Renovated flip, doesn’t sell, next options

Renovated flip, doesn’t sell, next options

Member since 2023 · 25 posts · 15 votes

I’ve finished my first flip in October in Richmond CA.  A single family, 3 beds, 2 baths, huge yard.  The house turned out great after renovations.  It’s listed at $650k based on comps.   It didn’t sell in 40 days though.  
My agent says it a combination of the time of year, rates and city reputation in general.  Although this neighborhood is very safe with nice neighbors, buyers and even brokers say there’s a “stigma” associated with the town.  

All that being said, a much less nice house with the same parameters a few blocks up sold in two weeks for the same price.   

In any case the question is what should I do now: 

- delist it and relist in March (what my agent proposes) - on the basis that more people buy in the Spring.   Is this true in CA where the  weather doesn’t change?  I’m not crazy about the idea of paying mortgage for another 2-3 months.  I’d have to refinance asap in this scenario (more costs).  

- reduce the price a bit ($10k) and still try to sell it now.  I don’t know what else we could do.  It’s priced pretty much at my cost.  

Thanks! 

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Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
2y

I would not call Roosevelt a good comp- it's 2 units and larger square footage sold $629 yours is closer to railroad and Pennsylvania Ave traffic that cuts through the neighborhood.

If you try to refinance my guess is $625000 is highest valuation out there and probably what you will sell for in March.

Reduce the price to $639,999 and see if Santa comes along.

Color is hurting in the photos (too hot)- tone down the red bark that you used in the images and the bathroom black and white (just do this with a photo app). The bark fades anyways. Add 15 more images - take the photos low from the farthest away corner. Put up some fake cameras and take them when you sell - an empty house is a liability. I do not suggest delist and relist. Esteban the Realtor says he has 22 years but he has a very small media footprint. This needs to be on Facebook, Insta and Tik tok with a  Filipino teen girl, a South Asian older man, and in Spanish. Richmond demographics are deep and varied- reach the audience. Your buyer is not a white tech worker in Oakland, it's a couple with children.   Offer some perks- $2500 towards a rate buy down or help with down payment assistance programs- advertise those programs with your social media. Can you afford a video? Esteban should pitch this at the Realtor meetings, have a broker preview with a taco bar in the back yard, door knock whatever drives traffic.

You know the problem is price. I didn't pound on reduce the price but that is the problem.

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  • Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    2y

    If you post the link to the listing and to the comparable sale, the members can probably help identify the issue (usually price, location, or condition...and price can address the last two).

  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Lor Fara:

    I’ve finished my first flip in October in Richmond CA.  A single family, 3 beds, 2 baths, huge yard.  The house turned out great after renovations.  It’s listed at $650k based on comps.   It didn’t sell in 40 days though.  
    My agent says it a combination of the time of year, rates and city reputation in general.  Although this neighborhood is very safe with nice neighbors, buyers and even brokers say there’s a “stigma” associated with the town.  

    All that being said, a much less nice house with the same parameters a few blocks up sold in two weeks for the same price.   

    In any case the question is what should I do now: 

    - delist it and relist in March (what my agent proposes) - on the basis that more people buy in the Spring.   Is this true in CA where the  weather doesn’t change?  I’m not crazy about the idea of paying mortgage for another 2-3 months.  I’d have to refinance asap in this scenario (more costs).  

    - reduce the price a bit ($10k) and still try to sell it now.  I don’t know what else we could do.  It’s priced pretty much at my cost.  

    Thanks! 


     Hey Lor, 

    Have you consider keeping this as a rental and doing a cash out refi instead? 

    LuxePrivate Investments LLC 572 Reviews
  • New to Real Estate · San Mateo, CA · Member since 2015 · 127 posts · 12 votes
    2y

    Hi Lor,

    We are currently in a similar situation. My partner and I did our first flip in Vegas. It turned out very nice but the appraisal came in $20-25k lower than our list price. After having it listed for over 40 days we decided to delist and applied for a DSCR loan in order to payoff our existing hard money lender. The good thing about this kind of loans is it based on the appraisal not income and they close much quicker vs traditional loan process. The rates however are much higher. We are looking to hold it for a few years via a lease option.

    Good luck 

    Armand 

  • Realtor · NJ · Member since 2023 · 215 posts · 99 votes
    2y

    Could be a combination of different factors. 

    What does the house that sold nearby have that yours don't? 

    Maybe your agent didn't do a good job marketing the property in the proper channels? You could consider another agent. 

