Zachary A, Other/Just Looking in 60622

What are agents telling sellers when they put their property up for sale in the current market?

Asked by Zachary A, 60622 Fri Oct 12, 2007

Question is in reference to how the agent comes up with a competitive list price in a down market. How long are sellers being told they can expect to have their property on the market? I am looking for a multi-unit rental property in Logan/Humboldt area. I am trying to find the best deal to achieve positive cash flow, but in my initial search I find many properties seem listed much too high to achieve this even with upgrades. Generally what percent difference can I expect from the list to purchase price. Small sidebar, Is Logan/Humboldt area still a good location to look for investment rental property?

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Hi Zachary:

Logan/Humboldt area is teeming with multi-units and there is a good rental market there. However, as an investor you should know that even in Logan/Humboldt (which is still up and coming), where prices tend to be a little more depressed due to still-higher than average crime pockets (but are appreciating), it is very difficult to attain positive cash flow with an investment. What you do get with multi-units in most cases is a faster build of equity, so sometimes, depending on your financial situation, a little negative cash flow can quickly turn around into an profit-producing property.

Of course, it all depends on your financing and your individual situation. It's best to meet with a tax/financial adviser to evaluate whether or not a) you can take the negative hit; b) it would be financially beneficial for you in the long-run.

Logan/Humboldt area is still many years away from gentrification, but because it's still an area where there are many rentals, it could be beneficial for you as a investor.

As for percentage difference from list to sale, in Humbolt/Logan area, the average list v. sale price percentage over the last 3 months for multi-family (2-4 units -- don't know if you're looking for larger than that) has been about 95% (with very few below that, and a few actually closer to or even over ask), and the average market time about 100 days.

But, it is important to note that the average list v. sale price percentage should not be the sole meter used to formulate a fair purchase price. Each case should be considered individually, with true comps sold within the last 3 months used as part of the process.

Good luck.
3 votes Thank Flag Link Fri Oct 12, 2007
Patti Pereyra, Real Estate Pro in Chicago, IL
MVP'08
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Sellers sometimes need market validation before they are ready to accept that their price needs to come down. It is a tough nut for many sellers to swallow, believing that they should be able to sell more. They sometimes hold on to hope that there will be one buyer out there who will love their home enough to pay their price.

When sellers are firmly unrealistic, we walk away from the listing. If a seller seems reasonable to listen to market feedback and their desired price is not grossly over the top, we will try to work with them. We try to give them feedback immediately from broker open about comments made on pricing. We montior web hits and provide comparison data to the volume of hits generated by other properties.

We will walk from a grossly overpriced lisitng; not all Realtors will.

We provide firm and honest feedback to sellers who are realistic about hearing the market speak.

The result is that some prorperties on the market are overpriced and some are not. For this reason, there is no standard list to offer price ratio that is correct. The correct offer is the price and terms that you are willing to pay after due consideration of the comps and activity of the local market. A local Realtor who is full time, knows the inventory and will work hard for you is your best ally.
3 votes Thank Flag Link Fri Oct 12, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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It all depends on where in the country you are....I would be cautious about anyone giving you a specific timeframe of having the ability to sell a property.

You need to have a tight handle on actual costs in your area before you get started looking for rehabs, if that is what you are looking for....to get an idea, visit this page on my website, http://www.iansellsnola.com/gpage8.html.

Note, this is for the New Orleans area, but you ought to have a similar set of numbers on paper / in your head when you are evaluating properties.
Web Reference: http://iansellsnola.com
1 vote Thank Flag Link Fri Oct 12, 2007
Zachary:

You said, "...but in my initial search I find many properties..." Are you searching for income producing property without a Realtor? Or is it you and your Realtor are looking?

Mr. Gary Keller, Chairman of Keller Williams, will not buy investment Real Property without a local (as to the location of the property) Realtor. Maybe good food for thought.

Also, look at this web site for detailed information: http://www.millionairesystems.com/pages/
0 votes Thank Flag Link Fri Oct 12, 2007
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