Neighbor wants to buy my house. Should I hire a realtor?

[Hugh R]

Next door neighbor expressed interest in buying my house for his older parents. He likes that its next door and a single story house. Grandparents would then be close, and can watch his 3 year old and another one in the oven.

A realtor I've dealt with favorably in the past might cut me a good commission deal if no marketing, no listings, no showings, etc. I could just go through an escrow company.

Downside, its about a year early for me to list and he would want to close this Summer, but it would push my retirement out of the Los Angeles area by a year and I'm totally OK with that.

Another nice part is I wouldn't need to "prep" the house for sale in terms of clutter, some inside painting and a few $1000 in sod and other landscape work to pretty it up for sale.

Another downside, housing here is getting bid up beyond asking price in many cases, so I may miss that up pricing potential if I don't do the MSL thing.

OTOH, we're talking $750K or so, and 6% commission doing the MLS thing is $45,000 in commissions, (the market is hot enough here that 6% is really the going rate). I think she might do it with a closed deal for 1-2%, $7,500-$15,000 for running some paperwork around (her broker would want a cut as well).

Bought for $330K 20 years ago and have put maybe $100K into it in hardwood floors, double pane windows and doors, HVAC, re-pipe and pool plastering all in the last ten years (no second for any of this stuff). I own the house free and clear. So I'd walk away with something like $600K either way.

OR, should I pencil out the realtor and just consider going with an escrow between the two of us?

Thoughts would be appreciated on the pros and cons of either way.

[Chocaholic]

You don't need a realtor. Hire a real estate atty to handle the paperwork. Should cost you a few hundred, maybe $1k at most. If you've got a buyer, there's no reason whatsoever to give a gift to a realtor.

[legion]

Originally Posted by Chocaholic

You don't need a realtor. Hire a real estate atty to handle the paperwork. Should cost you a few hundred, maybe $1k at most. If you've got a buyer, there's no reason whatsoever to give a gift to a realtor.

^This.

[eastbay]

Laugh if you want, but some friends sold their house in San Rafael for way over asking on Craigslist in one day. Did the lawyer thing to close. No issues.

As far as leaving money on the table, Zillow figures are ballpark close for CA, so take your Zillow price and add 20% and offer to your neighbor.

[HardDrive]

Originally Posted by Chocaholic

You don't need a realtor. Hire a real estate atty to handle the paperwork. Should cost you a few hundred, maybe $1k at most. If you've got a buyer, there's no reason whatsoever to give a gift to a realtor.

Yup, this. Wife and I sold our first house this way. I don't recall how much we paid the RE lawyer, but it was cheap.

[MRM]

Hugh, you're really asking two questions. The first is what is the most efficient way to transfer the property to a known buyer once the price is fixed. But implicit in this question is the question of whether you've priced your house fairly?

To answer the second question first, no, you don't need a realtor to close. You can use a title company to act as the closing agent. Not expensive. They do all the paperwork. Easy to do. My wife and I actually bought a house two doors down from us for my in laws to live in several years ago. We saw that the older woman who lived there had gone into an assisted living facility so we stopped by one day when workers were fixing the place up and asked to be out in contact with the family selling the property. A couple of weeks later were signed the papers. The seller used a title company as the closing agent. It went smooth as silk and we all saved the value of the real estate commission.

But to answer the second question, I think you need to ask a real estate agent to do a market evaluation for you. That should be a flat fee service. I am suspicious that the market is rising higher faster than you notice and that the potential buyer is more aware of this because they are actively looking at properties and are more tuned into the market. Again, no need to pay a commission, but I think you're leaving money on the table if you don't get a market comparison from a good agent.

The first question I posed is hidden inside the

[Don Ro]

