Distressed Home Q&A Recording – January 15th, 2021
For your ease, we have provided a transcript of the Distressed Home Q&A Recording.
Hey, this is Evan with Simple Sale Central Florida. We’re back here this month for our monthly Distressed Home Q&A, our January Q&A. Just to quickly introduce myself, I’m Evan Shelley, I run Simple Sale.
We buy distressed properties throughout Central Florida. That’s Tampa, St. Pete, Pinellas & Hillsborough counties. We even look down in Manatee, Bradenton area, and from there we look at Orlando, Orange County, even Osceola, Seminole Counties. Then on the east coast, Brevard County, including the cities of Melbourne, Titusville, Cocoa, all the way up to Palm Beach.
Like I said, we buy and sell distressed properties throughout Central Florida. We also do list properties if the situation fits. If your property isn’t extremely distressed, there are instances where listing your property makes more sense, so just wanted to put that out there. We do have a brokerage called Simple Sale Realty where we can list your property, and in some situations that does make more sense for the client.
The mission of the company is to bring transparency and accountability to distressed home sales. What that means is we are in a predatory industry where people will try to manipulate their client to get the most money possible, and what we do – yes, we try to make money, a business by definition cannot function without making money – but with everything we do we keep the client in mind. When we make a commission on a deal where we buy and sell a property and make a profit, we feel as if we’ve done everything we can for the client and it’s under our risk tolerance to where we felt that we bought the property at a price that we could make money and the client got an offer that was fair.
With that being said we’ll go on into the questions.
1. What’s different about selling a distressed home vs. a regular one?
If you have a distressed property you’re probably aware of it. To define distressed that means a property with excessive repairs, legal issues, in pre-foreclosure where you’re late on mortgage payments, you can be late on HOA payments for that matter. We recently bought a property that was a couple years late on HOA payments. That was a problem that would define distressed. A regular home is one that needs very little work, typically cosmetic work.
I actually just left a house earlier today that is going to be a listing because it needed very little work. There are some issues that are being worked through with a contractor, but it’s not to the point where this person needs to sell the property at a lower price to someone that’s going to give them a cash offer. It makes more sense to take the time to list it. They’re not in a rush and they’re going through a probate so we are helping them handle the probate with an attorney. We are going to take care of the few repair issues and list the property for them, and they’re going to net a lot more.
As I was speaking about the goal of the company, bringing transparency and accountability: we felt that listing the property made a lot more sense in this situation and the client will net tens of thousands of dollars more.
The difference between a distressed and a regular property is the amount of repairs, legal issues or something that you can’t overcome. You may need to sell the house very, very quickly – you don’t have time to list it and vet offers and let people walk the property. With a regular one, you can list the property, you can take time, you can let people view it. It’s not an issue, there isn’t anything extreme or extraordinary that’s wrong with the house.
2. What does it mean to sell property as-is? Do I need a realtor?
To sell a property as-is can mean something as extreme as you leave the property, you’re moving. We had a lady move to Tennessee and she just left the property literally as it was. She took the things she wanted, she left the rest of it.
That’s the extreme version of selling a property as-is you just kind of leave furniture, everything and you take what you want and you leave the rest and we take it with the repairs needed and then we’ll buy it as-is.
You can sell a property with a realtor as-is. The difference in the problem becomes the selling of property as-is with an agent or realtor is the timeline. If you’re wanting to sell the property in 30 days or less, you’re probably not best suited for listing as-is. You may get some offers that will close that quickly but sometimes it can take a while to get the best and highest offer.
We have a property that we sold as-is with our brokerage and I think we ended up taking maybe 60 days to really vet out offers, because in this industry you get a lot of offers that aren’t quite real. It’s just the state of the industry that we’re in right now. You’ll get offers that aren’t real and they’ll go into contract and they won’t close and then you’re back under contract with someone else and they won’t close. Then if you want to vet all that out you might as well go ahead and tell yourself you’re not going to close that property for 60 days. That’s just part of the process.
So if you don’t have that kind of time you should avoid the realtor route, but if you do, then you should definitely go that realtor route in most as-is situations.
3. What do cash offers for homes entail?
It really depends on the company you’re working with. With our company, a firm cash offer typically entails us have thoroughly vetted the property, we feel confident in the property, we’ve taken an inspection period – anywhere from 3-14 days depending on the property (and in some cases we do zero-day inspection periods) – and we’ve moved through the inspection period and we are ready to close.
With some other companies, they’ll make you cash offers without ever seeing the house. Knowing very little, they’ll just look it up online and throw you a number. It really depends on the company.
Going back to the mission of transparency and accountability, we try to make the process as clear as possible. With that firm cash offer that we make, we will tell you when we’re in this to close on X date.
Some other companies aren’t quite that confident in their offer so you just have to vet out those companies. Typically you can do that by reviewing the companies online, looking at the reviews and things of that nature.
4. When is the best time to sell a distressed house?
In almost all cases that I’ve seen it’s better to sell the house when you’re needing to sell it. I’ve seen cases where people refuse to want to sell for whatever reason. They say, “Well, you know, the offer isn’t high enough. We want your offer plus $30,000” or whatever the case may be. They have unrealistic expectations and things of that nature.
I’ve seen people become very emotional about it, then 3 months later they’re in a worse spot for whatever reason. Maybe there’s excessive repairs to the property, there’s a leaky roof and they don’t want to sell it for less than X price. They can’t get that price and the condition of the property is greatly worsened over that period of time. Then they come back 3 months later and things are worse.
