exit advice (by LL [IA]) Jan 19, 2019 4:19 PM|
exit advice (by Robert J [CA]) Jan 19, 2019 6:19 PM
exit advice (by BRAD 20,000 [IN]) Jan 19, 2019 7:49 PM
exit advice (by George [IL]) Jan 20, 2019 4:56 AM
exit advice (by George [IL]) Jan 20, 2019 5:06 AM
exit advice (by LL [IA]) Jan 20, 2019 6:56 AM
exit advice (by fred [CA]) Jan 20, 2019 8:10 AM
exit advice (by myob [GA]) Jan 20, 2019 8:46 AM
exit advice (by LL [IA]) Jan 20, 2019 2:39 PM
exit advice (by AllyM [NJ]) Jan 20, 2019 3:04 PM
exit advice (by OKHMBLDR [OK]) Jan 20, 2019 5:33 PM
exit advice (by Landlord ofthe Flies [TX]) Jan 21, 2019 1:04 PM
exit advice (by Dan [NY]) Jan 21, 2019 1:19 PM
exit advice (by Ray-N-Pa [PA]) Jan 22, 2019 8:13 AM
exit advice (by TonyT [PA]) Jan 23, 2019 1:13 PM
exit advice (by TonyT [PA]) Jan 23, 2019 1:16 PM
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exit advice (by LL [IA]) Posted on: Jan 19, 2019 4:19 PM
Iím selling my property and the listing agent wonít negotiate below a 4% commission. My property is going to be listed at 15M, so fee will be 600k. I will 1031 into NNN or DST properties on a all cash offer. 600k is very difficult to give up after a lifetime spent as a LL. Instead, would u advise me to find the buyer myself and do seller carryback with a 10% downpayment? Downside is Iíd lose the ability to do 1031 & buyer not wanting to relocate to my boring area of the country.
exit advice (by Robert J [CA]) Posted on: Jan 19, 2019 6:19 PM
I sold an apartment complex that was almost paid off. I listed the property for sale by owner on an investor web site. I got lots of calls.
Since there was no broker/agent, I saved myself the 6% commission. Since I was offering financing, i was able to get an over market price. Why? Because the buyer didn't have to pay points and fill out loan docs. I only asked for 4 years tax returns and permission to run their credit. I also got several bank statements. This was an experienced landlord.
I asked for a 15-20% down payment. The loan had a 10 year pre-payment penalty so they wouldn't pay off the loan so fast.
Since I accepted less than a 29% down payment, this was now an installment loan. The monthly payments were 95% interest and a few percent in principal.
I did not have to pay recapture on my depreciation on the entire amount, only on the down payment. I deferred my long term capital gains tax and state tax.
So I saved myself the 6% commission and got 2% over market value. My buyer put down 15%. I had the insurance put in both our names and the insurance company, if the premium wasn't paid by the new owner, I got notified and was covered for 30 days after they gave me notice.
After 10 years the buyer paid off my loan. It was like I got twice the price because the interest rate at that time was 9.5%.
exit advice (by BRAD 20,000 [IN]) Posted on: Jan 19, 2019 7:49 PM
You are mixing two issues.
Commission: I don't know about high priced properties and commissions. Shop around for brokers.
Sure you can try to sell it yourself but be willing to put in the time and money to advertise it.
$600k is a lot of money BUT you are dealing with $15mill. ONE good prospect can earn this money back for you. A GOOD broker will earn this for you. Buyers look at FSBO and automatically deduct 6%.
How desirable is the property? What type? Existing clients for such a property?
Financing: Offering financing can sweeten the deal but there are tons of laws you must follow. And $15Mill buyers have fancy pants attys who might know how to snatch the propery from you.
Selling on installment CAN bring in more money but you lose the 1031 option which is worth A LOT.
Interested in hearing more!
exit advice (by George [IL]) Posted on: Jan 20, 2019 4:56 AM
I bought my home for sale by owner, and i bought my first apartment building for sale by owner. both times, i felt since the seller is saving commission, i should get a better deal.
I sold another apartment building for sale by owner, but i stood firm in a tight market and managed to get top dollar for it, with no commission.
6% commission sounds high for a $15M property. shop around. is this a national brokerage company that specializes in commercial properties? there's a few of those around and they too negotiate.
if there's a co-op broker involved in the sale, make sure you agree ahead of time the commission split for the listing agent and for the selling agent. if the listing agent also happens to sell it, agree on that total commission too. everything is negotiable. --99.92.xx.xx
exit advice (by George [IL]) Posted on: Jan 20, 2019 5:06 AM
oops. i thought you said 6% commission... not 4%. that sounds a little more reasonable. then again, it depends who the listing agent is.
seller financing with only 10% down would scare me if i was the seller. if vacancy creeps up, and they have some major repairs, and interest rates go up, and prices pull back, they can decide to walk, and you are stuck trying to foreclose on it yourself, unless you do a contract for deed. i know i am being negative, but it happened a lot a decade ago. --99.92.xx.xx
exit advice (by LL [IA]) Posted on: Jan 20, 2019 6:56 AM
itís a classB property, basically a whole subdivision of duplexes, vacancy rate of 2% very steady, wife runs the office, i do maintenance/rehabs with 2FTE, have nice shop,van,pickup,trailer. I bot first rental Ď85 senior in high school, kept trading up, donít owe bank much. Wife wants 1031, got to convince her to find the right person and do seller financing, save 600K + plus sell at or above asking price. Mrlandlord is probably best place to a find honest, hands on investor that has 1M for downpayment. If the buyer has experience, It would be difficult to screw up.
exit advice (by fred [CA]) Posted on: Jan 20, 2019 8:10 AM
1. List with a broker or FSBO? - Only you know your capabilities and shortcomings. If you list it with a reliable broker, find one who will take less than 4%. At this price level, 1.5% to the selling broker and 1% to the listing broker make more sense. If you go FSBO, you better know how to do it so you are taken advantage of by some shark. Remember SSS: seller selects services - don't let the buyer take control of your escrow.
