real estate contract for sale by owner
real estate contract for sale by owner
Get

real estate contract for sale by owner

Get Form

FAQ

How do millionaires make money in real estate so quickly?
How do millionaires make money in real estate so quickly? Is it luck, their parents’ wealth, or is there some sort of science to it?First, you need to understand that there are dozens of ways to “make money in real estate.” Some take a long, long time. Others don’t.However, you also need to know that some of the “under 30” kids claiming to be millionaires aren’t. (Oh, sure, some are. You can be.) There are some people who make money selling courses—expensive courses—and they like to promote themselves with pictures of themselves standing in front of mansions, in front of very expensive cars, on fast boats surrounded by nearly-nude bikini-clad women, and so on. So, don’t pay attention to those claims. There’s usually no way to verify them. However, that really seems to be the way some of those folks have made most of their money. They do a few successful deals. Then they become “gurus.” They have a $1,995 course. A $2,995 “boot camp.” A $500-a-month “Inner Circle.”Here’s one list of “The Top 100 Ways to Make Money in Real Estate.” The list is worthless from a “how to” perspective (though the site itself is very good, with lots of information), but it demonstrates the range of real estate strategies. Also, keep in mind that many people will start off with one strategy, then use another . . . either when the market changes or when their circumstances change. It’s also important to choose a strategy that you’re comfortable with. For example, some investors pursue short sales and pre-foreclosures. Others really don’t like doing that.And before we finally get to “the answer” (or at least some of them), understand that one way to make a lot of money quickly is to use leverage. And, often, the more leverage involved, the riskier the investment can be, or can get. Still, here are a few techniques that some people have used:WholesalingBecome a real estate wholesaler. That’s a quick technique to make money, starting with little money. Note: Some real estate investors don’t consider this “investing.” And it isn’t. You’re not actually purchasing, renting out, or selling real estate. Still, this is a way to make money—sometimes a lot—quickly.A real estate wholesaler puts a property under contract—generally at a price substantially below what would be considered market value. The contract is assignable and that’s what you do: You assign the contract to a rehabber or another investor and charge an assignment fee.Example: You find a property that in fixed-up condition (ARV, or after-repair value) would sell for $550,000. It requires about $90,000 worth of work. You can put it under contract for $305,000. You do so, you now have a contract with the owner(s) to buy the property for $305,000. The contract is assignable (most contracts, including real estate contracts, are assignable unless they specifically say that they’re not). You find a rehabber willing to pay a total of $330,000 for the property: $305,000 to the owner and $25,000 to you as your assignment fee: For the rehabber’s right to take over your role as purchaser in the contract. You make $25,000. I know people who average $23,000-$26,000 per deal. I know others who average $5,000-$7,000 per deal, but they may do 20–30 a year.Your investment: Probably $100 or less. Remember: You’re not actually buying the property, so there’s no 20% down or 10% down or whatever. Instead, there’s an earnest money deposit. Many wholesalers use $100. Some use less. But if your assignment contract (the one between you and the rehabber) is written properly, you can even get your $100 back.RehabbingRehab houses. This generally isn’t for raw beginners. Learn wholesaling first. Or work with some rehabbers. Also, understand that the reality TV shows that show rehabbers (all the “flipping” programs on the air) you see are highly fictionalized. Still, there’s good, relatively fast money that can be made. Using the wholesaling example above, suppose you’re a rehabber. You pick up the property for $330,000. You put $90,000 into it, and you sell it for $550,000. The rehab process, if done properly, might take 10–15 weeks. Allow another 60–90 days to sell it and close. And you’re going to have a bunch of expenses. The main ones will be financing from either a hard money lender or a private lender. You’ll also want to maximize the sales price, so you’ll use a real estate agent. Still, you might make $75,000, plus or minus, on the rehab. Where I am, rehabbers typically do one at a time. But in other areas, where prices are lower and the profit might be around $25,000, rehabbers might do 2 or 3 at a time.Mobile HomesBuy and sell mobile/manufactured homes. This is like rehabbing, but with a few different profit centers. First, you buy with cash, getting a substantial discount off the asking price. (The secret is that most mobile home buyers want to finance the purchase, but can’t. This reduces the number of actual, available purchasers.) Drive through a mobile home park. You’ll see signs in the windows offering to sell for $25,000, $30,000, or whatever. (Can be a bit lower, might be substantially higher. New, really nice manufactured homes sell for $100,000-$125,000.) Do a bit of research on values, though it doesn’t take too much. Offer about 35% of the asking price, all cash. Yes, it’ll take you maybe $6,000-$10,000. You’ll get people to say “yes.”Have someone inspect the home. It’s likely to need a few