There are several key factors that go into a successful house flip. For starters, you need to get the property at a price that works for you. Overpaying on the way in will put you behind the eight ball throughout the process. Next, you assemble the right team and do the right work, all while staying under budget. Even if things go right the final, and most important, step is to get the property sold.
Finishing the property is really only the beginning. Finding the right buyer and selling in your timeframe will directly dictate your bottom line. The quicker you can sell, the quicker you can reinvest your profits to another property. Here are five important items that directly influence how quickly (and for what price) your rehab property sells for.
- List price. As simplistic as it sounds everything revolves around the list price. The list price is the first impression that buyers and real estate agents have of your property. A common mistake that rehabbers make is getting too attached to the property. They have put in weeks of sweat equity and think their property is far superior to everything else on the market. Because of this they fail to rationally view the market data and want to list the home above fair market value. As great as breaking sales records is, listing too high will singlehandedly ruin your listing faster than anything else you can do. With an overpriced listing buyers may not even give it a look and will move on to another property. With reduced demand, your home will sit stale on the market for weeks without any activity. Eventually you will be forced to make a price reduction just to stir up interest. You are always better off listing at fair market value and letting demand organically drive the price higher.
- Quality. With the influx of rehabbers and builders throughout the country there are more updated properties hitting the market. When you advertise that a property is fully rehabbed, it is essential that everything is perfect. You cannot cut corners with your work or skip steps in the process. You will be judged more on the quality of the work than almost anything else. End buyers want to be able to take the keys at closing and move right in without doing anything. If there is even the slightest item that isn’t perfect, they won’t be as motivated to buy the property. Just one item opens the thought that there may be other items in the house that aren’t perfect. This doubt causes hesitation, which will push them towards other properties. Even if you must spend a little more it is usually worth it to make sure the quality is there. With any rehab you pick and choose your battles, but the work quality must always be there.
- Design/flow. The goal isn’t to rehab the property to be the biggest or even the best on the market. It is important to remember that you are looking to appeal to end buyers. If the market doesn’t like the end product, it will collect dust before eventually selling at a severe discount. Prior to starting any work, you need to consider the design and how the property flows. If the layout is weird, appeal will be diminished. On the flip side, a property with a nice open floor plan with an attractive layout will help create a buzz and produce an offer. You need to personally remove your feelings and opinions and solely consider the market. Listen to the advice of your real estate agent and contractor and go with what works, over what you personally like. The quality of the property may be top notch, but if the design is poor buyers won’t even notice.
- Staging. Any buyer, regardless of market or price point wants to envision themselves living in the property. The more you can help them with that, the more likely you will find your buyer. If you are spending tens of thousands of dollars on the rehab, the last thing you want to do is cough up additional funds for staging. However, this may be the best money you spend throughout the process. By having the home staged you give prospective buyers the feel of what it is to live in the property. The alternative is a bare house that can feel dull and downright boring. Staging can be expensive on higher end homes but should be viewed as an investment. Spending money on staging will not only help expedite the sales process but will also help to get top dollar.
- Marketing. There are many benefits of using a dedicated real estate agent. Chief among them is for their marketing prowess. The best real estate agents are usually proficient in marketing and negotiating. With expert marketing they can increase the buyer pool which creates demand which ultimately improves the sales price. Marketing is more than putting the property on a few social media sites. It is digging in their rolodex of contacts to find the right agent for the property. It is taking the right pictures and putting them on the MLS, for all the market to see. It is creating the right mood at the open house and inviting the right people. If your real estate agent isn’t proficient at marketing, you may want to consider someone else.
Little things make a big difference when it comes to rehabbing properties. Don’t overlook, or ignore, these five essential items.
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