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How and When To Sell For the Highest Possible Price · Short Term Rental Problems and Solutions

• Jeremiah: It's not all sunshine and five star reviews. It's sometimes very challenging. And without a roadmap, we can get lost trying to navigate the landscape of short term rentals. If you believe that, that means you're in the right place. Today we're helping Garrett with a familiar strategy when our return on equity is low. We're discussing selling one investment so that he can make two more investments. Specifically, how to sell a house in Albrightsville and net the absolute most from the deal. I'm happy to help him because this is the community where we talk about the gross, awkward, and the operational messes, as well as the real strategies that help you keep going instead of quitting. This industry is somewhere where you can win big, or you can ignore education and you can quit. My name is Jeremiah, and I'm an investor and property manager for over 140 rentals. I talk about what rental investing looks like from the inside. Welcome to Short Term Rental Problems and Solutions. Let's get into today's email. Hey Jeremiah. The value of my property has increased to the point where I could sell it and have the funds to buy two more. My return on equity has gone down just because the value of the property has increased. I feel like I have the formula for success dialed in, and because of a promotion at work, I feel like I have the time to take on two. Already spoke to a financial advisor about a 1031 exchange too. So what's the best time to list my property for sale? And what tips do you have for me to get the best priced? Respectfully, Garrett Brown. Wow. Congratulations, Garrett. I am really happy to see this kind of success. 1031 exchange, you know, all the normal stuff you're already dealing with, a financial advisor. So I'm going to try and focus my advice on the perspective of a real estate broker, somebody who specializes in vacation rentals, and might even become your agent someday. But whether I do or not, it's not about that. my recommendation right off the bat is be careful what agent you choose. not every agent is competent. So as a real estate broker, I can tell you there's people who know what they're doing and there's agents who are just faking it. The ones who fake it generally make more money than the ones who know what they're doing. Some of the agents with the most sales are leaving tens of thousands of dollars on the table and couldn't care less. Other agents don't care if your house is listed for three years. They just want to make sure that you get the best outcome that you're after. It takes a special person to act selflessly, so choose carefully. So there's a few prices to consider when it comes to home sales. The first is the list price. obviously, this is self-explanatory. This is the price that you're listed at. The second is market value. And your relationship of list price to market value is an important consideration when you're discussing the strategy of selling your house. If you list lower than market value, there absolutely needs to be a way for those buyers. To recognize that the market value is higher than the list price, because that gets confused sometimes. And you know, the way that it's marketed and the estimate and all these different factors are going to factor into your buyer recognizing what they think the value is to them compared to what you're actually listing it at. So another price that you have to take into consideration is the appraisal value because. If we are talking about selling for the maximum amount possible, we cannot change the appraisal value. I mean, we could get into maybe some ideas for how you can influence the appraiser, but at the end of the day, that's something that you have very little control over. You also don't have much control over the market value. And the sold price is the last one. this is the one that we really are trying to control. This is the one we're really trying to change. And What it ends up selling for and what you end up netting at the end of the day is a combination of all these different factors. So I want to get into appraisals because appraisals are a real pain in the butt for me. Because what I'm selling, generally speaking, are running operating businesses, places that are doing well. And you can't really appraise a business based on comps from residential properties that are not a business. So the value of your business and the value of your property are this like somewhat connected, but very loosely connected concept. So Understanding the issues with appraisals comes up to a bunch of different things. So number one, appraisers they don't value the location accurately. Sometimes they just put a five thousand dollar value on your lot when your lot is actually like increasing the value of your home by another 20 or 50 grand. So that's a disservice because they could appraise low just because they don't value the property that it's sitting on. the next thing is they Do not value the furniture. And most houses in this marketplace are sold furnished. So if you've got fifty, sixty, eighty thousand dollars in furniture in your house and you're selling it fully furnished, make sure that you have a separate contract for the furniture. Because then the buyer cannot negotiate. based on the appraisal value if the sale of the house is in line. they also Don't value your rental history. Appraisers are not increasing the value of your property just because you made six figures on rent. They don't care about that. They're comparing it by the square footage. So they don't make any adjustments for rental history. They can only look back up to a year. So if the closest comp for your house sold 13 months ago, it's not going to be considered. Like it probably shouldn't be considered. Because the market 13 months ago could be wildly different from the market today, but it's not even factoring into the conversation. So, like I've seen this happen multiple times where there's a unique property, like a log home on the water, and they're comparing it only to other lakefronts, or they're comparing it only to other log homes, and they can't seem to get like those two things together. So that unique combination increases the value, but the appraisal is going to be limited. So There's things like that. they appraised a property for me one time and it was during a sale, and the appraiser said this is a zero bedroom house with five private rooms. And he said this because there were no closets. Now, when the house was built in 1962, it wasn't required that you put a closet in every room. But the appraiser today, in 2024, I think it was. was like, this is a house with no bedrooms. It's a five-bedroom house. So they actually reduced the value because of closets, where two other appraisals that inspected that same exact property didn't say anything about the closet situation. So it's really annoying, some appraisers. And there's other things that they don't consider. so they can only look in nearby communities. So Their radius can only go so far. Sometimes they might be willing to go a little bit further than that, but at the end of the day, the appraiser doesn't care. They don't care what your value is. they might, if they're trying to compete with your listing agent, take that for what it's worth. But the other