thousand dollars of repairs. There’s likely to be wood rot around the bathrooms. It might need a new roof. You may need to put in a few working newer (used is fine) appliances. Just make sure there’s nothing major, nothing that’ll take more than a few days to a week to fix.Fix it up and pretty it up. Then put it back on the market at close to “retail” price. Let’s say $20,000. But you put it up for sale with “seller financing.” Say, “Only $5,000 down and $x per month.” (I don’t have my calculator with me, but something in the range of $299-$399 a month will work.) So now you get a buyer with $5,000 down. Your total investment in the home is perhaps $8,000. You’ve just received $5,000 from the new buyer. So your net investment really is $3,000. And you’re selling it for $20,000. Your return on your $3,000 investment should approach (and often will exceed) 100% per year. That’s going to give you a nice, solid cash flow. If you want your money even quicker, you’ve got the note from the buyer for (in this case) $15,000. The note has a stated return (the amount you’re charging the buyer) of perhaps 12%-15%. Wait 6 months for the note to season, then sell the note at a slight discount. There are plenty of people out there who’d love to buy a seasoned note yielding 18%-20%.OK. So rehabbing and financing the sale of used mobile homes isn’t glamorous. You didn’t ask for glamour. You asked for a way to make a lot of money quickly.Other TechniquesI could keep writing all night, but I’ve got other things to do, and so do you. But a few other ways to earn money quickly in real estate without needing a lot of money up front or waiting forever include:Dealing in Notes (performing or non-performing)Options (for houses, apartment buildings, or land)Mobile Home Parks (Buy with seller financing, fix it up, fill the vacancies, then either sell for a profit or collect a lot of cash every month.)Tax LiensJoint Venture (You find and structure the deals. Your partner puts up the money.)
How can I sell my property without paying estate agent commission?
How do I sell my property without paying a real estate commission?Easy.Sell it yourself. Sell it as a FSBO (For Sale by Owner).There’s no requirement that you use an agent to sell your property. As a licensed agent (as well as an investor), I think it makes sense to use an agent. Even investors generally use agents to sell their rehabs and flips. You can get a lot of advice on pricing strategies, marketing strategies, staging techniques, and more. Except in super-hot markets where anything will sell instantly (as in the market in 2006), you’re far better off with an agent.However, it’s your choice.One possible glitch, though. Most homes are sold by agents. And in your marketing strategy, you really should include a few hundred dollars to get your property listed on the MLS. What all that means is that there’s a good chance that your buyer will be represented by an agent. Although the buyer’s agent probably has a signed agreement with the buyer that can require the buyer to pay the agent’s commission if a commission isn’t available from the seller, it usually works out that the seller still will pay the buyer agent’s portion of the commission.In other words, if the buyer has agreed that the buyer’s agent will receive (hypothetically) a 3% commission, that agent will first come to you to try to persuade you to pay the commission. You, of course, can say no and lose the sale. Most sellers say “yes” in order to sell their property.Thus, even if you go the FSBO route, you may face a situation in which you’re being asked to pay a reduced commission.And remember that there are other costs that the seller has to pay. Also, depending on your property and the buyers, the buyers may want you to pay closing costs and other fees. (Though that would occur even if you were represented by an agent.)So you may save a portion (and possibly the entire amount) of the commission you’d pay if you sell FSBO. Again, I don’t recommend it, but you do have that option.
What is the purpose of hiring a realtor?
Simon Kinahan has a good answer. I'd like to go beyond that and ask the question that with websites like Zillow, Trulia and Redfin, who needs a realtor? (Assuming you are someone with the time and savvy to use these sites)If you are a buyer, then you should use these websites to find the property you are looking for. No responsible realtor will advise you otherwise. Once you find the perfect property, now the realtor can help you in a few ways:A good realtor understands the housing market, and they can tell you if a house is reasonably priced in comparison to similar sales or not. The realtor will help you with the negotiations. For one, should you go over or under the asking price? If you are trying to get a good deal, you will often get into a bidding war. At that time you don't want to lose because you big much lower than you wanted to and the seller was insulted by your bid.Even if your bid was rejected, a good realtor will maintain the relationship with the seller, so it could come back to you if the original bid is rejected for some reason.A good realtor can help with other aspects of the negotiations as well - what can you ask for? what should you ask for? what can you ask for but probably should not?Beyond the regulatory and procedural stuff, a good realtor gives you the same value as a lobbyist. The realtor's experience and knowledge give you a good base to confidently negotiate and get good value for your money. Buying a house can be very stressful, and each reduced headache really helps.