"You can use a title company to act as the closing agent. Not expensive. They do all the paperwork. Easy to do."
~~~~~~~~
A couple I know sold sold several homes in WA and OR this way.
Cheap and EZ - PZ.

[Hugh R]

MRM, I'm glad you gave input, and as always valuable. I think the potential buyer is really looking at convenience and a single story house right next to his house, for his parents, especially since his wife is prego again. He seems to check out solid, VP or a local engineering firm, been in the hood for 10+ years. Credit check and background of the grandparents looking to move is a must.

They want to move from a 4,000 sq. ft. two story, they've lived in in Tarzana ($$$) for 40 years to a smaller (2,700 sq. ft.) single story. Again, he approached me today about this. I don't know, but I would expect a cash deal.

I will be doing a market check before we discuss $ and other particulars. I'm not in a hurry to move, but the convenience is too hard to ignore.

[Hugh R]

I'm thinking about it more and more. My optimum time frame to sell is realistically (for my convenience) about a year to 18 months, not 3-4 months. I've been told its a very desirable property, 18 acres, of mostly hills, but I own the ridge lines, several dozen, maybe a hundred, mature Oak trees, I really don't know, some are five feet in diameter. About 4,000 sq. ft. of nice hardscape patio, pool, spa, area. 500' to my neighbor's property line. I think I have close to 1/2 an acre in driveway alone.

Single floor at 2,700 sq. ft. hard to find around here. 20-30 minutes to the Studios in Burbank. Maybe I should list it for $1 Million and just sit and see what happens. Lots of schmucks in Los Angeles with more money than sense. I'm sure I'd list it with a realtor under that scenario.

[icemann427]

Hugh, just remember when you do your market check in a hot market, the sale prices you see are already dated and no longer really valid. Interview at least three realtors and have each of them do a CMA (current market analysis) showing you all their data. In addition to that data, they will need to give you an estimate of the overbid amount that your house is worth/could sell for in your hot market. However, no matter what they say, take what they say with a grain of salt and use your own brain in coming up with an appropriate sales price. A certain percentage of realtors want an easy sale, and as such, will not recommend the cutting edge price from which you would benefit. Additionally, since you live in SoCal, I'm guessing the summer months would be the most opportune time to market your property, so if you can wait about three months, prices will be even higher and you will be able to take advantage of an even hotter market.

[fanaudical]

You might be selling yourself short on only $1M. I'm seeing properties with descriptions similar to yours being offered here in Oregon for ~$1.5M+ ("Willamette Valley wine country").

[Hugh R]

ICE agreed. I sold a near beach front property 15 years ago, the three realtors suggested $320K or so, I said BS and had them list it for $365, it sold for list in 3 days.

[speeder]

#1, IMO, is don't sell sooner than you want to. The market keeps going up and you could be screwing yourself two different ways, (timing and $$). Even if it doesn't go up much, it's not going down.

Los Angeles has been a seller's market for quite some time and it doesn't look to be changing anytime soon, much to my chagrin.

The only way I'd recommend selling w an attorney, (no RE agent or listing), is if you were 110% sure that you were getting top dollar. The $$ left on the table otherwise could dwarf the RE agent's commission in the current CA. market.

[group911@aol.co]

Get your CMA's then offer it to your neighbor at 3% less.

[GWN7]

The other problem as you stated is it's a year earlier than you planned. Why not rent a apartment for that year? This way you downsize earlier also.

[look 171]

Hugh, I bought my neighbor's place a couple of years and we opted to not get an agent involved so we can both save a few bucks. I have know this old neighbor for 17 years since I moved there as a young man. We did this on a hand shake. I drafted a simple bill of sale (required to open escrow)for the amount sold with both buyer and seller's name and all the contingencies listed (we had none, this was a cash sale and no appraisal to screw up the deal). He had his money in 12 days. I specifically ask for Ruby, my go to escrow officer, anytime we buy and sell only because I know she ALWAYS gets the job done and on time, which is super important. Plus, she's my wife's friend from college. If you want to go that route and don't know any escrow folks, I can forward you her info. She's with American Escrow in San Marino. She's very easy to work with, stays on top of everything like any good escrow officer would.

I am in the process of buying another from an a guy that retiring to AZ. We open escrow Next Tuesday ourselves. This one again, without a agent. We agree on the price, call Ruby and open escrow. They will have their money in the bank in 12-15 days. I will let em' stay in the house for as long as they like this year (they like to be out of Torrance by may) until their new house is finished in AZ without rent. That's the least I can do for them only because I know them pretty well. They loved the deal only because they don't ahve to rushed out of their house with new buyers moving in if they don't get their new house finished. Tough situation to be in with many sellers.

I honestly think your house is worth more then that.

[look 171]

List it with an agent and let em' deal with the problem whatever they maybe. You pay for that and its a pretty large sum at 6%. IMO, my agent is worth every single penny of that 6%. On the other hand, you can sell it to your neighbor on an agreed price and be done with it. Just make sure they know its sold as its and you will not make any repairs (Iam sure everything is in working order). They will perform an inspection, but your home is pretty new so it shouldn't be an issue.

[look 171]

Another thing to considered is that they may not to be able to find a house within the next 8-12 months (highly unlikely based on the bidding war going on out there) so waiting maybe the best thing to do? Sell it to them then. If they already bought another, then there will the plenty of people waiting in line for it.

I have sold two houses to someone I don't even know without putting it on the MLS. Last one was the buyer's agent brought this young guy in during the last leg of construction. We were finishing up the wrap around deck, so we talked for about 5 min and he made me an offer without asking his agent. It hit my estimated target price so I sold it to him. I know he has been getting out bid for about 9 months. I did a good thing that day and now live to tell about it. Plus, it was beyond the top of market value for the area. This was Echo Park. I made sure my agent got a piece of the commission. Called her so she can handle the paper work, and of course, Ruby handled escrow. I didn't want the buyer's agent to double end the deal. There's no way I could do that to Alyssa, my selling agent.

[ZOO]

I have never regretted selling a house earlier than I've anticipated. I will take fair market value cash in hand any day over the uncertainty and stress of a listing. I've sold three of my houses because I've been approached by a buyer, and always walked away happy with the process. Of course, not paying commissions made things much sweeter.

But, and this may be important, none of my sales were in a hot (or even overheated) real estate market.

[WPOZZZ]

What did he offer, or are you just in the talking stage? Get some comps and find out how he will be paying. Cash makes things so much easier, but if he has a mortgage, you will have to jump through some hoops.

Can you do a sale/leaseback arrangement?