    Have you considered renting it out and holding the property for now? Interest rates are cooling (lower monthly payment) and you should be able to pull out at least 75% of ~650K since you say a similar home sold in the area (direct comp). 

    Not familiar with STR regulations in your area, but you could dive into the hospitality space as well!

    Good luck!

  • Member since 2023 · 25 posts · 15 votes
    2y
  • Member since 2023 · 25 posts · 15 votes
    2y

    Hi, yes looked into renting it short term. The property management companies said that would be unlikely to find  in that location for short term,  plus risky bc of rent control and eviction local laws.  (Aka I may find myself in a situation where people say they want to stay a few months but then don’t want to leave and I can’t evict them)

  • Member since 2023 · 25 posts · 15 votes
    2y

    Thanks Armand. May I ask what rate did you get on the DSCR loan? And which lender?

  • Investor · Brooklyn, NY · Member since 2022 · 158 posts · 118 votes
    2y
  • Member since 2023 · 25 posts · 15 votes
    2y

    Hi Erik - I haven’t considered renting long term as I had some bad experiences with tenants in other properties, but getting around to this option.  

  • Member since 2023 · 25 posts · 15 votes
    2y

    Hi Armand - is your flip in Vegas a house or a condo? How do you go about finding tenants, do you advertise it yourself or through a property management company?  

    If I go this route I’d prefer to work through a property management but I don’t have anyone yet in my network in CA.  

  • Member since 2021 · 104 posts · 78 votes
    2y

    @Lor Fara

    I'm sure you've considered this but the Roosevelt property has an ADU. So it's not quite a like for like comp to yours.

    The properties are in different school districts it looks like. Neither district seems to score well. So that may not make a difference.

    I'm assuming the realtor walked you through how they came to the list price with 3 or 4 other properties. Is your list price in line with those? Ideally these would be properties located as near to yours as possible.

    The pics are fine. You'd maybe want to pull back all of those curtains to open the home up a bit. For the bathrooms sliding clear shower doors would go a long way. They'd also draw attention away from the fact that the shower walls aren't tiled.

    Looks like the days on market are fairly low for Richmond as a whole, e.g. demand is strong - but it also looks like there's a high variance in crime rates depending on what part of Richmond you're in. Some areas are high crime. Others are low. Is this particular location in a higher crime area? Are your comps in the same area?

    Are you getting showings and no offers or no showings? What feedback is your realtor hearing from potential buyers?

    Delisting and relisting in spring is not a bad strategy provided that you're priced right for the market.

    Good luck with it. You will get there

  • Member since 2023 · 25 posts · 15 votes
    2y

    Hi Martin, thank you for the reply.  
    - The bathrooms are redone with quartz walls, which is higher end than tiled walls. That didn’t come across in the pics?  No maintenance required either.  
    - yes, our comps were no more than 1 mile around. several sold over the asking price 1-2 months earlier.  I was confident this would sell based on comps.  
    - Richmond has many pockets, this area is safe that’s why I purchased there.  But I think as a buyer coming from outside the city, it’s hard to know that.  We tried to convey it in the description and my agent called a bunch of other brokers. 
    - we had about a dozen good showings.  Everyone who comes over “loves it” but then they don’t put an offer.  Came close a couple if times. 
    - we didn’t get feedback that the price was too high.  

    I’m concerned that if March comes, it will be the same situation.  

    Thanks!  😊 



  • Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    2y
    Quote from @Lor Fara:

    Your house looks great. Looks like the comp you shared is pending at $630k and it has 175 more SQFT than yours and an ADU with an additional 550 SQFT. That's a massive difference in size and value, particularly in an area that appears to sell for ~$500 PSF. I assume the ADU SQFT is not included in the house SQFT. We don't have information on the other comps but based on this one comp, it appears that your price at $650k is way too high. Use comps without an ADU and that will be easier for you and your agent to assess price.

  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Lor Fara:

    Thanks Armand. May I ask what rate did you get on the DSCR loan? And which lender?


     Hey Lor, 

    DSCR loans are pricing at the high 7s to high 8% depending on your FICO, Property Loan to Value, DSCR Ratio, experience, and prepayment penalty. Happy to connect

    LuxePrivate Investments LLC 572 Reviews
  • Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    2y

    I would not call Roosevelt a good comp- it's 2 units and larger square footage sold $629 yours is closer to railroad and Pennsylvania Ave traffic that cuts through the neighborhood.

    If you try to refinance my guess is $625000 is highest valuation out there and probably what you will sell for in March.

