I flipped a 3/1 slab 1104 sq ft in St. Louis, MO and priced it at $125,000. Put in 42'' shaker espresso cabinets, granite countertops, stainless steel appliances, new tile, painted the garage floor, painted the exterior of the house, painted interior, added a walk-in pantry, finished the attic space to give it a 3rd bedroom/bonus room, new tile in the bathroom, new vanity, and tons of landscaping. Bought for $47,500 and put in $28,000 for a total of approx $76k.
Initially priced it too high at $139,900 and after 3 weeks dropped to $125k (should of started out lower than i did). Got a offer of $115k with a FHA loan and accepted but his financing fell thru. Then it goes back on the market and got an offer of $121,000 and a number of repairs (only 30% of them necessary imo). I accept b/c that represented a $40k profit and I already had my eye on another project.
I spend the next week and $1500 making repairs. Three weeks later I get a call that the buyers need to extend close 2 weeks b/c the IRS didn't receive the tax transcripts (huh?). I agree again to their request and set a closing for 6/30//14. That represented 7 weeks! Today we had the final walk through and discovered that the laminate flooring in the living room and hallway had buckled! Not having the AC on and the St. Louis summer humidity make them expand and literally ruined them. This morning I called the agent to tell her about the issue. I also told her I would gladly pay for carpet out of my pocket to replace the ruined flooring. NOTE TO SELF: NEVER USE LAMINATE FLOORING AGAIN. When they show up the buyers freak out and their agent freaks out. HELLO I told you what was going on. Then the buyer complains that I didn't fix the window screens. They DIDNT ask for the screens to be repaired! They complained the house was dirty and I will admit it wasn't perfect but since when is that a reason to back out of a deal? They complained the AC freon line wasn't replaced... uh yes it was... i did it myself. They complained that the windows with broken seals weren't replaced... again, yes they were. Then they complained the switch to the living room was in the adjacent room. That was like that when you put in a offer. Are you joking? Is this where Ashton jumps out and tells me I am getting punk'd?
To try and save the deal I offered to put in brand new wood floors at my expense. They left and 15 minutes later I got a DocUSign for a mutual release email on my phone.
At this point I don't know whether to put it back on the market so i can wait for another buyer and go thru the 4-5 week closing hell or to refinance / rent. I hope this real estate hell pays off down the road. Can someone put me out of my misery? If I put in wood floors should I increase my asking price or should I just put in carpet?
loans with FHA buyers are tough many times. The new buyers got scared because so many things went wrong with the house. Why didn't you run the ac if you knew the floors would have problems? They figured if the floors buckled what else could go wrong after they closed. Pay attention to the details. clean the house. fix everything. then put it for sale. the next buyer will not see any problems and they wont be so paranoid of something going wrong in the future.
If I had known running the AC in a empty house for a month would of been the key to closing the deal, thats exactly what I would of done. I had no idea this was going to happen
Does anyone know if I can require a non-refundable deposit from the next buyers?
you can require whatever you want as the seller, but it will cost you money. If you want a non refundable deposit, it tells me you know something is wrong with the house.
This happens with flips all the time. If you want the most money for a house, then you have to deal with owner occupied buyers who are picky. They are paying top dollar and they expect the house to be in great shape. You can't half *** at the top of the price range.
The past is in the past. Do you want a rental or do you want to free up capital and make a quick buck? That should determine your next move.
The problem is on walk thru the buyers see all this crap falling apart. You tell them it's the humidty and they think "This guy is rigging stuff and putting a hack job on us!".
PERCEPTION is reality. If you remember nothing else that is the key. It doesn't matter if it's a deal but if they THINK it's a deal.
Sounds like you need to make it nice and drop a few k and get rid of it.
It sounds as if you did much of the work yourself without knowledge of the products you were installing, Installing something, while the process may be very easy, doesn't mean you know all that is necessary to complete a quality job. I mean chess is easy but the level of players varies considerably. Cutting corners by leaving out crucial parts of a system whether it is plumbing or flooring is not acceptable and you will continue to have problems with buyers. All laminate or engineered flooring is not the same and not all types are appropriate for all conditions. Apparently you didn't know that and now it costs you buyers and more money.