thing that I've found is that they can only compare the properties to other properties of the same exact style. I've also seen that appraisers tend to have an enormous ego. They're Constantly in conflict with agents. No matter what they do, they're going to get called out on it. They'll usually just not respond. but the ego thing, I feel like, is just them getting pushed around and saying, I'm not going to get pushed around anymore. So no, I'm not going to reevaluate your appraisal. I've got nothing to benefit from it. You're not going to pay me extra. I'm not going to do any extra work for this. So I've got a story for you about this exact situation. So back in 2018 and 19, I was flipping a house with an investor. And the property was on Allegheny Drive. It's a bi-level house with a mountain view. Now, mountain views in this part of the Poconos are very rare. So getting one was huge. And we actually maximized on that view by putting a sunroom in the back of the house where you could see this view, cutting down a bunch of trees to maximize the view. From there, I actually had photos of the house at sunrise. So you could see how awesome it'll look from your breakfast table as the sun is coming up over the Delaware water gap. It was incredible, gorgeous. Well, we had this thing listed. back then, 2018 dollars were we're not inflated yet, right? But we had it listed for $275,000. We ended up getting an offer for $275,000. The appraiser valued the property at $185. how was I able to con someone into agreeing to pay $90,000 more than the market value? I wasn't. Do you know why? Because the actual market value was 275, but the appraiser had their appraisal value. That's how disconnected, the market value and the appraisal value are from one another. Appraisers follow certain rules, and if they don't follow the rules, they could lose their license. And it's easy money. They'll do four or five appraisals in a day, charging $600 per appraisal. These guys are sitting pretty, making their money. And not only that, You can't even become an appraiser without spending like three years in an unpaid internship. there's a whole process to this, and it's scammy. It's really scammy. so they've got their own little like trade organization keeping things in-house, and so there's only so many appraisers, and they're gonna do what they want and F you, you know? I get so frustrated with this. Anyway, so that appraiser blew up the deal. They valued it at $185,000, and it's because of a combination of these factors. Number one, they only put a ten thousand dollar value on the lot. this is a very rare lot up here. Don't you get it? These lots used to sell for $100,000 back in the 80s when people were building houses up here. So because it used to sell for $100,000, don't you think you should put $100,000 value on the lot? I think so. But did you? No. You put a $10,000 value on it. And the same lots across the street without the view are selling for $5,000. So you're telling me that view is worth a net of $5,000. Completely. Completely ridiculous, just completely ridiculous. Because obviously, somebody's not gonna buy the house across the street and only give it a $5,000 price reduction because of not having the view. They have the view. It's rare, it's special. They were willing to pay $100,000 for that back in the day. When the lots across the street were selling for $10,000, they were paying 10 times that amount for this lot. So obviously, we could get that $90,000 just from the land. But then additionally, They were not valuing the square footage below grade. Now, the square footage was on average one foot below grade. Now, this is a buy-level house. This is standard, this is standard construction for a buy-level. But they were comparing it only to other buy-level homes. And apparently nobody was renovating bi-level homes. We did, like idiots, but nobody else was. So the lesson that we learned from this was to not renovate houses that other people aren't renovating. So, if other people are renovating colonials, if they're renovating ranches, only renovate a ranch or a colonial. If they're not doing buy levels, don't be the first. Because if you are the first, there's no comps. And your appraisal value will come in low. And what you really need is a cash buyer. So this appraisal. Was $90,000 low, partly because they didn't put any value on the land. The second thing they didn't put enough value on was the square footage below grade. Now I've seen this over and over again. there's another property, 188 Anna Road in Blakesley. And that property is like 3,000 square feet above grade and then 3,000 square feet below grade. This was a eight bedroom house back when I'm talking about when this happened. And we actually had it under contract because I knew it would appraise low. We had it under contract. the buyer and seller agree to adjust the price to the appraisal value or the offer price, whichever is lower. And the seller signed that addendum. And the listing agent did not honor that and found a way to squeeze her seller out of the deal so that they didn't have to lower the price. But we were under contract at, I want to say $600,000 for this property, which $200 a square foot, really not that hard to do. But back then it was. So Today it would appraise at 600 without too much trouble. But back then, it was like only the upstairs is what the appraisal value was based on. We were only getting like $125 a square foot. And I'm not getting the numbers right. I'd have to remember back a little bit too far. But nevertheless, what ended up happening was that the appraiser put a $20,000 value on the whole basement. $20,000 on like a 3,000 square foot basement with three bedrooms, a full bar, two full baths. This is practically its own apartment and they only put a like $20,000 value on it. So the upstairs, they put as much value as they could, and they still came in at $475. So we were a hundred and twenty-five thousand dollars in the wrong direction. So we were above appraisal value by one twenty-five, which according to our contract meant that the seller had to come down one twenty-five. but the seller they weasel the way out. They eventually sold to a cash buyer for 575, I think. Either way, there was no appraisal for that cash buyer. That cash buyer ran it as a rental. There was issues with the township. There's a lot of things going on, a lot of parameters to talk about. But I don't want to get too deep into that one. I want to get into what kind of situations cause buyers to pay over appraisal value. And it could be like that seller's market. That would cause them to pay over appraisal value. But we're talking about today. So, Garrett, if you want to sell today, here's how you get over appraisal value. you have to market the property as though the market value is much, much greater than the appraisal value, or even greater than the list price, because then people will value it that way. But there's a lot of parameters that the buyers just don't know. They don't know how to value the furniture. they always overestimate the cost of repairs. So you need to not have any repairs that they're gonna walk through the house and think they need to perform. So the house has to be in such good condition that they're not gonna have to fix anything. Now they might want to do some optional upgrades, but if you can tell a buyer that this is something they should budget