    Reduce the price to $639,999 and see if Santa comes along.

    Color is hurting in the photos (too hot)- tone down the red bark that you used in the images and the bathroom black and white (just do this with a photo app). The bark fades anyways. Add 15 more images - take the photos low from the farthest away corner. Put up some fake cameras and take them when you sell - an empty house is a liability. I do not suggest delist and relist. Esteban the Realtor says he has 22 years but he has a very small media footprint. This needs to be on Facebook, Insta and Tik tok with a  Filipino teen girl, a South Asian older man, and in Spanish. Richmond demographics are deep and varied- reach the audience. Your buyer is not a white tech worker in Oakland, it's a couple with children.   Offer some perks- $2500 towards a rate buy down or help with down payment assistance programs- advertise those programs with your social media. Can you afford a video? Esteban should pitch this at the Realtor meetings, have a broker preview with a taco bar in the back yard, door knock whatever drives traffic.

    You know the problem is price. I didn't pound on reduce the price but that is the problem.

  • Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    2y

    First off, I dont know the story behind this but if you are a newbie and this is your first deal or have limited experience, Id like to say well done. Newbies usually dont jump into the game to this degree. Nice renovation. When you go into a flip a great rule of thumb is to have at least 1 alternative exit strategy if not more. The numbers should work for all those strategies. In terms of the advice you are getting from the realtor, Id question some of it. Are they a high end realtor that knows how to move things? The realtor (amongst many other thing) can make or break you. In my region I have never been told by any realtor to take my property off the market for months to re-list in another season. The most has been maybe a week and that was just to reset. Also, I'm not sure about this area but everything does not sell in 30 days in many places. You have a recent comp which seems to establish what you can possibly get eventually. If you have a competent realtor that really knows their game none of these questions should exist. Mine have a proven track record and knows verbatim, exactly what needs to be done and when to move that thing fast. They understand the dynamics of investing and know how to punch it all out.  I had to save an investor of mine. She had her own realtor who had it listed for nearly 6 months.  I put mine to it and the contract came in under 2 weeks. With the rental approach, will you have any cash flow? Its a lot to that angle as well. Do you know how to manage it or will you have to hire a company which will eat into  cash flow? Do you have to have rental licenses and jump through a million hoops similar to how its done in most progressive cities? Its a lot to take in but for me id probably get a hard charging realtor if one is not present. If you feel that one hits the mark Id let it ride another 30 days to see what happens. If it doesnt move after that I'd consider price cut or incentives. Just look at all the numbers and see what's best. If the price cut will get it moved sooner its probably less than paying the high mortgage for several months. On another note, with flipping give yourself room to breath. Dont take on something that is contingent on moving it in a few days or anything else. There are dozens of contingencies and things that can make it go sideways.  Everything is in the numbers. Its a lot to take in like I said but good luck. Again, you have done well. Much much better than the average newbie to successfully get this far. 

  • Member since 2023 · 25 posts · 15 votes
    2y

    Hi Caroline - thank you for the feedback.  I have real cameras installed from the beginning of the renovation.  
    What do you mean by it should be on social media “with a Filipino teen girl, a South Asian older man” - like in the pics? 

    the neighborhood is mostly Hispanic. Agree that target buyer is family with kids.  Or even two families in this area.    However, not many showed up.  

    the agent did do broker open houses and pitched it to brokers.  I don’t think there was much social media marketing. 
    I think I’ll go for a price reduction.  Still needs to be marketed better I think.  Thanks! 

  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    2y

    Personally, I would take it off until March and relist then. I am in a similar situation with a property for sale and am considering doing that very thing. I wouldn't consider renting, then you have to repaint, clean or replace flooring, might have damaged appliances, etc.....

  • Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
    2y
    Quote from @Lor Fara:

    I’ve finished my first flip in October in Richmond CA.  A single family, 3 beds, 2 baths, huge yard.  The house turned out great after renovations.  It’s listed at $650k based on comps.   It didn’t sell in 40 days though.  
    My agent says it a combination of the time of year, rates and city reputation in general.  Although this neighborhood is very safe with nice neighbors, buyers and even brokers say there’s a “stigma” associated with the town.  

    Yes it does look great, but its still about location, location, location. Your Realtor is slightly correct but as Caroline mentioned its really important to know who your buyers are. Real Estate is neighborhood specific. I'm questioning your comps during the underwriting process. Its still Richmond though. I always ask myself "would I & my family live there"

    All that being said, a much less nice house with the same parameters a few blocks up sold in two weeks for the same price.  