How can you sell for sale by owner in NYC without a real estate agent?
The most important thing home owners need to realize when they try to sell for sale by owner in NYC is that they can’t avoid all brokers completely (How to sell for sale by owner in NYC).If you avoid all brokers, and write “no brokers please” on your FSBO web listing, you by default will turn away all buyers represented by agents (3 Reasons why NYC FSBO sellers Fail). As it turns out, buyers’ agents represent over 80% of total buyer traffic, which is not surprising considering there are 27,000 real estate agents in NYC alone.If you try to sell for sale by owner in NYC and either actively avoid or get ignored by buyers’ agents, your listing will by default be considered “off-market.” Ironically, being off-market, or ignored by the majority of buyers was never the intention of FSBO home sellers in the first place!If over 90% of home buyers start their search online, why do most buyers still choose to be represented?The fact that most buyers start their search alone on the internet these days is a prime reason why most homeowners decide to try to sell for sale by owner in NYC. Unfortunately, most are not aware of the second part of the fact, that despite this most buyers still end up submitting offers through buyers’ agents.You would think that the internet would be able to seamlessly connect buyers and sellers without a middleman, so why do buyers’ agents still exist?The reason is quite simple if you step back and think about it. Remember when we mentioned there were 27,000 real estate agents in NYC alone? Collectively, real estate agents represent the biggest salesforce on the planet, offering a customized, high-touch concierge service for free to buyers about to make a major life decision they usually have little experience with.When someone offers to send you great ideas that have just come to market, organize your open house tours for the weekend, negotiate on your behalf, schedule and take you to showings and provide you with general, market and property specific advice for free, no strings attached, it’s really hard to turn down.And keep in mind, the pitch may very well be made to you where it’s most effective, in person at a social event by someone who may even be your friend. Now perhaps it’s starting to make sense why the next savvy real estate search website funded by equally savvy venture capitalists never seem to be able to eliminate real estate agents.Unfortunately for home sellers, buyers’ agents are here to stay for the foreseeable future. Barring the invention of highly capable, robotic AI with the full range of human emotions it will be extremely difficult to eliminate buyers’ agents in the near future.Learn why buyer agents are here to stay: Is buying a house without an agent in NYC a good idea?Fortunately for home sellers looking to sell for sale by owner in NYC, the commission model will be changing, just not as drastically as one would hope. The real estate commission model is not going from 6% to 0% since we’ve established that buyers’ agents aren’t exactly in danger of being made extinct.Instead, the model will be transitioning from 6% to 3%, and with additional competition on the buyer agent commission rebate front, to effectively 1-2%. Unfortunately for the homeowner, in order to remain competitive with commissions offered in traditional for sale by agent listings, they will have to continue to offer 2-3% to buyers’ agents even if they are selling for sale by owner in NYC (Real estate buyer agent fees in NYC). If they offer less or nothing at all, inevitably buyers’ agents will steer their clients away from the listing, assuming they even decide to gamble on letting their clients see a FSBO listing.The biggest savings for those home owners trying to sell for sale by owner in NYC will be on the listing broker commission. While “flat fee MLS” listing companies have been around for decades, the next generation of listing syndication companies like Hauseit have dramatically increased the effectiveness of buyer agent engagement for FSBO home sellers. Traditional “flat fee MLS” listing companies have the same problem as a non-MLS syndication service like Postlets: everyone knows it’s a FSBO.As we’ve discussed, once it’s known that you’re really a FSBO the advantages of being in the MLS largely go away. Buyers’ agents realize they won’t be dealing with another real estate professional and begin to doubt whether the commission will honored. Moreover, the fact that the listing’s photos are all watermarked with the flat fee MLS listing company’s logo make it completely obvious even to the most unsuspecting broker. As a result, the home owner experiences no reduction in listing broker solicitation and harassment versus if she had just sold for sale by owner in NYC herself.The next generation homeowner listing company Hauseit solves this issue by discreetly listing your home under an affiliate broker who has none of the reputational issues of a traditional flat fee listing broker. The affiliate broker will typically be a full-service, traditional broker who may normally engage in full commission work. The affiliate broker will list your home in over 90 major real estate search websites like StreetEasy, Zillow, Trulia and Realtor.com and more importantly, co-broke on your behalf in your local interbroker databases (RLS for NYC) so you can get the full attention of buyers’ agents. All inquiry is automatically forwarded to you via server level forwarding rules so there is no interception or intermediation of leads.It’s very important to be on more than just one real estate search website even if you’ve managed to list on your local brokerage database. As we’ve discussed before, over 90% of home buyers start their search online by themselves. You want to have every opportunity to capture a potential unrepresented buyer so you can save on the broker commission completely.Therefore, you need more exposure than just Zillow. Hauseit makes sure you’re on all the relevant, most popular local search websites like StreetEasy and Brownstoner in addition to national ones like Zillow and Trulia.Hauseit also offers complimentary open houses, comparative market analysis, professional floor plans and real estate photography to its customers so they have a fair shot and a level playing field against a professional real estate agent’s comparable listing.
