In any case, if you have a fire damaged home in the Seattle area, call us today at 425-640-2509 and let us know!  We can get you an offer and get you moving on with your life.

Good evening,

My wife and I are ready to leave the FSBO market for a full service real estate agent, however, we are looking at a very thin margin on our house sale and need all the help we can get. We have a nice, family home in the Auburn area that is listed at $279,000. We have had interest, but only one formal offer and it was well below the amount we needed to clear a 10% down on a similar home in another area.

To be specific, we are looking for an experienced, full service real estate agent that will provide the typical services (lock box, signs, MLS listing, flyers, open houses, etc.) for a flat, $5000 commission on the sale of the home. Also, we can not guarantee we will use the same agent as our buying agent.

If you are a real estate agent that is interested in this arrangement, please call 253-632-XXXX so we can discuss it further.
Thank you for your time,
John

John, where ever you are, what makes you think you are going to get a full service agent with experience that will get the work done for $5,000.  To be realistic if an agent is going to get a property sold they have to offer the buyers agent at least 2.5%.  That works out to $6,975 alone.  I understand that times are tough and sellers don’t have the equity to spare, but some things are just a reality.

Leaving the insane commission aside, lets look at the second part where he says he won’t guarantee that he will use the same agent that is selling his house to buy the next one.  WHAT?  So you want an experienced, full time agent to take in the shorts to sell your house and you don’t have the decency to at least give them a shot at making some money on the buying side of things?

John, wherever you are, you need a reality check.  Good agents aren’t crying for listings and don’t want another pain in the butt seller with prices that are too high and that are offering crap commissions.

For those of you that don’t know, I am married to Jacquie Cliff, who is one of the best real estate agents you will ever find.  I know how many hours she put in, and if she took a listing for that kind of money, I would literally kick her in the ass. 

Good real estate agents put in a lot of time and money marketing a house and for $5,000 all John is likely going to get is desperate schmucks.

Another form of Real Estate Investing profit we will talk about is ‘Rehabbing or Renovate and Retail.’ It is important you understand the ‘ins and outs,’ of this business making a wrong move might end you up stuck with a property that leaves you very few options for unloading it.

Rehabbing is the process of purchasing a property that is in need of repair. Repair can run from as little as paint and carpet to as much as repairing the foundation and adding an additional story to the house. In general it works like this, the more rehab you do the more profit you are entitled to make. In rehabbing there is what we call the ‘headache factor.’ The bigger the headache, the more you make. It is crucial that you not underestimate the catastrophic possibilities that may occur during the renovation process.

You need to bid every project planning for the worst. If you plan to change the windows without a permit, make your cost estimate (and your offer) as though you had to pull every permit. Several times, I have made small repairs on a property and then the city inspector shows up randomly to take a look (haters).

This increases your permitting fees by double and the inspectors can be much more difficult after this. I can tell you nightmare after nightmare about each inspector having their determination of how the code should be interpreted and enforced. It doesn’t help that if you have a Range Rover or BMW in front of the house. Sometimes they are determined that you aren’t going to make profit on their watch.

If you are determined to succeed without problems, hire a licensed contractor to perform all of the work, but negotiate your fees to the equivalence of a handyman. There are a ton of contractors out there that need work and are willing to provide contractor quality for a fraction of their normal costs just to keep their crews in motion.

A good team of subcontractors is very difficult to assemble, and the contractors know this. A good way to find a decent group of contractors is to drive the immediate neighborhood where the property is located and find a contractor that is working on a low-rise commercial building. Every day they have guys sitting there on the clock while another process such as concrete drying or permit checking needs to be finished. These ‘extra’ guys can be utilized at your property and the contractor will give you a substantial discount because he was paying them anyway.

While rehabbing one needs to be familiar with the entire process from closing the property the first time with a seller or Wholesaler, to closing the property the second time with a retail buyer. The first closing is rather simple, but there are precautions you need to take. The first item to consider, you need to pay for a home inspection. Your hard money lender may not require it because they protect themselves by loaning a 60% or less of the eventual retail value, but there may be problems with the house (like mold) that are only discovered when your retail buyer performs their required home inspection.

In rehabbing, you need to have money for the initial purchase in addition to all of the rehab costs. Most people just starting out do not have this money set aside.

If you choose to do a rehab with hard money you might put yourself in a position where you have to pay back the money with ‘job money’.

To date, I have encountered the greatest headaches and the most profit in the rehab sector of the real estate business. The rehabber generally makes the greatest amount of money in the deal and they definitely earn it. But other than the amount of money you make one needs to consider the time it takes to make it.

Hope this Helps,
Matt Gerchow

I have heard that nothing gives an author so great a pleasure as to find his work respectfully quoted by others.  Judge, then, how much I must have been gratified by and incident I am going to relate to you.  I stopped my horse, lately, where a great number of people were gathered at an auction of merchants’ goods.  The hour of the sale not being come, they were conversing on the badness of the times; and one of the company called to a plain, clean old man, with white locks, “Pray, Father Abraham, what think  you of these times?  Will they not be quite ruin the country?  How shall we be ever able to bear them?  What would you advise us to do?”  Father Abraham stood up, and replied, “If you would have my advice, I will give it you in short; for ‘a word to the wise is enough,’ as poor Richard says.”  They joined in desiring him to speak his mind, and gathering around him, he proceeded as follows:

“Friends,” says he, “it may be the times are bad, but let us see whether the fault is our own.  Our expenses are doubled by idleness, and trebled by pride and folly;, and these can only be abated by our own exertions.  If we hearken to good advice, we may gain something.  ‘God helps them that help themselves,’ as poor Richard says.

…

“So what signify wishing and hoping for better times?  We may make these times better, if we bestir ourselves.  ‘Industry need not wish: and he that lives upon home will die fasting.  There are no gains without pains; then help hands, for I have no lands;’ or, if I have they are smartly taxed.  ‘He that hath a trade hath and estate; and he that hath a calling, hath and office in profit and honor,’ as poor Richard says; but then; the trade must be worked at, and the calling well followed, or neither the estate nor the office will enable us to pay our taxes.  If we are industrious, we shall never starve, for ‘at the working man’s house hunger looks in, but dares not enter.’  Nor will the bailiff or constable enter; for ‘industry pays debts, while despair increases them.’

If you haven’t guessed, this is an excerpt from Benjamin Franklin’s famous work The Way to Wealth.  I encourage you to download the full PDF of this book and read through it.  There are some amazing insights into life and prosperity that still hold true today.

The Way to Wealth – Full PDF