     
    Again it's more about the location.

    In any case the question is what should I do now: 

    - delist it and relist in March (what my agent proposes) - on the basis that more people buy in the Spring.   Is this true in CA where the  weather doesn’t change?  I’m not crazy about the idea of paying mortgage for another 2-3 months.  I’d have to refinance asap in this scenario (more costs).  

    Yes, the weather is nice but its still the holidays 

    - reduce the price a bit ($10k) and still try to sell it now.  I don’t know what else we could do.  It’s priced pretty much at my cost.  

    Thanks! 

    I hope I didn't seem rude but that other house isnt a comp, and I didn't have the benefit of seeing the comps used during DD.

    Please read the other comments carefully, they're all correct.

    I really don't see any STR/MTR exit with the exception of blue collar field service guys & that's a challenge too.

    I agree with you & the others that LTR is also going to be a challenge in that area plus AB 1765 goes into effect on Jan 1 2024.

    I'd pull it, re-list & get rid off it ASAP.

    Learn from this, adapt your SOP'S, re-examine your underwriting & don't take what the Realtor says as verbatim. His opinions are worth consideration but your word is the bottom line.

    Remember "that what doesn't kill us, makes us stronger"


  • Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Lor Fara:

    I’ve finished my first flip in October in Richmond CA.  A single family, 3 beds, 2 baths, huge yard.  The house turned out great after renovations.  It’s listed at $650k based on comps.   It didn’t sell in 40 days though.  
    My agent says it a combination of the time of year, rates and city reputation in general.  Although this neighborhood is very safe with nice neighbors, buyers and even brokers say there’s a “stigma” associated with the town.  

    All that being said, a much less nice house with the same parameters a few blocks up sold in two weeks for the same price.   

    In any case the question is what should I do now: 

    - delist it and relist in March (what my agent proposes) - on the basis that more people buy in the Spring.   Is this true in CA where the  weather doesn’t change?  I’m not crazy about the idea of paying mortgage for another 2-3 months.  I’d have to refinance asap in this scenario (more costs).  

    - reduce the price a bit ($10k) and still try to sell it now.  I don’t know what else we could do.  It’s priced pretty much at my cost.  

    Thanks! 

     Your numbers were off when you bought it. Drop the price, no other option. Remember, you make your money when you buy. Know your numbers, lesson learned.

    Good luck to you  

  • Specialist · LA & Ventura · Member since 2023 · 119 posts · 60 votes
    2y

    You are priced at $585/sf, which in Richmond is on the lower-end for the quality of product you have delivered. Also, Avg DOM for renovated properties in Richmond is just under 30 days, and you've been listed for 45 days. This tells you it's the buyers pool slowing down, because you have a good product at a good price, but still not moving.


    If you notice, Q2-Q3 is when $/sf values jump, and is when the most transactions occur. If possible, rent it to cover the carry (something Short-term like AirBnB or M2M), and list it April/June to get the most $ back in your pocket

  • Specialist · LA & Ventura · Member since 2023 · 119 posts · 60 votes
    2y
    Quote from @Bob S.:
    Quote from @Lor Fara:

    I’ve finished my first flip in October in Richmond CA.  A single family, 3 beds, 2 baths, huge yard.  The house turned out great after renovations.  It’s listed at $650k based on comps.   It didn’t sell in 40 days though.  
    My agent says it a combination of the time of year, rates and city reputation in general.  Although this neighborhood is very safe with nice neighbors, buyers and even brokers say there’s a “stigma” associated with the town.  

    All that being said, a much less nice house with the same parameters a few blocks up sold in two weeks for the same price.   

    In any case the question is what should I do now: 

    - delist it and relist in March (what my agent proposes) - on the basis that more people buy in the Spring.   Is this true in CA where the  weather doesn’t change?  I’m not crazy about the idea of paying mortgage for another 2-3 months.  I’d have to refinance asap in this scenario (more costs).  

    - reduce the price a bit ($10k) and still try to sell it now.  I don’t know what else we could do.  It’s priced pretty much at my cost.  

    Thanks! 

     Your numbers were off when you bought it. Drop the price, no other option. Remember, you make your money when you buy. Know your numbers, lesson learned.

    Good luck to you  

    Yup, I see AS-IS this should have sold for closer to $425k, to be flipped at $610k. Whoever purchased at $540k is way too close to the ARV of $610-625k.


