Property sale opinions - WWYD?

gkainz

gkainz

Final Approach
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Greg Kainz
Seeking opinions on property sale - traditional MLS or auction? What would you do (WWYD) ?

My mom is now in a skilled nursing facility rehabbing after losing her leg to a nearly year long battle with infection in a knee replacement. How well she progresses through therapy will determine where she ultimately ends up living, but initial medical opinions are that she will be permanently wheel chair and most likely will need assistance with her daily meds for diabetes and heart condition.

Her house cannot be made wheel chair accessible within reasonable financial sense - double split level house, narrow doors and hallways, etc, as well as being 7 miles out of (small) town. So, we've begun investigation into selling the house and property for her to round out her portfolio in preparation for some level of nursing home care.

There's a realtor who does traditional MLS property sales as well as auctions for contents (estate sales) but also selling houses and properties at auction. They have reportedly sold many properties for over what they believe a traditional MLS sale might have made.

The proposal for house and property sale is a no reserve, what they're calling an "absolute auction". The no reserve part causes me to hesitate ... I'm not much of a gambler, especially gambling with other people's money.

What are the collective opinions here?
 
Yeah I wouldn't do it without a reserve. If they insist just go with a MLS listing IMO.
 
I don't have experience with auctions/estate sales other than buying the stuff inside the house, not selling. That being said, I would not auction the house off unless your in a rush to get the money, and I DEFINITELY would not list it with no reserve. Since a house is many people's largest liability (no a house your living in is not an investment) I would not gamble with it. Get it appraised, and list it the traditional way.
 
Dont believe realtors estimate on the price of the house. Realtors want the house price to be low so it will sell quickly. Do your own research or hire an independent appraiser.
 
coloradobluesky said:
Dont believe realtors estimate on the price of the house. Realtors want the house price to be low so it will sell quickly. Do your own research or hire an independent appraiser.
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Ive been burned by this twice now.... I dont trust an Agent any farther than I can smack them without throwing my back out.
 
Absolutely do not do an auction with no reserve.
Too many ways for you to get burned.
 
Go with the MLS and put a price 10% more than you think it will reasonaby sell for. If the realtor doesn't like it, then just tell the realtor you are going to start shopping for another realtor. Try and negotiate for a 5% commission. Check "don't know" on all the boxes on condition of the house btw (if they try and get you to fill that one out).
 
You should talk to an estate attorney or an elder law attorney. Depending on many variables you may be better off holding on to the house, renting it, and getting it in her estate. There is a thing called a basis step-up that is too complicated to explain here. Also, if you think she might at some point end up in a nursing home with the state paying, there are some very complicated spend-down and gifting issues that take careful planning.

Like others here I am not hampered by actual experience with home auctions, but auctions are for people who need fast money. I would be very wary -- especially because you are not in a hurry. In deals, he who is in a hurry loses and patience profits. The realtor is going to like auctions because it is the quickest path to a commission. They hate patient sellers.

Re "They have reportedly sold many properties for over what they believe a traditional MLS sale might have made." read here: https://en.wikipedia.org/wiki/Confirmation_bias
 
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Auction will absolutely guarantee that you will get 25 cents or lower on the dollar.

I am in the process of buying a house without a realtor, and it is going so much better and less expensive this way.
 
List on MLS first. Test the waters that way. If no nibbles or sale, go the auction route as a last resort.

Auction sales of large plots of ground can be profitable for the seller. You create a number of smaller parcels for sale and then in one session: auction each separately, then auction the whole together, then in any combinations that various buyers may want, then re-auction each separately again, whole again, combo again, and continue until the buyer (and auction co) have the highest total price, and declare a winner(s).
 
Is there any production farmland attached to the house ? For farmland, auctions seem to be the norm and firm listings are quite unusual.
 
Always solicit financial advice from your closest internet buddies. That said, don't auction it unless you're desperate to post bail or your family name is e'Bay. If this property is in CO then list it high in the MLS and sit back while the hoardes work themselves into a lather with a full price+ offer. Then invest it in a dispensary and make mama some scrilla. Or buy a new airplane.
 
