Excellent advice! Every investor I work with gets these ideas in one form or another. Putting a little extra thought and effort into any sales yields dividends...usually in the form of more dollars in the seller's pocket.
I admit that I am not an expert at a lot of things. Rather than being a jack-of-all-trades and a master of none, I decided long ago to be a master of a few things, while remaining downright awful at pretty much everything else. Some of my shortcomings include singing, dancing, drawing, or fixing anything that breaks. However, one thing that I have absolutely mastered is the art of selling my renovation properties QUICKLY and for TOP DOLLAR.
After a dozen years investing in real estate, my passion for renovating ugly and distressed homes burns brighter than ever. From the very start, I was obsessed with finding the perfect balance of spending enough money in just the right places to maximize profits, while at the same time selling properties in record time. The results have been nothing short of remarkable. Over the last 5 years, my fix & flip properties have averaged less than 7 days on the market, while boasting an average profit of over $25,000 per flip.
Do you want to experience the same results? Then check out my seven secrets to flipping success below.
1. RUN YOUR NUMBERS…CORRECTLY! – The most important part of any renovation project is the deal analysis. Determining a realistic after repair value, and ACCURATE repair numbers, are imperative to making sure your renovation dream doesn’t quickly spiral into a nightmare.
Typically when I see a rehab property sitting on the market for a long time, it’s because the investor has cornered his or herself into a price that isn’t realistic. Even though the market is clearly telling them that their asking price is too high, they can’t drop the price because they will lose money.Why are they in this unenviable position? It’s usually the result of the investor paying too much for the property because they bought the very first “deal” a Realtor sent them from the MLS, they underestimated the repair costs, or they OVER improved the property to make it look like the Taj Mahal or something they would live in, even though it sits in a low-income neighborhood.
2. STAY IN YOUR AREA’S AFFORDABLE PRICE RANGE – I primarily invest in the 2nd poorest county in my state (Escambia County, Florida), and even though we have beautiful beaches and a wonderful climate, our median household income is ridiculously low. So, I purchase most of my renovations in the price range where nearly EVERYONE in the area can afford it.
It you get lured into the luxury deals because of the potential for higher profits, you may up seeing those “profits” burned up in the form of holding costs. It only stands to reason that with fewer buyers in that price range, it will take longer for those homes to sell, and so the higher DOM (days on market) equates to more interest, property taxes, utilities, and more.
3. LIST IT IN THE MLS – This one is an absolute no-brainer to me, but I’m still shocked at the number of investors who try to sell it “FSBO” to “save” a couple thousand dollars. Time is money in this business, and the longer your money and energy are tied up into one deal, the longer you are missing out on the next deal.
There are 2,000 realtors in my local MLS, and nearly all of them have 5-10 (or hundreds) of potential buyers for my home. Additionally, our MLS listings are broadcast to major search engines around the world with millions of people searching for properties. Why would I want to rely on the few people that might drive by my pathetic sign in order to sell the house?
Get your home the most exposure you can possibly get, sell it fast, and move on to the next deal!
4. …WITH A COMPETENT REALTOR – Notice I said with a “competent” Realtor, not a high-octane agent on steroids. It really doesn’t take a superstar real estate agent to sell a house. Most “superstars” are “superstars” because they have been in the business a long time, or at great at marketing TO sellers, not necessarily FOR sellers. A great realtor isn’t going to sell your home any better than a good Realtor (though a bad Realtor can definitely destroy your sale), but the super high producer will oftentimes expect a premium for their services which is unnecessary to pay.
You want a Realtor who can take VERY GOOD pictures, and write a VERY GOOD description, and possibly even throw in a virtual or visual tour. Beyond that, you don’t need open houses, fancy flyers and brochures, or your own personal property website. That’s just fluff that makes for a good listing presentation. 99% of home buying is done on the Internet these days, and the property simply needs to have tons of good pictures and a great description that helps tell the property’s “story.”
5. REHAB IT RIGHT – You’ve probably heard this a hundred times, but the keys to selling homes quickly are the “wet” areas, also known as the kitchens and baths. Carpet, paint, and landscaping are a no-brainer, and everyone does that, so the renovations that will help you stand out from the competition are kitchens and bathrooms that have some “wow” factor to them.
Even though I stay in the affordable price range with my renovations, I always spend a little extra to make sure “momma” is happy. While some may consider it a sexist statement, statistics still show that women spend a majority of their time in the kitchen while at home, so we want to make sure she’s comfortable and excited about her workspace. New appliances in the kitchen, upgraded light fixtures and faucets, as well as a tile backsplash with glass tile inserts are just a few of the upgrades we use.
6. STAGE IT! – For those of you who are members of the Professional Investors Guild, you’ve probably heard me go on and on about my love affair with staging. I firmly believe that it’s the “secret sauce” to selling my homes quickly and for top dollar.
Going back to my priority of having “really good pictures” on the MLS listing, staging falls right in line with that recommendation. You can have a beautiful room with brand new carpet, fresh paint, new light fixtures, and brand new closet doors, but when you take a picture of an empty room, it just looks like a big hollow box.
Selling homes is just as much about appealing to the buyer’s emotions as it is to their pocket book. Potential buyers have to be able to imagine living there, and raising their family there, which is difficult to do in an empty, echo chamber. Staging might cost a little bit more money (typically 1-1.5% of the sales price), but it’s worth every penny!
7. DON’T LIST IT UNTIL EVERYTHING IS DONE! – Some real estate investors (especially new ones) can get a little anxious when it comes to listing the property, and end up putting it on the market too soon. It’s usually because they are getting nervous about the money they have invested, or the hard money payments that keep rolling around each month, and so they rush the property on the market before it’s truly ready.
If buyers had vision, there would be no reason to renovate homes. We could just put it up for sale as a piece of junk, and say “Home will be renovated to buyer’s exact specifications”. It works in new construction because they walk through a model home, but in renovations they have to see past the awful mess in front of them to see what it might become, and very few can truly do it. That’s why it’s so important to make sure all renovations are complete before allowing buyers to walk through.
Additionally, when you list a new property on the market, you typically get a burst of showings right at the beginning. There’s usually a bit of “pent up demand” for buyers looking in a certain price range, but that haven’t found the right home yet. My renovations oftentimes receive a contract at some point in the first few days from this “pent up demand”, usually from the 1st or 2nd buyer who walks through. This is why it’s so critical that all the repairs be completely done before the doors are opened, so that there are no potential objections from these ready and willing buyers.
Well, there you have it! While it might not be an exhaustive list, these are 7 of the most important keys to selling your renovation homes in under a week. Can you think of any tips that I missed? Share your thoughts in the comment section below…and let’s all grow together!