If you don't know how to do something don't assume it is done a certain way in all cases. Ask lots of questions or hire a professional to do the work and ask them lots of questions as you watch them install the product so you learn for the next job. Had you hired a pro it likely would have been guaranteed and no problem---and you save the expensive of having to do again.
I can install carpet, reroof, plumb or wire a house even put in a new foundation but I don't. I hire people who know how to do it. They are faster than I am and when it's done I don't have to worry about humidity and my limited knowledge of systems.
I applaud you for trying but put your efforts in what you are good at, buying below market.
I did not install the laminate floors myself. They were installed in winter and the contractor didn't leave any space along the sides for expansion.
Do you have a real estate agent representing you? In Wisconsin (I know this is not everywhere) buyers can't just back out that easily. For the floors, maybe, but not for screens or light switches. If you have a listing agent on your side, they need to remind the buyers agent that these things may not be issues that they can contractually use to back out. My Minnesota broker had some people who used an inspector to do the final walk through. The inspector found some additional things wrong that the first inspector didn't note. The buyers demanded that these additional items be repaired. The standard MN purchase agreement doesn't allow buyers to do that upon final walkthrough and the sellers didn't have to repair these issues.
Check your purchase contract to see if this is legal.
" the contractor didn't leave any space along the sides for expansion."
It shouldn't be you who pays for the new floor. That is very basic knowledge when installing flooring.
Stick with it, I still see you getting a nice profit out of the deal, just a little more frustration than you planned on.
Another product that looks really nice is the tile that looks like hardwood. We did that on our last flip and people loved it. You can get if to @$1.80 a sq if you shop but then you have ti install it.
Welcome to the real estate business! You have just gone through a very positive and educational process...if you choose to view it that way. You have received good advice from above and in my opinion the most important advice is to have a clean and problem free property especially the day of closing! This lesson did not cost you very much and nor could you sign up for this class and pay for it anyway. You learned exactly the way you were supposed to, by doing and making a few mistakes that you will not repeat in the future. Very valuable experience! I hope the comments have helped you to evaluate your performance and attention to details and less on the emotional reaction of the buyers (this will continue to happen!). They were simply scared that if you were not willing to present them with a perfectly clean home then you did not do the rest of the house correctly, (e.g. laminate flooring). Renting presents its own long list of issues that one gets to learn and relearn during the course of their land lording life. I have been a real estate broker here in St. Louis for over 14 years, I own and mange 25 + rental properties in the area, and I have done over 30 successful flips and I am still learning! My definition of a successful flip is one that you make money on. Sounds like you are on your way to a successful flip with some valuable knowledge learned along the way!
Best of luck to you!
Don't let this keep you down. Yes your flip isn't running as quickly as we might like, but you seem to have options and a couple avenues that should ultimately salvage the project and put money in your pocket. Sounds like your still gonna end up with a win....hang in there!
@Brant Hampton Sounds like you have learned some valuable lessons AND made money. Win-win as I see it.
Anyone who hasn't learned a lesson in this business hasn't done anything. There are always minor screw ups.
As someone above mentioned first impressions by buyers is extremely important and you likely will not neglect that aspect again.
I purchased my first rental property in the early 70's and I still learn on every project.
Sounds as if this has been going on for a while now @Brant Hampton and you are almost through it, so hang in there!
I would get the final - final list and purchase a 1-2yr home warranty for $300-500. Tell them you are willing to pay for the items on the list if this gets you to closing table in two weeks; if they keep asking for things you will never get the deal closed and it's time to put it back on the market cut your losses and move on! Your agent should be assisting with driving this to close, and if they are not it's also time to find a new agent!
Best of luck and I hope you have a successful future!
hang in there and best of luck! It seems you still have enough wiggle room left to do some minor repairs clean it up and still make a nice profit!
@Brant Hampton - I agree with Brant Richardson. You should not be paying for new floors if the contractor made a mistake. They may give you a hard time about replacing it, but ultimately it should be them fixing it and eating the cost, not you. My mom had a similar situation, only for her she was just remodeling her house, not flipping. She kept on them about the floors, and by the 3rd try they got it correct, and she did not pay any extra.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.