    Someone already ate up most of the value-add component of this deal, did you get this from a wholesaler? Someone made easy money on this, but it wasn't you

  • Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Steven S.:
    Quote from @Bob S.:
    Quote from @Lor Fara:

    I’ve finished my first flip in October in Richmond CA.  A single family, 3 beds, 2 baths, huge yard.  The house turned out great after renovations.  It’s listed at $650k based on comps.   It didn’t sell in 40 days though.  
    My agent says it a combination of the time of year, rates and city reputation in general.  Although this neighborhood is very safe with nice neighbors, buyers and even brokers say there’s a “stigma” associated with the town.  

    All that being said, a much less nice house with the same parameters a few blocks up sold in two weeks for the same price.   

    In any case the question is what should I do now: 

    - delist it and relist in March (what my agent proposes) - on the basis that more people buy in the Spring.   Is this true in CA where the  weather doesn’t change?  I’m not crazy about the idea of paying mortgage for another 2-3 months.  I’d have to refinance asap in this scenario (more costs).  

    - reduce the price a bit ($10k) and still try to sell it now.  I don’t know what else we could do.  It’s priced pretty much at my cost.  

    Thanks! 

     Your numbers were off when you bought it. Drop the price, no other option. Remember, you make your money when you buy. Know your numbers, lesson learned.

    Good luck to you  

    Yup, I see AS-IS this should have sold for closer to $425k, to be flipped at $610k. Whoever purchased at $540k is way too close to the ARV of $610-625k.


    Someone already ate up most of the value-add component of this deal, did you get this from a wholesaler? Someone made easy money on this, but it wasn't you


    RE is ALL about numbers, this poster messed up,,, Oh well, lesson learned  

  • Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
    2y
    Quote from @Steven S.:
    Quote from @Bob S.:
    Quote from @Lor Fara:

    I’ve finished my first flip in October in Richmond CA.  A single family, 3 beds, 2 baths, huge yard.  The house turned out great after renovations.  It’s listed at $650k based on comps.   It didn’t sell in 40 days though.  
    My agent says it a combination of the time of year, rates and city reputation in general.  Although this neighborhood is very safe with nice neighbors, buyers and even brokers say there’s a “stigma” associated with the town.  

    All that being said, a much less nice house with the same parameters a few blocks up sold in two weeks for the same price.   

    In any case the question is what should I do now: 

    - delist it and relist in March (what my agent proposes) - on the basis that more people buy in the Spring.   Is this true in CA where the  weather doesn’t change?  I’m not crazy about the idea of paying mortgage for another 2-3 months.  I’d have to refinance asap in this scenario (more costs).  

    - reduce the price a bit ($10k) and still try to sell it now.  I don’t know what else we could do.  It’s priced pretty much at my cost.  

    Thanks! 

     Your numbers were off when you bought it. Drop the price, no other option. Remember, you make your money when you buy. Know your numbers, lesson learned.

    Good luck to you  

    Yup, I see AS-IS this should have sold for closer to $425k, to be flipped at $610k. Whoever purchased at $540k is way too close to the ARV of $610-625k.


    Someone already ate up most of the value-add component of this deal, did you get this from a wholesaler? Someone made easy money on this, but it wasn't you


     This thread was better than thousands in GURU training.

    Thank you everyone!

  • Jose JacobPro Member
    Investor · 11040 · Member since 2019 · 186 posts · 111 votes
    2y
    Quote from @Lor Fara:

    I’ve finished my first flip in October in Richmond CA.  A single family, 3 beds, 2 baths, huge yard.  The house turned out great after renovations.  It’s listed at $650k based on comps.   It didn’t sell in 40 days though.  
    My agent says it a combination of the time of year, rates and city reputation in general.  Although this neighborhood is very safe with nice neighbors, buyers and even brokers say there’s a “stigma” associated with the town.  

    All that being said, a much less nice house with the same parameters a few blocks up sold in two weeks for the same price.   

    In any case the question is what should I do now: 

    - delist it and relist in March (what my agent proposes) - on the basis that more people buy in the Spring.   Is this true in CA where the  weather doesn’t change?  I’m not crazy about the idea of paying mortgage for another 2-3 months.  I’d have to refinance asap in this scenario (more costs).  

    - reduce the price a bit ($10k) and still try to sell it now.  I don’t know what else we could do.  It’s priced pretty much at my cost.  

    Thanks! 


    My best advise will be to reduce the price and move on. As someone said earlier you make money when u buy the property. Be more conservative when you calculate the ARV next time. Also consider deducting 10% from the ARV if you are planning to list the property during off season like Nov, Dec and Jan

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