I just realized this week that we had sold a property in Taunton, Mass – but I hadn’t told everyone on my team.
As they say, the key to success in business is good, honest and open communication…I guess I should follow that one more closely!
I actually felt really bad because I get so wrapped up in acquiring properties to keep the deal flow going, I sometimes forget to tell everyone when all our hard work finally pays off!
So to my acquisition manager John Fossetti…this is a public apology! 🙂
When you get an offer accepted on a flip, it is one of the most satisfying parts of my job – and oddly enough, the selling part is one of the easiest parts of the entire house flipping process! This is true just as long as you have stuck to all the house flipping rules and have fully leveraged the collective expertise of your house flipping team.
So what are the shortcuts to selling a property in record time?
As long as you keep to the seven principles here, you’ll find that selling is the simplest and most logical endpoint of the entire house flip process and they’ll help to keep you well into the black in every deal you do.
Seven Steps to Selling Properties
1. Nail Your ARV
This number is the most important number in the entire house flipping process. As you may recall, ARV is short for After Repair Value – or what you will sell the property for once it is all fixed up and ready for sale. In fact, all of your house flipping 5th grade math flows from this number. Here is a brief summary of how it works using some round numbers:
ARV = $200,000
70% Rule = $140,000
Cost of Repairs = $40,000
House Flip Math: $140,000 – $40,000 = $100,000
MAO (maximum allowed offer) = $100,000
If you’re not sure of any numbers click here for a full explanation.
So, as you can see, getting that ARV right from the start actually begins with the end in mind<link> and helps you stay on track.
2. Get An Awesome Broker
Somewhat related to #1 above, the ARV flows from the excellence of your real estate broker to make sure they get you the most accurate comps – which as you see from above, everything flows from that critical number. This is why it’s so important to have a top-notch real estate agent who is an expert in that market. When you do this, use as accurate a number as possible from the start.
If you can get this number right – making sure your listing broker has realistic comps and is an expert in their geographic area, your selling process will go far more smoothly.
And the best place to find good real estate brokers is through networking and meeting people in the geographic market where you operate. Take their business cards and then write on the back of the card where you met them and then call them when you are looking in that market.
3. Make Sure You List the Property at the ARV
Like I mentioned above, we all make mistakes. I still hold to the theory that more mistakes you make the more successful you’ll be (just as long as you don’t keep repeating those mistakes, LOL).
If you’ve done all the work to figure your ARV and get your broker – who’s an expert in that half mile or so radius or neighborhood to your listing – to get the most realistic comps as possible, when you list the property for sales, refer back to your ARV and make sure you list it at that price.
Unless the market has dramatically changed – which is rare if you make sure you keep your rehabs to a month or two and no more – your ARV you began with should be the ARV you list the property at.
In the case of a property we just sold in Taunton, Mass, we had an ARV of $209,000 – but for some reason or another (my fault here most likely), we listed it at $229,000.
So there it sat for 30 days – and although we had a lot of activity, there were no offers.
We then got the bright idea to look back on our original notes…and the ARV was $20,000 lower!
In this case, the market had heated up a bit more, so our ARV was a little bit low, but probably not as hot as $229,000. We dropped the price to $219,000 and then got a bunch of offers, one of which we accepted.
This leads me to the next point….
4. Be Fast on Price Changes
Failing fast is one of my other favorite expressions, which thankfully in the case of our Taunton property, we quickly realized our error and within 30 days (as well as due to the fact that there was activity but no offers) we acted quickly to lower the list price by $10,000.
We didn’t take three months to realize our mistake. We lowered it fast – within 30 days and then immediately started getting offers.
Aside from paying attention to your original ARV, when you are getting activity but no offers…FAIL FAST…then adjust accordingly.
So if you have a property that you listed at your ARV and you’re not getting offers within the first few weeks, admit your mistake and then drop the price. In our case, we dropped it $10,000 and then sold it at $216,000 – still selling it ABOVE the original ARV.
5. Clean It Up
It’s a fact that clean homes sell fast – dirty homes sell slowly.
Do everything you can to clean up the property and do what you can to make sure that every part of the entire property is as immaculate as possible.
Used car dealers do it – why shouldn’t you? When I bought my last truck before the one I have now, it was used and one of the main reasons I bought it was because is was so clean and new looking. Although it had 18,000 miles on it and was two years old, it looked brand new. Even the bed of the truck was glistening clean.
I bought it for nearly full price – primarily because I was so impressed with the way it looked and it had none of the remnants of the previous owner.
In the case of your house flips, do the exact same thing. Make sure everything, from painting the cellar floor (which we actually did in this property in Taunton) to cobwebs in the laundry closets (none at all thanks to our awesome cleaning crew) is sparkling clean. This goes for the outside of the property as well.
In the case of this property in Taunton, one of the bigger reasons why the house sold quickly because it was so sparkling clean – both inside and out.
6. Stage It
Staging sis something that we have started to do more and more – as it has really helped us to sell our homes more quickly. At first when we were doing this, we only did staging for our higher end homes, but now it seems like we do this with nearly every home we sell.
Although staging can vary in price from $300 to $1200 per month, it’s a small price to pay to sell the home as quickly as possible. If you’re selling a $100,000 property, a $1,000/month expense for staging may not make a whole lot of sense, so use your judgment here.
It just helps people to feel comfortable in the home and allows them to envision themselves in the home, with nice furniture and even many of the amenities including flat screen televisions and all the creature comforts. Staging is also very helpful in warming up a home and making people feel comfortable in it – so comfortable that in one case, people simply wouldn’t leave the house!
On that home, we got three offers that day and sold it for $5000 more than asking.
Staging is also very helpful in selling because it helps to help people envision how the home will look if you have an odd-looking space or a challenging layout.
7. Do Open Houses
Open houses are a great way for masses of people to come in and look at the property. We have found that not only is this a great social way in which to sell properties, but when combines with staging, it oftentimes allows for people to lounge around and really get to know the house with other people. This creates a sense of group validation and crowd interest – a valuable psychological tool when selling.
The more people want something, the more desirable that thing is. If there are a lot of people at the open house, then the people there feel validated in their interest as they see others interested as well.
In some case, people start to get comfortable in the house hand out and sometimes we have a hard time getting them to leave! This happened with this house flip – which sold in just two days.
If the property is not on a main street make sure that your listing brokers uses plenty of signs – signs out on main streets which point to the home and its location. In the case of the Taunton property, it was on a cul-de-sac so we had signs from the main street to the side streets all the way to the home itself – which was isolated a half mile from the main roadway. This is one of the main reasons why the open house was so well attended.
So make sure your broker schedules and markets a few open houses – a must for selling any flip.
If you’ve made it this far, please leave a comment below! What do you think? Are there any other tips you’ve used to help sell properties fast? Leave a comment below and let me know!
Photo: Robert Fairchild
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.