for next year or budget for the spring, then they're not gonna factor that into the value. And it doesn't come out of the closing costs basically. But if you've got a crawl space that's very humid and there's mold growing in it, they're going to knock you down on price later on in the deal because they've just identified this issue that you're going to have to disclose to future buyers. I want to go through some examples of properties that I've sold or that my buyers have bought that sold for over appraisal value. the first one I was very early as an agent. This is one of the first houses I listed, I think 15. short lane in Albrightsville. So this house was just gorgeous. they had kind of overbuilt the community. The neighborhood did not have any comps that were new construction like this one. It had forced air, propane heat, and everything was perfect with this place. So that situation, we sold about $10,000 over appraisal value. And it was just really our strategy to the deal that made this whole thing work out. and that's not necessarily the strategy they're going to go with, but basically what happened was we built in some fluff in the beginning of the deal through the agent's compensation. So we offered a five thousand dollar bonus to the buyer's agent. Now you can't really do that today, but you could back then. So they were getting three percent plus five thousand dollars. So then when the appraisal came in $15,000 low, we said, look, we could lower it up to this much without bringing money to closing. But we'd have to take away your agent's $5,000 bonus. And normally agents aren't disclosing these bonuses because they're paid by the seller. they're very rare, but we were able to put that. Buyer in a position to look at their agent and be like, you were gonna get an extra $5,000 for this. And I'm just thinking of that movie clip with Jennifer Aniston where she's like, You're getting $10,000 for this? I'm getting five. And in reality, like I was getting three. And the buyer's agent was getting three. And the buyer's agent was getting an extra $5,000 for going under contract at $155. So we were able to lower the price to $150 by eliminating that bonus. And the buyer then got a concession at that point. The one who actually lost in the deal was the buyer's agent. And both sides got three percent. And the sellers were able to walk away. they didn't have any equity in the property, they had negative equity. what they owed on the property was actually greater than what the value was worth. so long story short, this was just an exit strategy for them. but that's how that one worked out. 1038 Kilmer Drive. This one sold for over appraisal value because of the rental history. It was well designed. It had like three years of rental history. It was averaging $110,000 a year gross. it had like a look to it, like a style that really made people want this property. So we had multiple offers in a buyer's market. We had a multiple offer scenario, and we ended up choosing as a listing side, we ended up choosing the offer that. Offered the greatest gap on appraisal. So there was one buyer who offered to pay $30,000 over appraisal value. And there's another one who just waived the finance contingency 100%, which meant that They were willing to do any gap necessary in order to make this deal happen. So they ended up purchasing the property and paying like $40,000 over appraisal value. now you can justify that with: hey, it's got rental history, it's got All this other stuff going on for it. If it's making $110,000 a year, I'm gonna earn this money back pretty quickly. That's kind of the idea. the next one I can talk about is Pine Valley. I sold this to investors. I was the listing agent. we sold this, it did not have strong ransal history, but it did have lot of square footage that was below grade. So we knew that the appraiser was only gonna. appraise it based on the like fifteen hundred square feet that's above grade. So that limited us to what we could actually ask in our asking price. So we were priced below market value because of the appraisal thing. And we got like five offers. Now this was our strategy. We knew that we were going to get multiple offers and I told every single one of those agents the seller is not expecting this to appraise at your offer price. What's your buyer going to do If it appraises below the agreed upon value. And each one of them addressed that in their own way. One of them said, we're going to lower our down payment from 35% to 20%, still not have to pay PMI, that'll free up some of our buyers' funds that they can pay over. Another one, and again, I presented that to those buyers' agents in a different way. There's a strategy to this because buyers agents are just normal people. They don't think like you and I do. Like you and I are gonna focus on this deal and this property and the value of it and the marketing of it and the perception. So if you give a dumb buyer's agent the tools that they need to convince their buyer to pay over appraisal value, they will. Because at the end of the day, they just want a deal, generally speaking. so that is how we did that is like We said, look, you're getting this and this and this and this and this. The value of this property is based on this. We don't expect it to appraise at that number. So what will you guys do in case that happens? because the only thing you're actually limiting is your mortgage. So you're gonna have a lower mortgage payment, but you're still coming out of pocket with the same amount of money. It's the same 35% down. It's just a lower mortgage. so the limiting factor on the appraisal, it's not actually telling you what the value of the property is. The appraisal value is just telling you What the mortgage is gonna be. It's can be up to 80% or up to 90% of the appraisal value. So we're just gonna mess around with this and mess around with this. You still get it for the same price. You just have a smaller mortgage payment. You know, so we present things this way as listing agents all the time. And it's so that we can get the better deal for our client. And if you give that kind of I want to say ammunition to the buyer's agent, then they don't really have a problem. Paying over appraisal value. sometimes they do, the buyer's gonna feel like they've lost in this situation. they're going to feel like they've been taken advantage of. unless you can present it to them in a way that they can justify purchasing it. Right. So that's where the sales strategy comes in. That's where the salesperson comes in. And the buyer's agent, Don't want to feel like they've convinced somebody to make a bad decision, they need to be convinced that this is the right decision in order to hold the deal together. So there's like a lot of psychology to this. I think this is why I like sales, right? Because of this part. but anyway, getting back to the different deals. I actually sold this a second time, and that time it also sold for $15,000 over appraisal value. but at that point, the people we sold it to had improved it, so they made it worth more, they had better rental history. So when they sold it to my buyers that time, we went into it eyes wide open. I told the buyers what it was likely to appraise at. It actually did better than my expectations. And we decided to hold this deal together just because there was nothing better on the market at the time. even with