How can I make for sale by owner (FSBO) of our house work? In this modern era aren't real estate brokers an unnecessary expense?
In this modern era, private home sellers doing FSBO have more tools at their disposal to make it work. In fact, it is now possible to have a real estate broker just list your property on the MLS for a nominal fee without having to hire other real estate services. So you cut out the real estate agent fees but can you also sell to an individual willing to work without his own real estate agent?In an FSBO, the seller will need to price his house accurately, do his own marketing, answer and entertain any buyers, and negotiate and close the deal. In other words, the seller will need to do all the work.There’s no saying you can’t make it work but be prepared to work very hard. There are some odds stacked against you, though.For one, most home buyers prefer to have a real estate agent working for them because they don‘t want to do the hard work. They want someone to guide them, advise them, and broker the deal for them. If you aren’t willing to pay a buyer’s agent’s commission, it is almost a certainty that these buyers won’t get to see your house or make an offer.You will also need to have very good marketing and negotiating skills to find a buyer who is willing to pay your price. Sadly, most FSBOs don’t succeed although there are those able to sell but not as quickly as they would have with a professional broker or real estate agent.I wouldn’t say real estate agents are an unnecessary expense because they will definitely bring value to your real estate transaction. After all, you don’t pay them a dime if they don’t make a successful sale.You might want to look up FSBO vs. hiring a real estate agent to compare your options.
Why do real estate professionals (agents) use “for sale by owner” signs to sell their own property?
Where?I haven’t seen a FSBO sign in a very long time, and even then I never knew an Agent to do so. But hey, I suppose it could happen?
Can you market your real estate firm by putting a “For Sale” sign outside a property for which you get permission to do so by the owner yet it isn't for sale?
Whether this is legal or not usually depends on two things:The laws of the state or country you’re in.The rules of the realtors association the agent is a part of.As an example, in California you can market a home which is not yet officially for sale (meaning it hasn’t yet been listed on the MLS). But some conditions must be met:You must have a listing agreement signed with the home owner first.The broker must notify the realtors association that there will be a delay before the home is listed (usually in writing with a specific form).The home must still (eventually) be listed.In California, if you don’t list a home within a set period (days) after the listing agreement is signed, then you’re in violation of the law and you may get fined. Notifying the association that there will be a delay increases the time period before you must enter the home into the MLS, but the home is still expected to be eventually listed (unless it’s sold before it ever hits the MLS, which does sometimes happen in these cases).Zillow “Coming Soon”Another thing that hasn’t been said here yet is that marketing a home before it’s been listed is actually not that uncommon (though not necessarily with a sign in the yard). In fact Zillow has a “Coming Soon” section that’s specifically intended for this kind of pre-marketing, and some agents use this Zillow feature heavily.All that said, although some of the best agents know how to use pre-marketing like this to drive up demand (and thus the sales price of the home), the question you need to ask is if it really is worth the extra effort (including making sure you know the laws and making sure you comply with them). The agents that do best at this are successful because they have many homes in this stage all the time, having your sign up on just one or two houses may not get you enough business to make it worth the effort.
What is a real estate brokers' *real* impression of FSBO (For Sale By Owner) properties? Are the desirable for you to 'poach', are the owners considered stubborn?
I feel like in the rest of the country brokers may just generally ignore FSBO sellers as crazy people and they end up hearing crickets during their sale.However, in NYC it's completely different.  You'll still get ignore by the real brokers with real buyers, however because there are 30,000 licensed brokers in the city you'll get literally hundreds of harassment phone calls from them trying to solicit you to list with them.  It's literally one of the now most well known top fsbo tips to not even man your own open houses, or admit that you're the owner lest you want to be almost physically assaulted by brokers.  It's unreal.The only way through these da*mn brokers is via what's called an agent assisted or agent managed FSBO in NYC.  Essentially a real broker for a flat fee, no one else will tell the difference on how much you paid.
Get Form