As for appraisals. Last year I received two appraisals on the same home and they were 250k apart. One of them must be wrong.

If this is outside of town with some land, there is no easy way for an appraiser to come up with relevant 'comps' and their appraisal is going to be no more than a wild guess. A paid for 'brokers price opinion' from a local broker different than the listing agent may be more helpful.
 
If you list it, which I probably would, interview a couple realtors, get their opinion on what the house needs to sell and what they think it's worth. Hire the busiest realtor you can find!! We have a couple locally that move houses, the rest sit around and drink expensive coffees and complain about their spouses!! Any realtor can get you the comps, look at them and be realistic. Do seek some legal advice before selling, from a family law attorney, best $300 you'll spend! Good luck with your mom.
 
to answer some of the questions - small town South Dakota, no Ag property (horses and livestock ok, but not big enough for crops. We did hay the 2nd lot a few times but just for our own horses), 1 house and 2 lots totaling 6 acres. mostly retirement kind of folks are the biggest buyers. Limited market and maybe 1 sale in the last 5 years anywhere near this so comps are difficult.
The no reserve is probably the show stopper for auction of house and property - I just can't risk the downside on potential lost money that will pay for mom's care. Of course, there's always the potential lost upside of auction fever ....
 
gkainz said:
to answer some of the questions - small town South Dakota, no Ag property (horses and livestock ok, but not big enough for crops. We did hay the 2nd lot a few times but just for our own horses), 1 house and 2 lots totaling 6 acres. mostly retirement kind of folks are the biggest buyers. Limited market and maybe 1 sale in the last 5 years anywhere near this so comps are difficult.
The no reserve is probably the show stopper for auction of house and property - I just can't risk the downside on potential lost money that will pay for mom's care. Of course, there's always the potential lost upside of auction fever ....
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Doesn't sound like the kind of property where auction is a good option. MLS and a lot of patience.
Not the greatest property for a rental either.
 
Greg. Sorry to hear about your Mom. Start with realtor.com, and Zillow.com to get any comps at all. You may want to get a referral for reputable realtors in that market, and get a few "opinions of value". These are typically free, and provided by realtors in order to get the listing. However, you will be under no obligation to list with a realtor who gives you this, but just confirm that up front. An "opinion of value" is NOT an appraisal. You can list it for sale by owner also if you have people in the area that can show the property. Typically, most of the work/due diligence is on the buyer anyway.
 
Lachlan said:
If this property is in CO then list it high in the MLS and sit back while the hoardes work themselves into a lather with a full price+ offer. Then invest it in a dispensary and make mama some scrilla. Or buy a new airplane.
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That's good to hear. My house will be for sale in a few months. I'm interested in this thread too. No way do I want to sell it myself, though. I'm more interested in no hassle. Greg is probably one of the few here who have seen my house.

Hey Greg, you bought my Jeep, do you want to buy my house too? ;)
 
paflyer said:
Or they are both wrong.
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I'm sure you know this, but for some that may not, appraisals, and any real estate valuations are VERY subjective. The true market value of a property is only revealed when it is SOLD. As no two properties are exactly alike, adjustments need to be made in order to attempt to bring the properties in line when comparing comps to the subject property.
 
Anthony said:
I'm sure you know this, but for some that may not, appraisals, and any real estate valuations are VERY subjective. The true market value of a property is only revealed when it is SOLD. As no two properties are exactly alike, adjustments need to be made in order to attempt to bring the properties in line when comparing comps to the subject property.
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And when someone in your appraisal area drops their pants because they are desperate to sell it hurts you.
 