that factor involved. So, anyhow, another one that I sold did not get appraised. It was a cash deal. this is on Adam's place, and it was a turnkey, ready-to-go property. This one had rental projections. So it had like two months of rental history, but it already had future reservations at around $10,000 a month. So that convinced this investor that this is a property worth spending extra money on. But they actually started with too high of an asking price. So because they started with too high of an asking price and they were not motivated to lower the price, the deal ended up working out the way it ended up working out. And we tried to get the best possible deal for this place, but The seller was patient, the buyer wasn't. The buyer was motivated by a number of factors, including a 1031 exchange. So they had a timeline and they couldn't find anything else on the market that they were happy with. So they were going to end up paying like $80,000, I think, in taxes, or they were going to invest into this property. So even paying over appraisal value was better than paying taxes. Now I know the taxes are just delayed, but the strategy is to actually delay those things indefinitely all the way up until the point of death, in which case there's no taxes anymore. So this was all kind of playing into that one, but that's why. It's because it had the right formula, it had the right rental history and projections, and it came furnished. the next one was a primary home. This is on Seneca Road. I think it's 31 Seneca. I sold this property definitely over appraisal value. I spoke to the seller, I told him there's no way this house is gonna appraise at 375. It's gonna be probably 350 or 340. And he said, want to list it at 375. Let's see how it goes. We did get showings. Not a lot, but we got some. Well, we just happened to find the right buyer. It was a guy from Brooklyn who had just sold his mom's house and now he's looking to purchase a property out here. He has no idea the value, and he's got an agent that has no experience in this marketplace. If he did have a better agent, he probably would have alienated them anyway, because apparently this guy was difficult to get along with. So he Paid cash, full asking price, $375,000. Because I don't think that this money had any value to him. I don't think he knew what it was actually worth. He didn't have an idea what the property was actually worth. And he didn't make his offer contingent upon appraisal because he made his offer contingent upon the sale of his mom's house. So because he had weakened himself in the deal, he was overpaying on the property without knowing it. He just offered full price cash contingent upon the sale of his mom's house. in Brooklyn. So that's another situation that led to it. But It was on the market for a while until we found that buyer. And it's because other buyers had local agents that were familiar with the value, they were familiar with the deals, they had an idea About what this property would actually appraise at. And their agents would have said, look, this property is overpriced, you know. But now and then we find like a cash buyer in that situation where they really want to purchase the property and they're willing to pay full price because their offers contingent upon something random like the sale of another property. So the next one is on Antler Road, and that's a little A-frame house, and I think it's 403 Antler Lane. Toby Hanna. So that one I made some TikTok videos of. I really like that property. I really like A-frames, just generally speaking. but that one was like a little romantic getaway, and what they had was $90,000 of rental history, and they were asking $300,000 for it back in the day. the guy who purchased it ended up ruining it. And then like he didn't ruin the property, but he just he didn't manage it very well, and it caused the property to drop in its rental history to like three thousand dollars a month. So he went from ninety down to thirty-six, and it wasn't a good investment for him anymore. So he decided to sell, but he wanted to sell at a gain. So 328 was asking price, and he marked it up to that amount. Based on the money that he put into it, he could justify selling at this point. Now it's a fantastic property, and it could sell for $450,000 with 90k of rental history. So for anybody to trade this thing at the low 300s is still a good deal. the deal happened, the appraisal came in at like 270, you know, and the buyer was still very interested, but interested at a different number. my understanding now, before it even closes, is that it sold over appraisal value, but they got a new appraisal done. So the new appraiser valued it little bit higher that reminds me. Remember I was telling you about Allegheny Drive, the deal where I had it under contract at two seventy five and then it appraised at one eighty five. I went off on a rabbit trail. I just complained about the appraiser and the factors that led them to that. I didn't tell you the second part of the deal. to remind my listeners without rewinding, this was a buy-level house that I flipped. I fixed it all up and sold it with an investor. We had it under contract at 275. We appraised at 185. challenged the appraiser and gave them a couple more comps. They valued it up to 188. which is like an insult. So we went back on the market. That buyer obviously wasn't going to purchase it. They didn't have funds to pay $90,000 over appraisal value, or even $20,000. They didn't have funds to pay over appraisal value, period. This was like an FHA loan. the next one that came along was a conventional offer. We had listed it at $225. We got $219 that we negotiated in the deal, and the appraisal came in at $219. if appraisals are so scientific, right, that then two appraisers should come to the same value on a subject property. How in the world did that happen? Tell you. the second appraiser didn't have their head up their butt. They didn't have this ego trip. They didn't have this power trip. They didn't live two hours away in Reading. They lived up here in the Poconos. They recognized the value of the lot. They looked at comps that were colonials and ranches because they knew they weren't going to find any renovated comps that were buy-levels. Because they looked. They found the right comps. They were able to get to our sale price. And we were able to sell for $219,000, From one hundred eighty five to two hundred nineteen. Is roughly $35,000 more. The appraisal value went up 15% just because of who the appraiser was. There were no new comps. There were no new buy levels that sold. It's not like he found other listings that he could use that the first one couldn't find. It's just that this one used some common sense where the other one didn't use any. They just don't care sometimes. So what do all those different properties have in common? What do we have in common for like Shortlane, Kilmer, Pine Valley, Adams, Seneca, Antler? Even the properties that I see that sell for over appraisal value all over the place, they have a strong rental history. And we're talking 15% of the asking price to 20% of the asking price, or in the case of Antler, it's like 30%. All right, so what do all these properties have in common? that you can benefit from, Garrett? one is a strong mental history. I'm assuming you've got strong rental history. What people are willing to pay over appraisal value for