should expect to pay a fee at the door. Normally, if you are a first-time attendee, the feel will be very small – just a few bucks. However, if you continue to attend these meetings as a non-member, the fee will likely increase.
The range of investors that attend these meetings include everyone from landlords and contractors to rehabbers and wholesalers. Everyone with his or her finger on the pulse of the housing industry is welcome. Once you have committed to attending a meeting, you need to make sure you are prepared. Do not go empty handed. First, make sure you have business cards with your contact information. Hand them to anyone you are able to network with. Secondly, make sure to print out flyers. The flyers should include the following information:
- A picture of the property
- The asking price
- A description of the property
- Detailed information about the property
If the house is priced right, and located in a desirable area where it can easily be flipped, you will generate more interest than you will know what to do with. Again, some investors will view your problem property as a potential goldmine.
Host An Open House
Hosting an open house is a great way to generate interest in a property, regardless of its condition. Be sure to accommodate the schedules of local investors. You will want it to be at least two hours and at a time when everyone can make it. A good time to schedule an open house is towards the end of a workday, around 5 or 6pm. Do not schedule it for more than two hours, however, as it reduces any sense of urgency. Furthermore, having everyone there at the same time will manufacture a sense of urgency, forcing those that are interested to act quickly.
Conduct An Online Search
Another way to find local real estate investors in your area is to simply Google “real estate investors” followed by the area that you’re located in. For example, “real estate investors Atlanta.” You can also visit the websites for the REI Club or National REIA to find local investors near you. You can even visit the Craigslist or Backpage websites and look through the “Real Estate” Section for investor ads and contact the posters. Look for ads that read “We Buy Houses,” as these are typically investors.
Residential Redevelopment Companies
In addition to collaborating with local real estate investors, selling a problem property can be accomplished by contacting a redevelopment company. While they may not have been as popular in the past, residential redevelopment companies are making a huge splash in today’s market. Their presence is directly correlated to the influx of foreclosures the recent recession brought. Therefore, they are constantly searching for properties to develop and remodel. Not only do these entities specialize in buying problematic properties, but they simultaneously rejuvenate and rebuild entire communities.
While they are not as easy to find as local real estate investors, the nature of their business allows them to pay more. Begin your search for a residential redevelopment company on social media, Yelp, and Angie’s List, as you will be able to read up on reviews and conduct the appropriate research. These companies have also become stalwarts at local REIA meetings. It may go without saying, but mind due diligence when selling to anyone you are unfamiliar with.
Again, just like the open house, if you’re able to find more than one Residential Redevelopment Company, schedule them to look at your property one right after another. If they know they are competing for a property, they will be more proactive. These companies are purchasing entire city blocks, rehabbing them, and re-selling or renting them in order to rebuild and beautify entire communities. What makes you think they wouldn’t be interested in your property?
Quick Sale Auctions
Quick sale auctions may be the most foreign strategy enlisted to help sell problem properties. However, they are less complicated than you may have expected. You can hold a quick sale auction without investing a lot of time and effort. While you can expect to have minimal marketing expenses, they will be well justified when the house sells.
Investors looking to sell a problem property are advised to follow the 5-day quick sale auction strategy. The goal is to market the property for five days and on the fifth day, hold an open house for two hours. Attendees will have a chance to view the property and make an appropriate bid if they see fit. The idea, once again, is to manufacture a sense of urgency. Simply having all of the potential buyers in one area will force someone to take action, sooner rather than later.
Just because it is called a quick sale auction, does not mean you will need an auctioneer. In fact, the bidding process resembles that of a silent auction. Place an auction bid sheet in a room that is easy to congregate in (we recommend the kitchen). This sheet will facilitate the entire auction and will include lines to obtain the following information:
- Name
- Primary phone number
- Address
- Email address
- Bid
The sheet will serve as the focal point of the entire auction. On it, prospective buyers will place their bids and be able to see what the previous bids were.
Before you even begin to market your property, however, there is one important factor that warrants your attention in an auction. There are two types of auctions, an absolute auction and a subject to reserve auction. In an absolute auction, you agree to sell the house to the highest bidder, no matter what. In a subject to reserve auction, you can set a minimum price that needs to be met in order to sell the house. It is important to let prospective buyers know this information, as it will change their entire strategy.
Make The Property More Appealing
1.) Curb Appeal
The fastest and most effective way in making a property more visually appealing is to add curb appeal. That is to say, make the outward appearance of the property more alluring to any potential buyers. While this can be as extensive as you want it to be, there is a fine line that warrants your attention. You do not want to improve the property too much, as to make it unappealing to those who were looking to get a bargain. Essentially, reviving your problem property too much could push away potential buyers. Consider making small improvements that range from mowing the lawn to planting flowers. The impression you make can go a long way in attracting a buyer.
2.) Odor Control
While it may sound insignificant, odors can make or break a deal. While you are promoting a problem property, the last thing you want to do is neglect to address any disturbing odors. Introducing something as minimal as a candle or an air freshener may be all that is needed to mask or eliminate any problematic odors. Sometimes, the pleasant smell that replaces an odor can actually help sell the home.
3.) Remove Clutter
This should go without saying, but remove any clutter that occupies too much space in the home. Basic cleaning will allow suitors to view areas with little intrusion. This includes the space under your sinks and anywhere else they may need to venture. With odds and ends out of the picture, it is much easier to conduct a walkthrough. Furthermore, the house will be more attractive to anyone who is viewing it.
4.) Small Improvements
Small improvements, with careful limitations, should be considered. Again, just like curb appeal, you do not want to improve the property too much. You may want to consider sprucing up the paint or replacing the carpet to freshen the property up. Just a little bit of paint and carpet can add a ton of value to your property and will get you top dollar.
5.) Price It Right
As the single most important factor in selling a problem home, the price must be just right. First and foremost, your asking price needs to be fair. The second you try to gain a significant advantage over your potential buyer, you will be pricing yourself out of a sale. To make sure you are asking a fair price, compare your property with those in the same area and make it competitive. If you set the right price, a bidding war may even start between potential buyers. Their intrigue will only serve to drive up the price. Setting a high price right off the bat risks loosing buyers and the chance of a bidding war. Finally, be willing to negotiate and create a “win-win” transaction for all parties involved.
