While talking with a local flipper over the holidays, we got on the topic of profit from flips. One of the points he was making is that Realtors take away a significant part of his profit. His main points were that he has to find the property, buy the property, rehab the property, take all the risk and then he has to pay a commission in order sell it, which can be almost as much as he makes on the deal.
I was able to sell him on my company that offers flat fee mls listings and now have him onboard as a repeat customer for 2018. So my wheels started turning that I should be targeting flippers in order to grow my customer base. I wanted to conduct some research before doing that and figured this would be a great forum.
For anyone who flips multiple properties, how do you sell your flips?
- I list with a Realtor that I have a relationship with and value their service
- I list with a Realtor but don't see the value
- I sell them FSBO off the MLS (craigslist, zillow, etc)
- I use flat fee mls listings.
For the 4 options above, can you let me know which one applies to you and why you choose that route when you sell your flip?
I have used a flat fee service for all of mine. It was entryonly.com and I did it for all my CT flips as well as my personal house I sold.
@Brian Pulaski Thanks! I hope you don't mind if I dig a little deeper. What is your track record and experience with flat fee mls listings vs full service listings?
Originally posted by @Jason DiClemente :
I list with a realtor because I'm looking for more than just someone to list my property. My realtor has a network of buyers at all times and a network of other realtors with buyers.
Thanks Jason! this is exactly what I'm looking for. A couple followup questions for you.
1) "My realtor has a network of buyers at all times" - Do you think your Realtor would not show your flip to their buyers if they did not have the listing?
2) "and a network of other realtors with buyers" - Do you think your house would not be exposed to these realtors and buyers without being listed with your realtor?
Also, I just wanted to say, these are selfish questions to help me and provide value to my customers, not to change your mind about listing with your realtor.
@Kris Lippi of the 6 houses I sold this way, 3 sold within a 3 days of list, 2 sold in roughly one month, and my personal home took a few months, but ended up selling. I tried to sell my personal home with a realtor however it wasn't over a year and no one bought it.
All of my houses sold without hiccup. One didn't appraise but I ended up negotiating the buyer $15k over the appraisal. I never felt the need for a realtor to list or sell the houses.
With that said I do think a good realtor can be a great benefit to investors, and I have a good one in my new market.
@Kris Lippi What is the ARV on these properties if the local flipper is making about as much in profit as the realtors are in commissions?
As both someone who flips and is a realtor for several people who rehab homes here in Connecticut I would say if a flipper is making 10-15% percent of the ARV on a flip they are doing well for this market. Anything above 15% of the ARV is very good in my opinion. Is this person flipping to make $10-12k per project?
@Kris Lippi 1 is my answer; however, as we start to ramp up, we might start to look for alternatives.
Typically, it is hard to find a good realtor who understands the RE Investor's pain points unless the realtor invests as well.
Some of the standard services that Realtors offer can be easily DIY'd online using sites such as Zillow to run comps. Consequently, if an investor doesn't have a good relationship with an awesome realtor, then investors can be disincentivized to list with a realtor in general.
Hope this helps. Good luck. Thanks! - Ola
@Kris Lippi listing with a flat fee service agents, investors save only a listing side of commission, or you don't offer buyer agent compensation either?
Majority of buyers have Realtor representation or get one after they find the property they are interested in to lead them through the process.
If one decides to list with a flat fee company, they potentially compromise on negotiation skills ( not just purchase price, but contingencies, contract terms, etc. ), Real Estate knowledge ( market, location, contracts, riders and multitude of other forms ), brand recognition ( listing with a large and establishes brokerage that stands for its reputation ) and simply convenience ( no need to handle open houses, coordinate showings, inspections, appraisals, staging, photo session, etc.)
Of course, there is a niche of sellers that have time and resources to manage all these by themselves.
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