today is when your property has like 15% of the asking price is the rental history. So if you're asking $400,000 for it and you've got $60,000 of income, that seems strong to them. and that's usually a justification for them to pay over appraisal value to a limit, right? And another one might be where it's got like $110,000 of rental history and it's selling for $515 or $525. I've seen deals like that work out really well as well. So when you've got 15% or more of the subject property's value, that's when people are willing to pay. This extraordinary amount of money. because generally at that 15 to 25% mark, everything pencils out, even though you've got a bunch of, you know, pass throughs involved there, like taxes and cleaning fees. So, the next thing that they're looking for is something that's professionally decorated. So you can tell when you're looking at these listings which ones are professionally decorated because they follow a theme, they have a common look. the color choices are, you know, just professional. They look good. having all those things together, having a mural, you could have all the different stuff that another property has, but if it's not professionally decorated, it looks weird. It looks disjointed. It looks like you've got, you know, an Arizona theme in this room, and you've got seashells too. Like, what is your theme? What are you following that's causing you know, this whole space to kind of fit together. So I've invited Katie Schnell onto our show because I have a question that I've been waiting for the right person to help answer and it's about decor. so we'll get into that another time. so pay attention to future episodes because I'll be hosting her on the podcast and we'll have a conversation about it. the next thing is not just that it's professionally decorated but that it's fully furnished. So They're looking for furniture. Now, the furniture doesn't have to be a high price. it just has to look attractive, right? So you can get like fall apart furniture. You don't have to get like the stuff that's going to last forever. But if you furnish your house with stuff that looks trendy, that looks good, and it fits with the theme, that's gonna bring your value up. Now, I'm assuming you've already got your house, Garrett. I'm assuming you've already got strong rental history, it's already fully furnished, it's already professionally decorated. And I'm assuming you've also got your short-term rental permit. But those are the four things that buyers are willing to pay over appraisal value for. So if they put a lot of value in your furniture, it's smart to get a purchase price with furniture to the side. if you know that the house is $400,000 asking price and you're going to appraise at $370,000, it's wise to say, look, I'll sell the whole package for $400,000. But the buyer has to admit right now that the value of the furniture is thirty thousand dollars. Because if the house appraised at three hundred and seventy, I still want my asking price of four hundred. That's how you do that. That's actually a great way to do that. So what to do to prepare? document your rental history. Get reports from Airbnb, from BRBO, put them together, have a spreadsheet, whatever. it doesn't have to be fantastic. some information to put on your stuff is utilities. I would probably only put the utilities on though if they're like low, because nobody wants to see your electric bill was a thousand dollars, you know, that might surprise them. And if they're estimating in their mind that this is going to cost $10,000 a year for electricity and you show them documentation that's only eight, that's good. It's a good thing. If they think in their mind that it's going to be six thousand dollars a year and you show them documentation that it's eight, that doesn't help, obviously. So what information you disclose and what information you don't disclose, I think is just based on, you know, a conversation with your listing agent about what buyers are gonna expect. for your property. Like what are they going to underwrite this with the first time? So if your utility bills seem strangely high to your listing agent, we can keep those quiet. If they seem like they're pretty low and the house is pretty energy efficient, we can advertise it. We definitely showed that's a selling point. Anything that's not a selling point, we just don't really talk about unless it's something that we have to disclose. In which case I recommend putting that on the seller's property disclosure because eventually when the buyer figures it out, they won't be able to negotiate because it was disclosed and they signed it. they signed off on it back then. put on your gross income. Don't include repairs and maintenance records unless they're like surprisingly low. So if your house is in great condition and you haven't had to fix it very much, your furniture stayed in good shape, then you can actually advertise. Like this is what I paid in maintenance and repairs, because a lot of buyers are actually underwriting this with their spreadsheets and they're trying to factor in like maybe five percent for repairs, and they have no clue. So if you publicize, like if you say what the actual number is, they'll put that number in and they won't even question it. This is not an opportunity to lie. It's just an opportunity to point out another selling point if it exists. don't include the cost of your cleaners. Almost every buyer is going to estimate that it's going to cost less to actually clean the house than it's actually going to cost. so the cleaning services in the Poconos are generally overpriced compared to other markets. And this is no secret. I've talked about this many times. But buyers who are purchasing here are generally thinking that it's going to cost like $150, $200 per clean. They don't really know, they don't have a lot of confidence in that. But when they're underwriting their figures, it really helps you sell for a higher number for them to not know this. So I don't tell them because it's not required to disclose. It's not in my best interest as the listing agent. And Garrett, it's not great for you either. But you might have, a cleaner who's cleaning your house for like a hundred bucks. And normally that clean would cost $300. So in those situations, maybe it is a benefit because they might be anticipating that the cleaning fee should be like $150 or $200. But if you're like at market rate with your cleaning service and it's $300 to clean your house, and the buyer's estimating that it's going to cost $150 to $200, leave it that way. don't point that out. Bring light to it. Just move on and let them purchase it, you know? Don't include your registration fees or your community fines. So when you do all these numbers, I'm sure you've got a good record of all these different things. You don't want to present the registration fees or the fines because that's not something that a typical investor is going to anticipate there being. So let them be surprised by that. It's really their agent's job to talk about those different fees, to talk about what a typical cleaning fee is going to be versus what a typical registration fee is going to be. But what I've found over and over and over again in this marketplace is that buyers are coming. With their own agent that is completely clueless. And people value agents based on the relationship, based on, trust or loyalty