Selling a Run Down Rental Property

Client: Caitlin Michelle

When Caitlin agreed to meet with Cathy and Andy about getting her family rental property sold last year, the prospects were not good. For the previous year, a local real estate expert had had the property under contract twice – without being able to get it all the way to closing. The challenge was merely one of perspective.

This beautiful stone home was built in the 1940s by Caitlin’s grandmother. Through the years, there were additions and upgrades and then was subdivided into a multi-unit apartment building. At the time we first saw the home, it had been uninhabited for several years and the deferred maintenance was extensive. Though the systems were intact, there were lead pipes, asbestos everywhere, and even an original oil-burning furnace. Let’s just say that we didn’t use “Move-in Ready” in our marketing.

So despite the environmental cleanup issues and the three front doors, we ended up selling this home in 27 days.

Because of Andy’s background in land development, it was easy for our team to react and respond to the potential of this great home. Starting with a floorplan rendering, we were able to recreate the feel of this old home – to showcase the feeling of the space that could be, not the limiting constraints of the apartment walls. Going way beyond the typical inspection process, we were able to navigate the scary discussions of the process of cleanup. And then we partnered with the buyer – through his buyer agent – to give them the confidence that they could indeed get a permit from the City to return this old lady to its former grandeur as a single-family estate. We also had to convince the buyers’ lender that this project was worthy of their investment since it didn’t fit into their typical profile.

The perspective we brought to this situation was not magic. Every other person that had been to the home was an investor – each of which soundly rejected the project because of its cost and rehab headaches. This project needed more than someone to put it into the MLS and wait for a buyer. It needed more.

We provide MORE. More to a young lady trying to solve an old family problem. More to the buyer that was thrilled to reconstruct an old house into their dream home. More to our community, because we were able to create a domino effect of renovation and improvement. We provide MORE.

MORE REAL ESTATE GROUP

5540 Centerview Drive, Suite 204, PMB 75655
Office: 919.867.1501

Each office independently owned and operated
COPYRIGHT © 2023 MORE | ALL RIGHTS RESERVED

Step Eight:

inspections

SCHEDULING:

The Buyer will schedule all their inspections of your home to be completed during the Due Diligence period. We will make you aware of these as soon as they are requested and coordinate with your schedule.

INSPECTIONS:

Expect that the Buyer will have a home inspection completed and most likely a radon test and pest inspection. If the inspections show areas that need further inspection such as HVAC, plumbing, electric, etc., the Buyer will most likely schedule additional inspections.

RADON:

The Buyer may elect to have a radon test performed. This is a simple device that will be left downstairs in the center of your home for 48-72 hours. Its purpose is to measure radon levels in your home. The inspector will arrange with you a convenient time to pick up the device once the test has been completed. We will notify you if the Buyer elects to perform a radon test.

REPAIR REQUEST:

Once the Buyer has completed these inspections, they will most likely submit a Due Diligence Repair Request. We will email this request and the inspection report to you and schedule a time to review it. Anything that they ask for the Seller to repair is negotiable.

REPORT LANGUAGE:

As you review the inspection report, you will see that inspectors will suggest the type of contractor they believe should perform the work. Please do not allow that to alarm you i.e., we find that electricians do not replace a light bulb any more effectively than a homeowner! We will address the appropriate person to perform the work on a case-by-case basis.

2ND NEGOTIATION:

In terms of a response to the Buyer, there is no requirement that the Seller agrees to this repair request. All of these items are negotiable. Here are your options:
1. You could agree to fix some or all of the requested items by a qualified contractor, and this work would need to be completed at least one week prior to closing. Receipts must be submitted as well.
2. You could agree to some monetary concession (based on a cost evaluation) to be given to the Buyer at closing. This money is paid via the HUD in the form of a closing cost concession. This is typically the cleanest way to handle the negotiation as you don’t have to worry about the logistics of facilitating the work.
3. Or, there could be any combination of these items.
4. And of course, you could always tell them to go pound sand…:-)

AMENDMENTS:

Once the repair negotiations are complete, the Buyer’s agent will update the Repair Request to reflect what was negotiated. The listing agent will review it for accuracy and it will be sent to the Seller for signature via DocuSign. The Seller will receive a copy of the executed Repair Request for their records.

