I’ve been tired for the past three weeks.
I’ve been staying up a little later than usual, getting up in the middle of the night a bit more, the whole time with a singular thought dominating my brain.
“Why won’t this house sell?”
The rehab was done well (not perfect, see below). I had 30 showings in three weeks. The feedback has been good. The area is good. what in the name of Brandon Turner’s beard is going on?
Like a baby transformed from crying to contentment, rocked back and forth in the comfort of a parent’s arms, I let the ease of the market lull me into a false sense of security. I’m someone who subscribes to the notion (from J. Scott’s The Book on Flipping Houses) that when flipping, we operate in one of four boxes: Acquisition, Funding, Rehab, and Disposition. The market cycle and the scale of your business will dictate how much time you are allocating to each one on a weekly basis. In a slow market, finding deals is easier, and selling them is harder. Therefore, you spend a ton of time on disposition. In a hot market, I could teach a dog to input listings on MLS while I spend all of my time trying to find the next deal.
The ease of disposition has turned me into something I have feared:
I’m now a lazy investor.
Now that we have a seasonal dip in the market, which happens every winter and holiday season, my laziness has bitten me square on the buttocks. Taking my eye off of the ball a bit this year has created some bad habits that I have to break. If this seasonal dip turns into an overall cooling off of the market or (forbid) a drop, the nip on my butt will become a shark latched onto my rear end, going for the kill. This is a manifesto to all of my investor friends: Hot markets make for lazy investors who form terrible habits that destroy them when the market shifts.
I’m not keeping up with market stats
It’s easy to just wake up on a Monday and assume that this week will be just like last week. The market is hot, days on market are short, deals are hard to find, houses sell in three days with multiple offers! Let’s go do more of the same! I’ve gotten out of the habit of checking my weekly market action reports and going outside of those for a few other views of where the market is headed. Of course, nobody has a crystal ball, but the data does not lie. Smarter people than me are paid to interpret that data. From your favorite agent to your local business journal, this information is not too hard to get your hands on. For me, I’ll be getting back in the habit of checking the market data every single week—hot market, frozen market, and everything in between.
I’ve let a few quality control issues slip
When competing with five other fixed-up properties in the same neighborhood, we can all agree that everything has to be on point. No flaws, all of the right choices made, property layout and lighting all taken into consideration. My crews tend to do a great job overall, and sometimes they have to make decisions on the spot without direct input on every little thing. Personally, I would say that 95 percent of the time, they make the right choice in the spirit of all of the properties we have worked on together.
I went on vacation in the middle of this current flip, and when I came back the vanity that they had put in the bathroom was slightly too small for the space, as was the medicine cabinet mirror and the light fixture. I didn’t like it at all. It didn’t work with the space. It was nothing crazy, but it was not perfect. I let it slide and kept it in, thinking that it really wouldn’t matter since the market was great, inventory was low, and I’d likely still get my price. The time and cost to change it out just was not appealing. Even if all of those things were true, it still sets a bad habit of letting things slide here and there. Time to sharpen the pencil and keep my eyes sharp for little issues that could snowball in the future into sloppy product.
No staging required?
From flipping in the downturn to flipping now in the frothy hot market, I’ve honestly never had to stage a property. I lucked out when the market was cool and inventory was higher; and in a hot market, why bother? I’m really starting to change my mind on this after touring dozens of fix and flips in the last six months. I know many investors who always stage no matter what. I always saw it as a wasted expense, especially in a hot market where the days on market are the same as the weekend. But in the seasonal downturn, staging the property could have hooked me an offer on week one instead of week three. I’ll now strongly look at the market, my competition, and the expense on each property to see if it makes sense or not to stage each project. Fix and flippers, completed houses are our marketing, so why not make our final product look as great as possible? When compiling a portfolio of completed projects or trying to showcase your designs, a staged property will always look better.
A National Association of Realtor’s poll of its agents said the following about staging:
•It has a 49% impact on their buyer’s final decision
•77% of buyers said it made the decision to see the property easier
•29% said the price impact was 1-5% higher due to staging
•21% said the price impact was 6-10% higher due to staging
These are just three of my issues, but there are more I could get into, such as not doing 3-D tours, not doing a second clean of the property before listing, not doing landscaping, etc. Since I am the listing agent for these properties as well, I don’t have a check and balance system to smack me over the head and let me know I’m slipping. It’s time for me to start to pay attention to these little things again.
After three weeks on the market, I finally got a good offer on that property. One day before I was going to pull it off the market to change the bathroom vanity out and stage the kitchen, living room, and master bedroom (the three places it matters the most)! Sometimes you are lucky, but I was preparing to put in the right work if that didn’t work out.
Habits are a funny thing, and once you start letting them slide, you let bigger things slide as well. Being diligent and not getting lazy in a hot market will only make you that much better if and when the market cools off and you actually have to compete to sell your finished projects.
Have you found yourself letting things slide in this hot market? Tell me about your experiences in the comments!