Listing and Selling A San Diego Home The BloodhoundBlog Way

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I am a California real estate broker.  I don’t sell a lot of homes and prefer not to have a robust brokerage business.  My business partner (and wife of 22 years) and I make our bread by funding residential and commercial loans, the former in California and the latter nationwide.  Many of my commercial lenders require a real estate broker’s license to earn an origination fee

I refer (at no cost) some 8-10 buyer clients and 2-3 listing clients per year.  I stick to my knitting and refer out the brokerage business but once a year, a situation presents itself that I just can’t refuse.  This year, it was listing and selling a townhome in the Carmel Valley section of San Diego.

This new client was a referral from my friend.  The seller is an engineer so my friend felt that my analytical skills would match up perfectly with his needs but, more importantly, this guy was frustrated because his original real estate agent wouldn’t call him back.  He tried one of the “brand name agents” in his area but only one of the junior “team members” called him.  My  friend asked if I could just call him and help him get his home sold, whether I did it or referred it out.

I called him and met him at his home in May.  His home was a 1200 square foot townhome in a high-demand San Diego neighborhood.  The property was in perfect condition with designer upgrades to the bathrooms and flooring.  We discussed keeping the home as a rental but, in the end, he wanted to sell and asked me to list it in the Fall.

During this period, Greg Swann was talking about his listing and sales success using, among other tactics, a transparent marketplace (watch the video, it’s the third topic he discusses).  Greg has a three-step praxis for listing and selling properties:

1- price to fair market value
2- list in increments of $5000 (rather than the XXX,999)
3- ***  disclose offers as they are received,  in the confidential remarks  ***

I shared Greg’s video with my client and he, like me, loved the idea of creating an auction-like marketplace.  The client is an engineer, a brilliant man who pores through data.  We both came to the conclusion that his property would sell for $685,000 and certainly appraise for that number.  While he is an excellent data scientist, he knew that good salesmanship would fetch a higher price so, rather than listing at $690,000 and negotiating down, he trusted my advice to list at $680,000 and negotiate upwards.  We were thrilled if he closed at $685,000 but secretly hoped to match “the record” set in this complex at $690,000.

It worked.  I entered the property into the MLS on Wednesday at $679,999 and, in the confidential remarks, stated that showing appointments would start Friday afternoon. I intended to be present for all showing appointments because I wanted to get a feel for the buyers.  We had a dozen showings in three days and five offers were submitted from three investors and two owner-occupants.  I chronicled each offer as it came in in the confidential remarks:

1- owner-occupied offer at $680K, 25% down payment on the first day
2- investor offer at $685K, 25% down payment on day two
3- investor offer at $680K, all cash, on day two
4- investor offer at $690K, 25% down payment, on day two
5- owner-occupied offer at $693K, 25% down payment, on the third day

One of the advantages I have over other listing brokers is my background in lending.  I can pore through offers and determine which may not close.  I also encouraged the seller to order the HOA docs at the time I listed the property and those were received by the escrow company on the same day the last offer came in.  The owner-occupancy ratio was 50.3%.  I know that investment property loans won’t be made into complexes with an owner-occupancy percentage of less than 50%.  If the underwriter counted our transaction as an investment property, he/she could legitimately make a case for a non-warrantable complex rending a financed investor unfinanceable.  The seller chose to counter the two owner-occupied offers and the one all-cash investor offer.

What happened next is important.  I called each agent and told them why we countered the way we did.  I explained to agents representing the two financed investors why we rejected their offers so that they understood that we considered them carefully.  I called the broker representing the all-cash investor and told him to carefully look at the confidential remarks before he submitted his highest and best offer.  I called the agents representing the owner-occupants and told them the same but also told them I would be speaking with their clients’ lenders.  Then, I called those lenders.

Here is another reason my background in lending comes in handy– I know that desktop underwriting models sometimes offer an appraisal waiver.  What that means is that the value is accepted “as stated”.  I implored each of the two lenders on the financed owner-occupied offers to run the desktop underwriting programs, for the buyers, with a $700K value to see if they had an appraisal waiver– both received appraisal waivers,  I called each of the agents and told them to speak with their clients’ lenders.  An offer with a waiver of the appraisal contingency would be stronger and their clients could do that up to $700K.

Finally, I called the all-cash offer and said that we expected offers to be at $700K or above.  I put a 4PM deadline on the counters and here is how they came back:

1- owner-occupied, financed offer of $695K, no appraisal contingency
2- owner occupied, financed offer of a $5K escalation clause up to $700K, no appraisal contingency
3- all cash investor offer at $700K

We closed the transaction with no repairs requested (other than a clear termite report), 15 days later.  It closed 20K over listing price and $15K over expected sales price.  Three months earlier, we expected to sell this property for $675K. The tight inventory and stoopid low mortgage rates helped to fetch a higher price but I argue that two things helped to fetch the record-setting price we yielded:

1- radical transparency with the buyers’ agents/brokers
2- knowledge of lending guidelines

You can learn more about Greg’s listing praxis by watching the linked video.  If you don’t have a lending background, you could save sellers a lot of headaches by enlisting the help of an experienced lender, when presenting multiple offers to your seller.