or whatever. What they really need to be valuing those agents on is their ability to negotiate their expertise in what they're purchasing and their expertise in the area. And for me to have a buyer's agent. I'm the listing agent. So I'm dealing with a buyer's agent who's from like Reading, Pennsylvania. They drove an hour and a half to get up here. They haven't sold anything else in the Poconos. I know that this is a prime opportunity for us to take advantage of that agent. And it's a prime opportunity for us to take advantage of that buyer because the buyer's not being guided correctly and the agent doesn't seem to have any clue of what they're doing. Because in Reading, the houses are like an average of 50 years old. Up here, they're an average of 35 years old. Up here we have issues with crawl spaces. Down there, they have slabs. Like it's a completely different marketplace. Down there, it's almost everybody's buying their primary home. So they're going to be surprised like how easy it is to sell a house up here. And they're going to want to get involved in the real estate up here. But without any experience, without any knowledge of these things, it's an opportunity for us to really take advantage. And no matter how good of a negotiator they are, they're completely clueless. They don't know what it's going to cost for a clean, they don't know what's going to cost for registration fees. When they're asked, does this community have a pool? They just look at the MLS sheet and see if it has a pool or not. They don't know that that pool's only open all weekends or that pool's like close for the next, you know, three years for construction. They don't have any clue. They don't. And they think, just like a lot of buyers do, gated community, that should mean higher value. Well, no, it doesn't. Not if you know this marketplace and they don't know this marketplace. So I've seen over and over and over again people using their sister, their friend, the person they bought their house with in Lancaster, using an agent and having them hop in the car together and drive all the way up to the Poconos and buy a vacation home. And it's a dumb move if you want to save money. It's a dumb move if you want a good investment, but it's a fine move if you want to increase the values in the Poconos. Because you overpaying for your property causes us to have a better appraisal value. So I want it to keep going, you know, and as a listing agent that sells a lot of properties up here, I really want those agents that can be taken advantage of to come up here. I don't like negotiating against the locals. They know the ins and outs, you know, like they know the pitfalls and they're protecting their buyers. but when I'm a buyer's agent, I know all those ins and outs and pitfalls, and we're on level playing field, you know. Agents from the Lehigh Valley are the worst. they come up here wearing suits and agents in the Poconos are more laid back. you can see I'm wearing a t-shirt and jeans. This is the broker. This is how the broker dresses at Investment Real Estate of the Poconos, and because that's me, right? So I'm very approachable. I can be reached usually on the first or second ring, unless I'm on the phone. Like the agents in the Lehigh Valley, their brokers are getting like these two hundred thousand dollar salaries, they're wearing suit and ties, they're being treated like a CEO. They're very unapproachable, difficult to get in contact with, difficult to get a hold of. And they're just looking at reports all day. so they're not really guiding, they're not really training, teaching their agents, and their agents are just out there looking for every deal they possibly can get. And when they get a deal up on the mountain, it doesn't matter if it's a good or a bad deal. The broker doesn't care. The buyer doesn't know. And so that's where this comes in. Garrett, you're gonna be, working with an agent. You want to make sure that they know the ins and outs of your marketplace. You want to know that they're in your corner, right? So to speak. That they're loyal, that they're that they know how to negotiate, and that they can market your property well. that's a rare combination. And I started this episode by talking about the agents who fake it are actually making the most money. And I'll give you a different example of where my buyer purchased a property and got like $80,000 of equity instantly. there's billboards for the listing agent. They're known as the top agent in the area. I'm not going to name names, but we purchased this lakefront property. It was listed at 750. We made this like ridiculously of like 620. And the deal ended up working out. I think we closed at like 645. The property appraised at 735, lower than their asking price, but not by much. And because the sellers came down so far in price to meet ours, they're never ever going to know that that property appraised at $735,000. They're not going to know that. Their agent had it listed at $750, and they accepted an offer that was significantly lower. And apparently the seller was pretty motivated to sell in a certain timeline. And the agent Was doing price reductions, but wasn't doing them aggressively enough. And they ended up accepting an offer that was like 20% below their asking price. But what they'll never know is that the buyers purchased that property and had like this enormous amount of equity because their appraisal and their purchase price were so far apart. They were comps justifying this property's value at $735,000. They bought it for six hundred and forty-five, thousand dollars. And this is an agent that fakes it. I don't think she thinks she's faking it, but obviously she's faking it. she didn't foresee what that was gonna be. If she had actually told her sellers, look, this is what I think it's gonna praise at. It's probably gonna be in this seven hundred to seven fifty range. And for us to accept an offer. That's $640,000. You are leaving $60,000 of equity on the table. Why don't we just lower our asking price? If you're willing to take $700,000, like lower the price to $700. Turns out, halfway through the deal, after negotiations, there was a buyer's agent that came along to her and actually told her, and she told me, told her, hey, my buyer was interested. They made an offer on a different property and it didn't work out. And now they want to come back to yours. So we're submitting this as a backup offer. And the offer was like 700. but the seller was already committed to selling it to us, and there was nothing that could happen. That backup offer never actually materialized into a paper offer. It was just like, well, this is what they were going to pay. Now, if she had lowered the price to $700,000 on the MLS and the advertised price to $700,000, that would have gotten their attention. If she had been in communication with these previous, agents that showed the property before and said, look, the seller's motivated. They're looking to drop the price for this other buyer that's making this lowball offer, then she would have ended up going under contract with them instead of us. This stuff happens. And this agent is representative of like, I want to say about 10 agents I've got in my head right now that do far more volume than I do. And it's because, you know, they're focused on being agents, they tell the right stories, their sellers are never going to know that there's