Most agents don't spend time searching for "fix and flip properties." Those in the construction business love them, especially if single lots are become difficult to secure. There are always run-down, tired homes in need of attention.
The key role of real estate agents in a fix and flip transaction is to provide information that the buyer/builder will need to do his figures. The most important information needed is what the home would be worth after it's completely finished.
The starting point is to do at least 3 comps for the final product. That's the starting point for the builder. The figure that's deducted from there will lead to the fair market asking price range for the fix and flip. Most listing agents overprice them, and that doesn't help their client.
Starting from that final flip list price, the numbers deducted should be the following:
1. the approximate cost of the improvements.
2. The carrying costs to achieve that final product. Many builders might use a 90- day note, hard money or some type of financing with no closings and short term.
3. The profit the builder would be "satisfied" receiving. Greed rarely works.
4. Total those figures and deduct them from the fair market value figure. This will give you a range of what the fix and flip is worth. Anything less could be considered a bonus for the builder in the deal!!
Easy deals, two of them back-to-back, commissions on both, and repeat business from a happy "fix and flipper." I always had 2 or 3 builders to call. If you keep 3 busy, that's 6 quick deals.
I say quick because while the builder is fixing to flip, you're pre-marketing. That's "marketing like you mean it." Have your list of buyers for the first open house event, That's a trifecta!!! Fix, Flip, Fast!!
That's another blog post.... we'll title that one "Creating A Bidding War."
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