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FSBO in CA resources?

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Senior Contributor

FSBO in CA resources?

Can anyone suggest a book or website to consult where I can get advice about conducting a potential FSBO sale (of an average single family residence, and possibly later a small apartment building) in southern California?

 

For the latter, should I even go to night school for a bit and become a licensed agent while I'm at it?

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Message 1 of 15
14 REPLIES 14
Senior Contributor

Re: FSBO in CA resources?


@wasCB14 wrote:

Can anyone suggest a book or website to consult where I can get advice about conducting a potential FSBO sale (of an average single family residence, and possibly later a small apartment building) in southern California?

 

For the latter, should I even go to night school for a bit and become a licensed agent while I'm at it?


I really would never ever try that with an  apartment building.   To many legal liability issues.    For both the house and the apartment building their is according to National Assoiciation of Realtors 1) a 90% chance you will either over price or under price by 10%.   2) There is a less than 10% chance you can sell it your self.    Questions 1) Who is going to guide though the discloures 2)   How are going to hold escrow 3) Are you gong to handle and be present for all showings, appraisals and inspections  4) Can you run a title? 5) Do can you handle any hick ups in the transactions.    6) Who  is going to handle you closing Buba Attorney    some firms are alot better than others.   7) What if they want to change the deal? 8) How are you going to value it? 

 

Selling your own property as a Real Estate Agent setts your self up to an even higher standard and very strict liability.   Many brokers will will not let a new agent sell their own properties and they certainly won't hire you just so you can sell your own. About 1/2 the e/o claims and Profeesional Standards Complaints come from  Agents trying to sell their own properties. My DW is on the Professional Standards  Committeee.   She has no problem with suggesting large fines and suspending liscenses.  Your broker will be subject to fines also if you made a mistake. He will make you pay for his fines. 

 

Your best bet for the apartment building is to hire a commercial realtor with a ccim.     For residential find a strong realtor in the imediate area who sells about 10 to 15 houses a years and avoid teams. With teams you become a number and get no attention.  Have both due CMA on the properties to use for list prices.  Valueing properties is something that a night school can't teach in 40 hours it takes years.

Both myself and DW hold numerous certificates for valuation courses  and can project the sales price with 1%.  This has taken  many years to learn. 

Message 2 of 15
Senior Contributor

Re: FSBO in CA resources?


@Backwoods wrote:

@wasCB14 wrote:

Can anyone suggest a book or website to consult where I can get advice about conducting a potential FSBO sale (of an average single family residence, and possibly later a small apartment building) in southern California?

 

For the latter, should I even go to night school for a bit and become a licensed agent while I'm at it?


I really would never ever try that with an  apartment building.   To many legal liability issues. We'll probably keep the apartment for a while, but whether I sell it myself will depend on how the first experience goes.  For both the house and the apartment building their is according to National Assoiciation of Realtors 1) a 90% chance you will either over price or under price by 10%.  Both were appraised a year ago as part of an estate division. 2) There is a less than 10% chance you can sell it your self.    Questions 1) Who is going to guide though the discloures 2)   How are going to hold escrow 3) Are you gong to handle and be present for all showings, appraisals and inspections  I've been doing this already for the property I've been living in that is about to close. 4) Can you run a title? 5) Do can you handle any hick ups in the transactions.    6) Who  is going to handle you closing Buba Attorney    some firms are alot better than others.   7) What if they want to change the deal? This is southern California, unfortunately. The buyers tend to try to change the deal right up until closing. But in using a "professional" agent the estate/trust beneficiaries have had to deal with this anyway. 8) How are you going to value it? A year-old appraisal that satisfied the IRS for the house.

 

Selling your own property as a Real Estate Agent setts your self up to an even higher standard and very strict liability.   Many brokers will will not let a new agent sell their own properties and they certainly won't hire you just so you can sell your own. About 1/2 the e/o claims and Profeesional Standards Complaints come from  Agents trying to sell their own properties. My DW is on the Professional Standards  Committeee.   She has no problem with suggesting large fines and suspending liscenses.  Your broker will be subject to fines also if you made a mistake. He will make you pay for his fines. 

 

Your best bet for the apartment building is to hire a commercial realtor with a ccim.     For residential find a strong realtor in the imediate area who sells about 10 to 15 houses a years and avoid teams. That has been a problem. We hired a relative who kept her agent license active and nominally works for a local broker but hasn't had any other business in a long time. Her office's staff has also made numerous errors with the paperwork, often making the same errors for multiple properties. And yet she was getting very nearly 6%. I don't think I could do much worse, given that I'd actually give it serious attention. With teams you become a number and get no attention.  Have both due CMA on the properties to use for list prices.  Valueing properties is something that a night school can't teach in 40 hours it takes years.

Both myself and DW hold numerous certificates for valuation courses  and can project the sales price with 1%.  This has taken  many years to learn. 


I don't doubt that there's a lot to learn, but I'm willing to put in a lot of time to save a few hundred thousand dollars in commissions.

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Message 3 of 15
Senior Contributor

Re: FSBO in CA resources?