tens of thousands of dollars of value that they just gave up on. They're gonna get their sale price, they're gonna be happy with it, they're gonna leave a five star review for their agent, and they're gonna move on with life with whatever they got for the property. But there's no way, there's no way. For there to be some sort of a record of what the property appraised at and what it's sold for. That's not gonna happen because that's private information, private knowledge that agents, lenders, and the buyers know. That's it. And the buyer feels like they got a deal because the appraisal was high. so that deal, Garrett that I'm talking about, the one where my buyers got $90,000 of equity. There was no rental history at all. the property was not a rental before, it was just this incredible property. And I saw the value in it. I estimated for my buyers what it would make, and they weren't all that interested. This was their first day going out seeing homes. They saw like six different properties, I just talked them into making an offer. I said, Of all the ones that you we saw today, which one do you want to make an offer on? And they said, Well. I don't think any of them are really that good of a deal. It's like, but what if we could get this one at this price? And they're like, I'd sign that offer. And like it worked out. they ended up purchasing it. And so they didn't realize what of a fantastic deal they were getting at until like the appraisal came in. And then they were like doubting the appraisal. Like, why did it praise so high? And it appraised high because there's comps for this. You know, it's in a good neighborhood. It's a lot of square footage. It's all above grade. it's just the combination of a lot of things that make it a praise high. All right, so Garrett, the next thing is that you did ask about timing. And I would say there's a couple of factors to consider right now for investment buyers and investment real estate. the first is the big beautiful bill. I'm not gonna say this is a great bill or not. I'm just gonna say the effect that it's having on real estate is this accelerated depreciation is causing a bunch of high income people to purchase properties near the end of the year or by the end of the year. Last year I had Two or three investors that were looking to purchase something by the end of the year, by like December 31st. One of them told me he was gonna save like $30,000 in taxes if he purchased a property. And that was just something that was passed, I think, in like October of 2025. So there weren't even a whole bunch of people who knew about it. Now those people who did something about it are bragging to their friends. And a lot of those friends are purchasing properties this year. And the deadline for them To use this year's income to depreciate is the end of this year. So I'm not going to speculate and say that the best time for you to sell is like, you know, go in the market in October so that you can get those investors fight But I am saying normally it's very slow in our marketplace in November and December. But last year it wasn't. And I anticipate that this fall is going to be a very good fall for sellers, and that this December is going to be really good. As well. So this marketplace is going to be brought up because of the big beautiful bill. And I'm not trying to say that's fantastic. There's downsides to raising values. That's a whole nother conversation. the next one is the real estate professional status. So the news has gotten out to like doctors and pharmacists and IT managers, that they can write off a lot of their W two income. For tax purposes, if one of them is designated, in the marriage, one of them is designated as a real estate professional. For that, they need to log 100 hours of work actually managing their property, and they need to document that nobody else has spent that much time at their property, working on it. So we could get into all the ins and outs of this and whatever, but suffice to say, you know, they could save $60,000 a year on their income tax, especially in these high-income states like California and New York. They're looking at this strategy and saying, I could just purchase a property. It doesn't matter if it makes money or not, it's gonna save me money on taxes. So why don't I get into real estate investing now? So that's the buyer that you're looking for. Those buyers. are looking for something like what we just described, something with rental history, something with an STR permit. They don't want risk, right? If the STR permit goes away, this becomes a big liability for them and it becomes a big mistake. So they want something that's steady, they want something that's low risk, they want something that's gonna at least cover its expenses. They don't want come out of pocket for a year or two years of expenses. So having rental history that shows that this property can cash flow is very valuable for them. Those buyers are only interested in properties that have proven rental history. So, Garrett, it really does seem like your property has proven rental history, comes fully furnished, it's turnkey, it's ready to go. And if it's in a low risk area, if you can market it that way, then you are much more likely to get somebody who's willing to pay over appraisal value. Because at the end of the day, they're not trying to get a 5% cash on cash return. They're not trying to get a 25%. They're not looking at the numbers that way. They're just saying in their mind, sometimes it's just mental math. This place earns $30,000 a year. It's going to cost me $20,000 a year. I'll make $10,000 a year and I'll be able to write it off. And in two years, I'll sell it and I'll get something else so I can depreciate that one. Like that's how they're thinking through this stuff. it's just passive investment. It's just a mutual fund. I just need to purchase it and move on with life. They're not necessarily trying to get the very best out there, but they do want somebody to tell them that this is the best option for them. And in those cases, it's the buyer's agents that fake it that get the deal and they make the money because they have these connections. And the buyer doesn't necessarily know if they're overpaying or not. So that's your ideal buyer. And if they're looking for this real estate professional status or like the tax incentives right now are what's driving up real estate. The tax incentives are what's gonna cause you to get more for your property than appraisal value. And that is the buyer that you want to hone in on. That's the one that you want to focus your marketing on. That's the one that's the offer that you want to accept because they do have liquidity. Some of them are making like a million dollars a year and they're facing like $400,000 a year that they've got to pay an income tax, which I think is just ridiculous to tax them to death. But nevertheless, if they can buy your property and save $400,000 They're looking for opportunities like this, and you just have to know how to market them, market to them and get them pulled in. also there's a little bit of networking involved there. So back to the point. in this market, generally speaking, let's take away the whole tax strategy situation. and this is particularly helpful if your property doesn't have great rental history. understanding the seasonality of our market, it's people are buying vacation homes