2. Are your rents at full market rate or below market rate? Will the buyer be able to jack up the rents without losing tenants?
3. Financing: If you provide financing, know your buyer(s) past well.
4. There is a chance that your buyer(s) will come from out of state. Stay on top of the verification process on every detail. Make sure your buyer(s) are keeping up with providing documents on a timely manner.
5. Let us know how you're doing.
exit advice (by myob [GA]) Posted on: Jan 20, 2019 8:46 AM
Am I the only one who thinks if you have a sale of a 15M dollar property-- and have been a lifelong investor that you would need advice from here-- us? REALLY? you yanking our chain? It worked. --99.103.xxx.xxx
exit advice (by LL [IA]) Posted on: Jan 20, 2019 2:39 PM
u guys are smarter than me, i've been reading & learning from mrlandlord since aldo was a daily poster, that was probably ten years ago, no better place for motivating and educating a hands on LL than here! --174.126.xx.xxx
exit advice (by AllyM [NJ]) Posted on: Jan 20, 2019 3:04 PM
hi. That's a big deal. I would do whatever it takes to get the 1031 exchange. Have you identified a property? An old friend in Boston used to manage for high rollers like you. --73.248.xxx.xxx
exit advice (by OKHMBLDR [OK]) Posted on: Jan 20, 2019 5:33 PM
Since this is a group of duplexes in a subdivision can't you parcel them out and sell individually, or in packages of 2, 4, 6, 8, etc. buildings?
exit advice (by Landlord ofthe Flies [TX]) Posted on: Jan 21, 2019 1:04 PM
Keep in mind that 3% of that 4% is going to the buyer's agent. Even if you weren't using an agent, but the buyer did, you'd be paying that anyway. If that's the market rate, you really don't want to undercut the buyer's rate.
The listing agent will only receive 1%. Granted that's $150,000, but the agent doesn't get all of that. The broker takes their share first so that agent may be getting $75,000 to $125,000. Also keep in mind a $15M property will probably be on the market a longer time than typically priced properties so they're going to have to show and promote it more and that means their expenses may be higher.
Before you decide to reject the agent, ask for a breakdown on their expenses and how the commissions will be split. You might find that it's not that out of line.
Also, if doing it yourself prevents you from doing a 1031, how much would you lose in taxes vs paying the 1%? I bet the difference would be worth paying to sell quicker and have less hassle.
Look at the bright side, the more you pay in commissions, the less you pay in taxes. --108.69.xxx.xxx
exit advice (by Dan [NY]) Posted on: Jan 21, 2019 1:19 PM
Commissions are typically divided four ways. Selling side and listing side. Each side splits it further between agent and broker. I would be more concerned how the commission goes out to the selling agent. I typically put the listing out at 50 percent of listing commission. The commission can be used to help sell the property. Not all agents do this so read the contract carefully. --68.192.xxx.xxx
exit advice (by Ray-N-Pa [PA]) Posted on: Jan 22, 2019 8:13 AM
Get a call into your local banker and let him know you are considering selling. He might have someone lined up looking to buy. At that price point, you will be dealing with a seasoned investor.
NNN properties are selling with rather low cap rates. It will be difficult to step down to a 6% rate. If you are considering doing a 1031, now is the time for you to find a replacement property or properties and take control of them via an option.
You might want to consider listing it on loopnet yourself. The problem is for a mere 4% you will be getting a person who can act as a buffer for you. If you sell it yourself, I am not so sure.
Perhaps you can offer 4% if it is sold within the next 4 months and 3 if it takes longer to get an offer. You will want an incentive for proper behavior.
Also offering a seller assist of $$$ with an accepted offer on or before the next 45 days, keeps the offers to you honest.
Hope these ideas help --72.23.xxx.xx
exit advice (by TonyT [PA]) Posted on: Jan 23, 2019 1:13 PM
If I had a 15M property with no mortgage, I would be very tempted to just keep it and have a company manage it for me. Yes, they will not do as good of a job as you would, but the money you stand to lose ($600,000) seems like it would be way more than the losses using a management Co.
Keeping it would also eliminate the higher risk on a NNN commercial property which may not be doing too well right now and in the close future. The internet is killing several sectors of commercial properties (non-residential).
Also, if your capital gains/depreciation recapture is around $600k - $800k or less, then I'd just sell (FSBO) with no 1031 exchange. Tax rates are very low right now and it could justify a taxable event while the getting is good. A Democratic congress could easily hike taxes (as they usually do) and even possibly eliminate 1031's ...you never know. I just got crushed on the Trump tax reform: just after structuring/shifting all of our multi-family debt on to our mortgage-less home (for a really low interest rate), the tax deduction was promptly eliminated by the new tax laws. So we now lose thousands on them changing the rules in the middle of the game. --73.52.xx.xxx
exit advice (by TonyT [PA]) Posted on: Jan 23, 2019 1:16 PM
I once had my 12 unit FSBO and I offered something like $10,000 commission to a buyer's agent. I did get as buyer right away and they had an agent who was willing to take the lower commission.
So if you list yours FSBO on loopnet and offer, say a $100,000 commission to the buyer's agent, you may save a lot of money. --73.52.xx.xxx
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