Great Rehab, now what to expect from the Agent?

Question

I am just wrapping up my first flip. The house looks great! Not one square inch has gone untouched. I am expecting to pay a stager. I had a real estate agent come and take a look at the house and he said that he would charge a 5% commission. For that he will pay for the photographer and the marketing. I am trying to reconcile the commission rate and how much work is actually necessary to sell the property. When a house looks great, should I just find a listing service? Or should I go with my 5% agent?

Russell Brazil · Answer

You shouldn't just use a listing service. Most of the work on a transaction is done while the property is under contract.

But also you should have already have been working with an agent during the rehab. This is where their expertise can really come in handy, especially if they have ever flipped themselves. From pointing you towards paint.colors and finishes appropriate for the location and price point and helping you avoid easy mistakes.

You should also not just pick your agent now based on price, but based on who will get you the most money in your pocket, as well as who understands how to work with the appraiser, how to select the best offer, who knows what buyers will sale through and which ones will fall through etc.

The appraisal issue is a real concern if it's in an area where there are not a lot of flips taking place. So he especially mindful of that. Also make sure you don't pick an agent from a brokerage that gets black balled by the market. There are some whose reputation is that they list properties in disrepair and some buyers avoid that companies listings.

Aaron Lovett · Answer

This is so true. I can't tell you how many "renovated" properties I've seen that could sell faster and for more money or more profit if the flipper had worked with an agent on the front end to hit the sweet spot of the area.

Account Closed · Answer

Congratulations
Wish you a great success.
This is a difficult question to ask because each transaction is different.

Great agent sometimes can be a great help if the deal turns sideways and can help you saves the deal based on their experience, connection and creativity.

By this I mean, inspection issue, Appraisal issue, financing issue, etc.

Listing service is great for putting the house on the market and if the market is hot it will be under contract just as fast.

If you decide to do that, I would recommend to still have an agent as consultants a day just compensate them for their time.

Here are things you want to avoid and an agent can help you with this.

Pricing it too low.
Real life Case.
I ask the seller how much they want to list the house.
They said they did research and they think their house worth 250,000.
I know the area pretty well so I recommend it to listed much higher.
and the house sold for 270000.

Pricing it too high or odd numbers.
example:
some area the hottest market is selling under 200,000
seller listed at 205,000 (big mistake)
they just eliminated majority of buyers that are looking to purchase under 200,000
why this is important you ask?
because when the buyer run a search or when I set up listing notifications to my client. I usually put even numbers.
example: if they are looking for up to 200,000. all the listing I send them will have MAX price 200,000.
seller listing over that my buyer won't even get the notification.

many other samples that is too much to list.

Hope that helps!

Account Closed · Answer

Actually, If it's my listing I would not get appraisal. (Get local agent opinion that knows the market)

I would spend my money on home inspection (good one) instead. Most termination happen during inspection period. When buyer's see those 50 pages report they freak out. Even when it's small items that we see every day. If you can tackle this small items prior their inspections you have a better chance pass the due diligence period.

Why i don't get appraisal:

1. A good appraisal once told me that they usually try to match the contract price as much as they could. Meaning it is better to have a contract price so the appraisal can work on that.

2. One appraisal can appraise high and the other can appraise low, since the bank won't be using the same appraisal you really have no say on this. Buyer appraisal can come back with totally different price than your appraisal.

This is just my preference.

Great Rehab, now what to expect from the Agent?

Great Rehab, now what to expect from the Agent?

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