So if your property is truly distressed, there’s some real issues, the honest answer is probably today. The day you think ”I need to sell this property” is probably the best time. It’s not going to get better unless you have the money for the repairs. Then I would highly recommend you make the repairs and then sell the house. In that situation that would be your best alternative.
If you have the money for the repairs and you understand construction and contracting, hiring contractors and vetting them, the scope of work, then you should fix the property. Make it a house that’s no longer distressed and then sell it.
5. I inherited a home, what are some pros and cons to renting vs. selling it?
If you inherit a property, let’s assume that there’s nothing owed on it. Renting the property isn’t a bad idea. If you know how to handle and vet tenants, or you have a very good property management company, that is not a bad idea at all to rent out the property.
The cons are if you try to self-manage, you’re going to have a lot of stress in your life for that rent payment every month. Just for general maintenance of the property, making sure your tenants pay rent, making sure that there’s nothing going on at the property that you wouldn’t approve of, things of that nature. It just can be a constant stress vs. selling it.
The pro of selling it is you’ll get your money out of the house quickly. The con is you don’t have that passive income that comes from renting it. I would never say renting is a bad option. Just be prepared and understand the responsibility that comes with renting a property. It can be time consuming and comes with its own headaches. However, there’s ways to mitigate those if you educate yourself.
So it really depends on your situation. If you don’t need the money I would recommend you rent it and find a great property manager. We can refer you to people if you’re in the Central Florida area, I would go that route.
6. Do you have any tips for selling a home when you’re going through a divorce?
We’ve handled a few of these and the biggest thing, the most important thing, in my mind, is making sure that you’re on the same page with that other person that you’re getting divorced from. I’ve been in situations where I talked with one of the spouses and they’re on a totally different page than the other. We’re talking about price and moving forward and the other person is saying “I don’t want to sell” or “I don’t want that price for it I want some other price.”
A lot of the time it just doesn’t work out and those people end up just fire-saling it to some random person down the road for whatever they’ll give, which is not ideal. So I would say it’s really getting on the same page with that other person. Even though you’re going through a difficult relationship you need to just take the time to be on the same page and understand “OK, we’re gonna sell this thing. We want this for it, we agree. Let’s sell it.”
Otherwise, you’re just going to spin your wheels and talk to people and try to get it sold and nothing’s ever going to happen. I would just have a clear plan and obviously, you know, a good attorney.
7. Can I sell my house in foreclosure?
We purchase properties in pre-foreclosure all the time. There are definitely instances where there’s a foreclosure, and you can sell your property and get out of foreclosure.
There are variables there. How much do you owe on the mortgage? Is there any equity in the house? If not, there are various ways you might be able to get it sold and make some money. We could discuss that with you, or another company you’re talking with can discuss that with you. Hopefully they’ll help you understand different ways you can sell in foreclosure even if you don’t have any equity.
What “no equity” means is you may owe more on the mortgage than what the home’s actually worth. There are ways to get around that and possibly put money in your pocket. We can definitely talk with you about that.
8. My house is in very poor condition, but I can’t fix it and I need to sell it. Can you help?
That’s what we do. The majority of the properties that we buy are in very poor condition for various reasons. That’s exactly what we do. We buy those properties as-is, no repairs. You don’t have to clean the property up. We’ll just buy it as-is with all the repairs on it. That’s exactly what we do.
9. How can I sell a property in probate?
Simple Sale deals with a lot of probate deals and essentially the first step is getting an attorney that you trust. We have attorneys that we use for all our probate deals. We’re very comfortable working through the various complications that can come with a probate deal. If you have a trusted attorney I would say reach out to them. If you don’t, reach out to us. We can recommend one to you and we can help you through that process.
Some of the big things are how many heirs are there? Are all the heirs wanting to sell the property? Do all the heirs want to sell it for around the same amount? Things of that nature. You really want to get on the same page with the heirs. If it’s only you, you just need an attorney you trust and to find a buyer for the property.
So that can be us or another company that you trust. Selling a property in probate does have its complications, but if you work with someone who actually works in probates and works with attorneys regularly on probate deals then it can be pretty simple on your end.
10. Can you sell a house with a lien on it?
So you definitely can sell a house with a lien on it. We’ve bought many properties that do have liens. We typically pay those liens off prior to closing or at closing those will get paid off, but also we have bought properties and closed without paying the liens.
In mid 2020 we bought a property that had $364,000 in liens on it. The house was worth much, much less than that. We renegotiated those liens over the course of 6 months down to just a few thousand dollars. We can really handle any type of situation and we’re prepared to take the risk of negotiation.
If you do have a lien or substantial liens feel free to reach out to us because we can handle those and we will take those risks with a property.
With that being said I think that was the last question that I’m going to answer today in our January Q&A. I do not see any questions in the comment box, so I’m just going to go ahead and close it out.
Thanks for watching this Q&A. You can reach us at 407-338-4183 and if you want to refer your distressed property you can go to simplesalecentralflorida.com and leave your info and we will reach out to you and talk with you about your property and see if we’re a good fit. Not all properties are a good fit just depending upon the situation.
We like to work with people who want to work with us and we want to continue to expand our mission of bringing transparency and accountability to distressed home sales and taking care of our clients with every decision we make.
Thank you all very much and have a great weekend!