@wasCB14 Get a current appraisal  about 4 weeks before you list .   I would stay away from friends/and family realtors.   The california especially southern california has very wide swings.   This year supply has gone down demand not quite as strong.   I am very familar with the southern california real estate market as my family manages and has a large interest in one the reits.   I personally prefer the nice quite pace of the lower mid atlantic. 

Message 4 of 15
Senior Contributor

Re: FSBO in CA resources?

I'm originally from NY and I'm not that tied to southern CA (at least, I don't especially want to be). I'll be getting a modest house that I plan to live in for at least a while, but the rental economics aren't as favorable as when the business was started by my grandparents. I'd rather own more of my favorite stocks.

 

The apartment building is complicated because some tenants need to use parking spaces that are part of the lot for an adjoining SFR (not the house in the original post). An apartment buyer would need to purchase both the adjoining SFR and apartment.

 

If you're willing to discuss it in a private message, I'd be curious to know which REIT.  I make a little money from an occasional investment blog and write mostly about REITs.

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Message 5 of 15
Senior Contributor

Re: FSBO in CA resources?


@Backwoods wrote:
7) What if they want to change the deal? This is southern California, unfortunately. The buyers tend to try to change the deal right up until closing. But in using a "professional" agent the estate/trust beneficiaries have had to deal with this anyway.
...and the house I've been living in, which was supposed to close next week, just had the buyers back out. Same relative/agent for the sale. There were no buyer contingencies other than the loan-to-appraisal value (which the house satisfied comfortably), so it's not clear what we can or will do. It's not clear how much money, if any, the buyers actually put into escrow that we can keep. Lots of outside parties being clueless and/or deceptive.
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Message 6 of 15
Senior Contributor

Re: FSBO in CA resources?

I have seen buyers walk and loose EMD because they did not like the color of the neighbors house. Nothing  has shock value any more.

Keep the EMD.   Now if you  really want to rattle sabers 1) tell them you intend to sue them for specific performance  2) If they really want  out you will release them from the contract for only another $25,000 

Message 7 of 15
Senior Contributor

Re: FSBO in CA resources?


@Backwoods wrote:

I have seen buyers walk and loose EMD because they did not like the color of the neighbors house. Nothing  has shock value any more.

Keep the EMD.   Now if you  really want to rattle sabers 1) tell them you intend to sue them for specific performance  2) If they really want  out you will release them from the contract for only another $25,000 


So $28k went into escrow (about 3% of the purchase price).

 

The buyer's agent is saying that the buyer's financial adviser won't permit him to take a loan from his IRA for the down payment (which was his original plan). Of course, the adviser is just an adviser and not a trustee with any real power, so this excuse is invalid. Taking a loan from retirement money is not a good course of action IMO, but it's one the buyer had previously chosen, committed to, and has the legal authority to do. Additionally, the buyers are in the process of selling their current home (which was in escrow when the viewed the house, but their buyer has backed out). The sale of their property was not a contingency in their offer to buy ours, but they seem to be saying that we should have known it was necessary.

 

There are some saber-rattlers, myself among them, who want to keep the escrow and sue for specific performance or an additional ~$20k. There is some concern that the relative/agent's office may return the escrow funds to the buyer so as to not sour its relationship with the buyer's agent. I'm not sure what the odds of this happening are. It's unusual that the offer had no contingency for the sale of their current property, and (from what I hear) unusual for the buyer to really lose anything in a deal that falls apart because this contingency is common.

 

It definitely steers me further away from using her at any point in the future, and saddens me to see how greedy my extended family is. I know I don't have the experience to prepare a complicated 706 return, even though I am a tax accountant, so I let the family use a firm with a specialized office for estate returns rather than demand the fee for doing it myself. Yet I have to put up with bad service from a relative/agent who isn't good enough (or at least interested enough in real estate) to get any other business.

 

It definitely reminds me of the value of going with someone I can fire, in any line of business!

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Message 8 of 15
Senior Contributor

Re: FSBO in CA resources?

@wasCB14    The 706 and the related 1041's?   I was involved in a total of 3 estate tax returns. Two for family and one for client when I had my little CPA firm.   At one point I and 4 other people also owned a very large droped  firm dropped off   at the convience store and pick up the next day. Made lots of seasonal money doing basic returns and had 20 data entry people. Sold out for good money    Back on point keep the emd. The agent to dispurse the emd will require a release.   For estate tax returns most of the time is assemblying asset lists  and trying to value low.   Its usually easier to find a firm that just does these as a sub out for around $125/hr unless    you  have tons of spare time.   Try doing 1041 that own multiple business including 25 plus rentals, 2 farms one which makes money and the other looses and hold large stock position including municipal bonds.   Real fun. 

    

Message 9 of 15
Senior Contributor

Re: FSBO in CA resources?

Now the relative/agent's boss is saying they "don't know" if any escrow money from the contracted buyers ever actually arrived. If they did ever get any (still unclear at this point) they seem much more interested in their relationship with the buyer's agent and reputation for "playing nice" with other brokers.

 

What is clear is they're not being straightforward with us, their own client and the agent's family!

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