Step Seven:

due diligence period

ACTIVITIES:

During the Due Diligence period, the Buyer will conduct inspections and secure financing. The Buyer has the right to back out of the contract for any reason during the Due Diligence period. However, you do get to keep the Due Diligence money either way, so deposit it right away and feel free to spend it. Remember – it will go toward the purchase price of the home when they close.

CHECKS:

Our Team will send a copy of the Executed Contract to you for your records. In most cases, the Due Diligence check will be delivered to your home within 24 hours of the Executed Contract. The exception would be if the Buyer is out-of-town and the check is being overnighted to us. We will ask you to sign a form signifying you’ve received this money. That form will be sent to you via DocuSign. The Earnest Money check is held in a Trust Account typically by the closing attorney. In the event that the Buyer decides to terminate the contract after the Due Diligence period, this money will be given to the Seller.

LISTING STATUS:

Your property will now be listed in MLS as Contingent. This lets real estate agents know that the property is under contract. On occasion, we might still get a showing request. It is our recommendation that you go ahead and allow showings. Wouldn’t it be great to have a backup offer on your home? That’s why we recommend you approve all showings even after you’ve gone under contract.

COMMUNICATION:

We will supply a copy of the Executed Contract to all parties involved in the transaction. We will maintain continual communication with the Buyer’s agent, lender, and closing attorney to ensure that all details are being handled in a timely manner so we close on time.

BUYER PROCESS:

The Buyer’s agent schedules the closing date and time with the Buyer’s Attorney, the Seller, and Seller’s agent. The Buyer’s attorney conducts a title search, prepares the closing paperwork, and works with the Buyer’s mortgage lender to make sure documents are ready for closing.

SELLER ATTORNEY:

We recommend having an attorney different than the Buyer’s attorney prepare the Seller closing paperwork. This way you have someone looking out for your best interests. Once they prepare the paperwork for you, you can sign the Seller portion of the closing paperwork at your convenience either by having it mailed to you and you sign it in front of a notary or you can schedule a time to go to the attorney’s office and sign everything there in person.

Step Five:

the offer

NOTIFICATION:

We will notify you immediately of any offers, potential offers, or requests for additional information from potential Buyers. Once we receive notification that an offer to purchase your home is signed and ready to be presented, we will contact all realtors with upcoming showings as well as other realtors who have shown your home and have indicated any type of interest. This method often yields more than one offer to purchase your home, which can result in a higher purchase price and better terms of sale for you.

RECEIPT:

Once an offer is received, we will review it and have a conversation with the Buyer’s agent to review the offer and gain pertinent information to help in negotiating the highest and best terms for you.

DUE DILIGENCE:

There are two types of upfront money the Buyer will offer to the Seller in the contract – Due Diligence money and Earnest Money. Generally, we see these two amounts equaling 1% – 3% of the purchase price of the property. There are variables to these amounts and there is no hard and fast rule governing them. The Due Diligence money is the amount the Buyer pays to the Seller for the right to take the home off the market while they do inspections and secure financing. This money is to be deposited by the Seller right away and may be spent. It will go toward the purchase price of the home. The Earnest Money can be offered either at the time of the executed contract or at the end of the due diligence period. This money is deposited into a trust account that is governed by the laws of the State of North Carolina. It will also be applied to the purchase price of the home. In the event that the Buyer decides to terminate the contract after the due diligence period, this money will be given to the Seller.

CONTINGENCIES:

We will explain what contingency paragraphs allow as far as the Buyer’s ability to exercise their right to get out of the contract. We will also review your obligations such as specific performance and maintenance of the property through closing.