Anthony said:
I'm sure you know this, but for some that may not, appraisals, and any real estate valuations are VERY subjective. The true market value of a property is only revealed when it is SOLD. As no two properties are exactly alike, adjustments need to be made in order to attempt to bring the properties in line when comparing comps to the subject property.
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And those adjustments are much easier to make if you are in a suburban market with 100eds of cookie-cutter homes that all pretty much conform to the same pattern. The price differential for an extra garage, second staircase or extra bathroom is easy enough to determine. With a rural property in a county of 3000 people that hasn't seen a non-ag property transfer in the last year coming up with a reasonable guess on what things like extra bedrooms are worth in that market is near impossible. With those kinds of unique properties, it really comes down to 'what is it worth to one specific buyer'. The problem of course is if a buyer needs to borrow money for the property, the final price will not be determined by what is on the contract, but rather what the home appraises at (with an appraiser who is now tied into the Dodd Frank system and limited in what he can use as data).
 
paflyer said:
And when someone in your appraisal area drops their pants because they are desperate to sell it hurts you.
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Especially if the appraiser is a knucklehead and uses a distressed property that sold at insurance auction as a comp :confused:
 
weilke said:
Especially if the appraiser is a knucklehead and uses a distressed property that sold at insurance auction as a comp :confused:
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Is that noted somewhere in the report? What if there are very limited comps available?
 
paflyer said:
Is that noted somewhere in the report? What if there are very limited comps available?
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I know the property and it was obvious to anyone who inspected it from the road. Of course, if the appraiser only pulls 10 year old pictures off the MLS for his comps and doesn't even do a drive-by, he would not know that. A limited number of recent transactions in that market segment were a problem for all three appraisers. Also, we are at the edge of the commuting range for DC and there is a steep gradient in prices based on position relative to a particular highway. Anyone not familiar with the local market wouldn't know that. With the way the appraisal rules have changed since 2010, appraisers have little downside to providing ****ty work. It all goes through those intermediaries who don't care about the quality of their appraisers.
 
Anthony said:
Greg. Sorry to hear about your Mom. Start with realtor.com, and Zillow.com to get any comps at all. You may want to get a referral for reputable realtors in that market, and get a few "opinions of value". These are typically free, and provided by realtors in order to get the listing. However, you will be under no obligation to list with a realtor who gives you this, but just confirm that up front. An "opinion of value" is NOT an appraisal. You can list it for sale by owner also if you have people in the area that can show the property. Typically, most of the work/due diligence is on the buyer anyway.
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Thanks, Anthony. I did look at Zillow a few weeks ago and nothing within 10 miles shows up on there, and those that do are in town properties. Again, being really "small town" there are just a couple of realtors. I do know the guy that runs/owns both the auction company and realty (another small town benefit AND detriment - went to school with him). To his credit, he is quite successful at both, and is probably one of the best auctioneers in the region.
FSBO would be more work than I or siblings can do, since I'm the closest geographically and it's a 6 hours drive or 1.6 hr flight from here for me.

Everskyward said:
That's good to hear. My house will be for sale in a few months. I'm interested in this thread too. No way do I want to sell it myself, though. I'm more interested in no hassle. Greg is probably one of the few here who have seen my house.

Hey Greg, you bought my Jeep, do you want to buy my house too? ;)
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The jeep I was able to relocate back to the foothills - I'm afraid the house would be too hard to move! Altho I'm so sick of traffic here (Denver metro has expanded to now include my area) that I'm sorely tempted! :)
 
weilke said:
And those adjustments are much easier to make if you are in a suburban market with 100eds of cookie-cutter homes that all pretty much conform to the same pattern. The price differential for an extra garage, second staircase or extra bathroom is easy enough to determine. With a rural property in a county of 3000 people that hasn't seen a non-ag property transfer in the last year coming up with a reasonable guess on what things like extra bedrooms are worth in that market is near impossible. With those kinds of unique properties, it really comes down to 'what is it worth to one specific buyer'. The problem of course is if a buyer needs to borrow money for the property, the final price will not be determined by what is on the contract, but rather what the home appraises at (with an appraiser who is now tied into the Dodd Frank system and limited in what he can use as data).
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Agree on all points.
 
How did you solve this problem, OP? I'm asking about it, because right now I have a similar situation with my dad. He's in a wheelchair after an accident, and he will never walk again. Now I'm searching for options. One of the options I see is to sell it through this www.thepropertybuyingcompany.co.uk company. One of my friends had business with them, and he says that they gave a decent price for his flat. Should I do the same thing or should I try something else?
 