when they're here on vacation. So the summer and the ski season are our two top seasons. There's not a lot of buyer activity in the fall. Historically, there's not a lot of buyer activity in the spring. Historically, it usually happens in the summer and the winter. And that's because typically the buyers are sitting in the Airbnb thinking, this is nice. We've got good weather, like this house is really cool. Like, what do you think this thing costs? Or why don't we do this? Like, if I'm gonna keep spending fifteen hundred dollars per weekend for the foreseeable future. Why don't we just buy instead of renting? And that gets them down this rabbit hole where they're looking on Zillow, they're seeing other houses, they're seeing this one looks nice, this one looks nice, this one looks better than the one we're in. And they're saying, I spent $1,500 for this weekend. So, like, if I just had my property rented two weekends per month, then I would cover like a $2,000 mortgage, no problem. And they're seeing on the Zillow. listing what their estimated mortgage payment's going to be. And they look at their 401k and they see like they could take a 401k loan for the down payment. They could purchase a property up here. And so like, hey, while we're here, wouldn't it be funny if we stopped in at this open house? Wouldn't it be funny if we just like contacted this agent for a showing? You know, we're checking out Sunday at 11 o'clock. Let's see if we can see a house. So they check out Sunday at 11 o'clock. They contact an agent through Zillow and they just they go and check out a house. You know, and they look at one or they look at two or they look at three and they're like, I really like this one. They're not running the numbers. This buyer is your retail buyer. And historically, they're the most likely buyer for your property. outside of this whole tax situation. So these are folks that are, not running the numbers. They don't know if they're going to be successful. But if they really analyze this stuff, then this sales process gets, stretched out longer. And they end up not making offers on properties until they've underwritten it. So there's personality things in there. But the ones with the big ego, they don't need a good agent. And that's that's amazing. When you find the buyer with the big ego that has a brand new agent that doesn't know what they're doing, doesn't know how to negotiate, that's sometimes a volatile deal. But as the listing agent, I like it because I can tell the agent what I want the buyer to know, and they'll usually communicate that. They'll sometimes copy paste. I say sometimes. I mean most of the time they'll copy and paste. The listing agent said this. And so that's that's another one to take a look at. So understand like the month of November is likely to be the moment when people are at last minute looking for that deal for the big, beautiful bill and the bonus depreciation. I'm anticipating that a lot of the inventory is going to dry up in November. So if you are on the market, you might have two or three people who are willing to pay over appraisal value simply because it's A good option, or they'll compromise on other things. Like it doesn't have to be fantastically furnished, I think that inventory is going to dry up when that happens. Offers get made on properties that are overpriced, and sometimes they pay that overpriced value. So that's something to know, and it's all speculation. We don't know what's going to happen with it, but I think it's likely. Now, the other thing about timing is that it also depends on your property. So if your property is a lakefront, it's most likely to get the highest value in the summertime, fall, or even the spring. So in the wintertime, that lake is a liability. People are looking at the ice and thinking, what if my kid falls through it? So it's not a great time to sell a property in the wintertime if it's a lakefront property. It's much better to sell it when people can swim in it, when they're looking for a place to go kayak, you know. if it's next to a community pool, that's also seasonal. It's Right next to the community pool, you want to get photos of that pool being open. And if it's in the spring, the pool's not open. So you it could have an ugly cover over it. And people are not going to necessarily anticipate the joy of going to that house, buying that house. The other thing is like it could be right next to the community pool and they're paying for it. And it's like August. And by the time they close, it's going to be September or October. They're not going to have access to that pool for the next 10 months. if you're right next to a private pool, like or if you have a private pool in your yard, again, the best time to sell is when people can enjoy that amenity. It's not necessarily in the middle of the winter. If it's an indoor pool, it's better to sell it in the winter than it is in the summer. Because it's an indoor pool, you separate yourself across every other property that has a pool, right? So there's nuances to all these different things. If you're right next to a ski resort, like next to Camelback. then the best time for you to sell is during ski season. And you better make sure that you're priced well because if you miss ski season, you're gonna discount your property by 20% to sell it in the off season. So, understanding all these different dynamics is important. If you're going to get the most for your property, you know, and again, you haven't identified the properties you're going to 1031 into, you haven't put the property on the market yet. This is the best time for you to think about that timing. And your strategy has to include all these different factors. But do not hire the number one agent on the billboards. because the story I gave you. You know, like I'm not giving names. I like her. She was a great agent to work with. and always probably will be, you know, but the people out there who are faking it are doing a lot of deals. In fact, the number one in the S T R space is faking it the most. And Be careful. You know, What can I say without him knowing that I'm talking about him? I don't know. I guess email me directly. Maybe I'll be willing to tell you who it is that way. but I don't want to burn any bridges because at the end of the day, I still want my buyers to be able to purchase his properties that he has listed. Why don't more people talk about this? Well the people who know are only willing to tell you the version that puts them in the best light to get a commission. And if you'd like to just follow up with me by email, I'd be happy to do an episode on how to find a great realtor. because this is the show where we discuss the challenges as well as the stuff that no one talks about when they sell the dream of easy passive income. If you're a property manager, an owner operator, a co-host, or just an investor, I would love to help. Have you got questions? Email me at infalvanizemagement.com. Your question might be the next one that we break down, and chances are you'll help a lot of other hosts in the process too. We win or we lose together. If this episode helped you, great. Share it with another host Also, follow us on YouTube and Facebook at Galvanize Management and TikTok at Galvanize Investments. Until next time, stay steady, keep learning, and keep building something real. This is Short-Term Rental Problems and Solutions.