NEGOTIATION:

Counter offers go back and forth between the Buyer’s agent and the Seller’s agent until the Buyer and Seller agree on the terms of the Offer to Purchase and Contract. During the offer process, we will utilize our strong negotiating skills and knowledge of the real estate industry, in order to protect and promote your interests to the very best of our ability.

SIGNATURES:

Once the Buyer and Seller are in agreement on the terms, the contract is updated by the Buyer’s agent and reviewed by the listing agent and then sent to the Seller for signature via DocuSign, our online electronic signature program.

EXECUTION:

Once the Buyer and Seller have come to agreement on all the terms of the contract, have signed and dated the Offer to Purchase and Contract, and the agent of the last signing party communicates acceptance to the other parties’ agent or their client, we have an Executed Contact.

Step Two:

pre-launch activities

TIMELINE:

Introductory call from our Team where we will craft and manage a timeline to give you an idea of when your property should be ready for market.

PROPERTY HISTORY:

Complete the “If These Walls Could Talk” home overview:
– Share all renovations you’ve completed, along with the approximate cost and completion date.
– Share your personal story to create an emotional connection between a Buyer and your home.
– Share average utility costs and providers because interested Buyers will ask
– Share your home’s survey, septic permit, past appraisals, proof of permits for additions, etc.

PRE-INSPECTION & REPAIRS:

Any repairs or improvements needed to maximize your home’s value and appeal will be identified and discussed. More and more Sellers today are seeing the value of investing in a pre-inspection on the property they are preparing to list. Whether or not you are confident in the condition of the home, an inspection can give us both a professional, third-party validation, as well as an in-depth report of potential issues you may need to deal with – issues a Buyer inspection could bring to the surface later, making them part of the final price negotiation. We will provide you with recommendations for vendors and contractors as needed.

PROFESSIONAL STAGING & CURB APPEAL ANALYSIS:

Staging is the art of preparing and designing your home to become a marketable product to sell at the highest price in the shortest amount of time. It involves de-personalizing the home and focuses on highlighting the positive attributes of the property. Staging helps to capture the Buyer’s attention by creating an inviting environment, enabling them to connect emotionally with your home and be able to mentally move in, not move on to the next listing. We can help you to complete the designer’s recommendations – from simple paint jobs and curtains to table settings and fresh flowers. We’ve got a professional for everything you may need!

PROFESSIONAL MEASUREMENTS:

We will schedule our licensed appraiser to measure your home. Professionally measuring your home and providing detailed renderings with room measurements increases Buyers’ confidence in the property and assists them in envisioning themselves living there.

HOME APPRAISAL:

For some of the Sellers we represent, it is difficult to find relevant home sales to assist us in determining a strong marketable price for the property. If this is the case, we may recommend that we have our licensed appraiser perform an appraisal of your property.

SIGN & LOCKBOX:

We will install a sign in your yard and get a spare key from you for our Sentrilock Lockbox and install it in a convenient location. Our Team will walk you through setting up the entire showing process through Showing Time (MLS vendor that facilitates showings).

HOME WARRANTY:

Enroll in Home Warranty, if selected. The program we use covers the Seller during the listing agreement AND allows you to choose your own contractors. Since most Buyers will be asking for a Home Warranty as part of the offer, we find that there is a strong benefit to the Seller to have it in place from the get-go.

PROFESSIONAL PHOTOGRAPHY:

Professional photos set the tone, informing what and how we communicate with the person who will buy your home. We work exclusively with the team at Visual Properties. About a week before your house will be ready we will schedule the professional photo shoot. We’ll work out a convenient time with both you and our photographer. The actual photo shoot typically takes no more than a ½ hour. He will take photos so amazing that every Buyer will be able to visualize themselves in your home. Some suggestions to make the photo shoot go smoothly:

– Have the home clean and ready to photograph. If there is anything you don’t want in the photos, please make certain it is put away someplace that won’t be photographed.
– Light dust generally does not appear in pictures.
– Turn on all lights (overheads and lamps) but make sure ceiling fans are in the off position.
– Open all window blinds in the rooms to be photographed.
– Remove all clutter, such as mail, keys, dishes, drying racks, etc. from the kitchen countertops. Kitchens are one of the highest viewed photos.
– Pets should be kept out of the way and any pet dishes removed during photography.
– Please have all cars removed from the driveway and in front of the home. Garage doors should be fully closed.
– Remove any garbage cans from the street and make sure the yard is picked up of large items, kids’ toys, and debris.
– All of the above items should be completed 1 hour prior to the photography appointment time.
– If the home is vacant, please make sure any alarm systems are disabled before the scheduled arrival of the photographer.

RESEARCH:

We’ll be doing in-depth research on your neighborhood and surrounding areas in order to highlight the opportunities of living in your home. We’ll use this research to showcase the merits of your property. It will be the basis of our marketing portfolio and designed to create extreme SEO traction. We will then prepare a full color marketing brochure and a custom Home Marketing Information Book to be placed in your home. Together, these will showcase your home’s features with items such as an area map, school information, letter from homeowner to potential buyers, survey, deed, floor plan, Property Disclosure, tax information, and HOA documents.

PRE-MARKETING:

In order to maximize exposure to the Buyer pool, we start hyping your home on our marketing channels before it’s ready to go live.
– Reverse Prospecting of MLS
– Present your home to our proprietary database of qualified Buyers. Follow-up phone calls to targeted Buyer clients who are the best match for your property
– Notify the Top 20% of real estate agents in TMLS

PRE-SHOWING:

We create a Pre-Showing package that is sent to the Buyer’s Agent when they schedule a showing. We help agents sell your home to their Buyers.

Step Ten:

settlement & closing

WARNING:

SETTLEMENT:

CLOSING:

Step Nine:

after due diligence

FINISH PACKING:

MOVE OUT DATE:

TERMINATE INSURANCE:

SHUT OFF UTILITIES:

SCHEDULE MOVERS:

CHANGE OF ADDRESS:

FINAL WALK THRU:

CLOSING DOCUMENTS:

CLOSING DISCLOSURE:

Step Eight:

inspections

SCHEDULING:

INSPECTIONS:

RADON:

REPAIR REQUEST:

REPORT LANGUAGE:

2ND NEGOTIATION:

AMENDMENTS:

Step Seven:

due diligence period

ACTIVITIES:

CHECKS:

LISTING STATUS:

COMMUNICATION:

BUYER PROCESS:

SELLER ATTORNEY:

Step Six:

contract to close

Step Five:

the offer

NOTIFICATION:

RECEIPT:

DUE DILIGENCE:

CONTINGENCIES:

NEGOTIATION:

SIGNATURES:

EXECUTION:

Step Four:

on the market

FOLLOW-UP:

ACCOUNTABILITY:

ADVERTISING:

ADJUSTMENTS:

CHECKUPS:

Step Two:

pre-launch activities

TIMELINE:

PROPERTY HISTORY:

PRE-INSPECTION & REPAIRS:

PROFESSIONAL STAGING & CURB APPEAL ANALYSIS:

PROFESSIONAL MEASUREMENTS:

HOME APPRAISAL:

SIGN & LOCKBOX:

HOME WARRANTY:

PROFESSIONAL PHOTOGRAPHY:

RESEARCH:

PRE-MARKETING:

PRE-SHOWING:

Step Three:

go live

THURSDAY:

OPEN HOUSE:

PROPERTY SITE:

GETTING READY:

SHOWINGS:

FEEDBACK:

The Buyer found larger homes for the same price

They found other homes that are better values

Buyers will pay 10-15% more for a new home

The Seller should replace the carpet due to age, color, condition

They found other homes with larger homes and quieter streets for the same price

The Seller may need to make minor repairs and neutralize and/or de-clutter

They didn’t like the floor plan

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