How to price a fixer-upper for sale

Re: 'Ugly listings bad for business' (Nov. 6)

Dear Editor:

If a real estate agent wants to get rid of those "ugly listings" fast so that his or her sign is not out in front of them too long, I have some suggestions.

First, price it right the first time ... if you can. That is if you can get the seller/bank to cooperate. Explain that it is better to sell now at a price that people want to buy rather than incurring holding costs and other liabilities while waiting to get an unrealistic price. If the seller is a bank and wants to get the property off its books sooner rather than later, it is well advised to price right and sell now. Setting a price on a "fixer" that is the same or comparable to what a house in good condition would sell for in the area will do nothing. It will delay the sale while the property is successively marked down over months or even years.

Meanwhile, the seller incurs opportunity costs by not having the money to use had it priced right the first time and sold the property sooner. Next, network with real estate wholesalers, rehabbers and investors. These are the only people who will buy a property in bad shape. In fact, these are the only people who can afford to buy the property. Banks are unlikely to loan on a property that needs more than cosmetic touch-ups.

Regarding pricing the property right, remember that investors and rehabbers buy houses to make a profit.

In pricing the property, just using comps is not enough. You have to see the situation the way the investor or rehabber does. In other words, you have to remember that they have to factor in cost of repairs, holding costs and seller costs. Price the property so that after including these costs the investor/rehabber can still make a profit even if they sell the refurbished property a bit below market to retail buyers looking for value at a good price.

If you are going to deal with wholesalers, familiarize yourselves with real estate options and contract assignments and see if there is a way to abide by local real estate board rules while still making use of wholesalers who can be a valuable resource. Wholesalers can vastly enlarge an agent's pool of potential buyers of distressed properties.

Finally, be flexible. It's a buyer's market, and what worked during the boom times might not work now.

Alfred Strauss
ARS Services
Delran, N.J.

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