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weilke said:
Is there any production farmland attached to the house ? For farmland, auctions seem to be the norm and firm listings are quite unusual.
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I wonder if that is a regional thing? Where I grew up, auctions were the norm to sell everything on the farm, but the land itself more often got listed.
One thing to try before listing, if there is land attached: Tell each of the neighbors that you plan to sell, before it's listed. It is well understood by farmers looking to expand that they'll have an opportunity to buy an adjoining property once in a lifetime, maybe.

When it was time to sell the remaining piece of my parents farm, I drove over to the farmer next door, introduced myself (as I hadn't lived there in decades), and told him we were planning to sell. I had a spectacular offer within hours. I'd also contacted the two other neighbors I did know, and got two more offers within a week. I told my wife this realtor stuff is a snap... :) I did ultimately get the property appraised, and worked with a local realtor to handle the details of the sale since I was across the country, but since I'd brought him the buyers and it didn't hit the MLS, I believe we settled on 2% or maybe 2.5% commission.
 
I did very well at Auction with my mother’s home after her move to long term assisted care....but a major factor in that decision was the need to auction (or otherwise sell) her house full of “stuff”. I believe folks showing up for the stuff pushed up the final house price.
Midwesterners love their auctions.
 
To those of you that said never trust an agent... phooey to you. I did real estate for a while and still have a license.

Go to https://www.realtor.com/soldhomes and look at the homes in the area and see what they sold for... this will give yo an idea.. Also X-check it with https://www.zillow.com/homes/recently_sold/. Zillow is not may favorite site.

I would also Interview a few agents. A good agent will come to the meeting with comps and a marketing plan... if they don't show them the door
 
Adrian Anderson said:
How did you solve this problem, OP? I'm asking about it, because right now I have a similar situation with my dad. He's in a wheelchair after an accident, and he will never walk again. Now I'm searching for options.
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The auction went as good as we had hoped for the house and land. Became one of the highest sale of similar properties in the area and those comps were very hard to come up with. 6 acres with trout stream along the complete property line is pretty rare in that area.
Personal property sales ranged from higher than expected to try to give it away - typical auction. In the end, we didn’t haul much to the dump.
Clothing and other hard to sell items were donated to a couple of different charities.
Again, I know the auctioneer and he is 3rd generation auctioneer in his family’s business. Long time history in this region, and is widely respected in the Buffalo auctions.
Turned out as good as we had hoped.
 
gkainz said:
The auction went as good as we had hoped for the house and land. Became one of the highest sale of similar properties in the area and those comps were very hard to come up with. 6 acres with trout stream along the complete property line is pretty rare in that area.
Personal property sales ranged from higher than expected to try to give it away - typical auction. In the end, we didn’t haul much to the dump.
Clothing and other hard to sell items were donated to a couple of different charities.
Again, I know the auctioneer and he is 3rd generation auctioneer in his family’s business. Long time history in this region, and is widely respected in the Buffalo auctions.
Turned out as good as we had hoped.
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Ok, thank you for the information.
 
gkainz said:
The auction went as good as we had hoped for the house and land. Became one of the highest sale of similar properties in the area and those comps were very hard to come up with. 6 acres with trout stream along the complete property line is pretty rare in that area.
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While the reasons for the sale are sad, glad to hear it went well. The key part about the auction is that anyone who bids on a property like that has the cash in hand or a line of credit that he can draw on. Properties like that just dont work well in the traditional MLS+realtor+mortgage company+appraiser sales mechanism.
 
coloradobluesky said:
Go with the MLS and put a price 10% more than you think it will reasonaby sell for. If the realtor doesn't like it, then just tell the realtor you are going to start shopping for another realtor. Try and negotiate for a 5% commission. Check "don't know" on all the boxes on condition of the house btw (if they try and get you to fill that one out).
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Check "don't know" only if you don't know. There are consequences for lying about condition issues.
 
I'd hire a realtor and tell him or her to drop the check off at my office. I've better things to do and life is short. That, and I really don't think I'm an expert at real estate sales.
 
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