Factors Affecting the Fast Sale of Flips
Welcome to 2019!I
I'm so excited for this year and eagerly anticipating the blessings and experiences to come! How about you?
This is an expanded discussion of what I talked about on What the FLIP Live on Wed January 9. I have created a FREEBIE for you to use to help you assess how fast your property will sell. Click HERE for Sell Your Flip Fast SCORECARD!!
In this blog post, I want to talk today about factors that affect the resale of a flip property.
I believe that as fix and flip real estate investors, your biggest enemy is TIME.
Most of you who are in the flipping and real estate investing circles for any length of time, know that there is conventional wisdom when it comes to what you should and shouldn’t do with a property to flip it and sell it fast.
For example, everyone knows that the main method of determining what repairs need to be performed is to look at the comparables and see what those that have sold looked like.
Today I am going to really dive deep into all of the factors that affect the resale of flip properties and give you some real life examples of what a few of my investor clients are encountering when trying to sell their flips.
I would love to tell my clients that I can provide them with 100% guarantee that my design services will help them sell their properties within 1 week of going on the market, however it is just not that simple and there are several factors out of my control that will affect the quick sale of your properties.
With that said, I KNOW FOR A FACT that if the other factors are met, my designs will ensure a FAST SALE! I have seen it time and time again.
3 Main Factors for fast resale:
The ARV and final listing price is key to resale. If you don’t get this right, no amount of repairs, design or anything else is going to help your house sell fast.
Houses Under median home value tend to sell themselves, those above median need to be little more spiffy, and high end homes really need expert interior design to ensure a fast sale.
Case Study: I have one client who is struggling to sell a property in Houston around $800k. Right now that higher end market has slowed down drastically and there is just not much you can do about that. This house is beautiful so I know it will sell but it doesn’t make the waiting game easy. This property also falls into another category and that is NEIGHBORHOOD, (see below) right now that neighborhood is struggling to get back to normal from Hurricane Harvey so they have that going against them.
You really have to study the comps and the market to determine final list price.
In any price range, your listing price has to be competitive. You will want to ensure that you are right at or just under the comparable market value. How do you know what that is, you have to constantly study the market, before you start the rehab, all the way through the rehab and throughout the listing. Markets are volatile and change on a dime so you will want to keep a close eye on what’s going on.
Case Study: I have one client who has his property priced too high. In fact, $20k too high. The comps simply don’t warrant his listing price and I have a suspicion that he needs to get that out of it to be profitable. Sometimes we have to bite the bullet and take a loss.
DESIGN AND CHARACTER:
The design of the rehab is so important. So much so that even if the above are not met, design can pull your property out of dire straits and help it sell fast! I have encountered countless investors who have run into real trouble due to poorly executed floor plans, drab and boring finishes and little to no thought about who will ultimately buy that home. I call this the Ideal Buyer Avitar and I will be talking more about that in upcoming episodes but it is all part of the many decisions one must make when flipping houses.
Case Study- Bad Design: there have been several clients who we have done staging for or “after the rehab- rehab” design work for and the reason is because the first time around, they didn’t take design into consideration, or they went cheap on the finishes and fixtures and it did NOT appeal to potential buyers. Please give us a call if you are worried this will be you.
Case Study- Good Design: An investor reached out to me several months ago and hired us to help him with a $2.2MM ARV home in Highland Village. When all was said and done he was able to list it at $2.7MM and 15 days later had an offer! Wow! (Stay tuned for the full case study coming soon.)
Neighborhood: Schools, busy street, railroad, commercial nearby
Quality of the Rehab: Make sure your rehabs are done well. Leave nothing to chance when making repair decisions. I know you have a great deal of them to make on a day to day basis but try to get into the mind of your potential buyer and think about how they would view the home when doing a walk-thru. Too many investors have sat on properties far too long and lost a lot of money because they didn’t ensure a good quality rehab.
Time of year on the market: this is hit or miss and there are varying opinions on this matter but traditionally Spring and Summer are hot selling months. So, if your rehab will be compete outside of those optimal selling months just account for that in your due diligence and you will be fine as you watch it sit without much traction.
Days on Market: every neighborhood has an average DOM. You must figure that into your numbers and make sure all of the other boxes are ticked and your flip will sell!
Market Conditions (interest rates, economy etc) Not my wheelhouse but there are some really smart people out there who are a wealth of information on those topics. Learn how these factors affect your market and account for them in your flipping business.
Staging: I can’t believe I didn’t address this in my FB Live!! Especially since this is one of our main SERVICES we provide here at REI Design Solutions!! This is HUGE! (but I was focused on several other factors so we will do a whole episode on this one alone someday soon, Lol) You HAVE to stage if you are going to be flipping houses over the median home value. Period.
So there you have it! How does your current flip properties under contract, in the process of being rehabbed or listed on the market, measure up?
Be sure to schedule a 30 min FREE consultation if you'd like for us to help you assess your project!
And don’t forget to download the FREEBIE I created! A SCORECARD for you to use when you are assessing all of these issues which affect the fast resale of your flips! Find that HERE and download it for free!!
That’s all I have today!
To your success,
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