Finished Flip, No Traffic - Now What?

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Finished Flip, No Traffic - Now What?

Andrew Taylor
Contractor · Magnolia, TX · Member since 2016 · 279 posts · 155 votes

My wife and I just finished our first flip. We put the house on the market about a month ago and have had almost zero traffic (two showings). Empirically, I know this means it's overpriced, despite an initial listing price that I *thought* was under the market, and two price drops since then.

We've also listed the house for lease but aren't getting any bites there either. Again, I think I've got it listed at or below market rent rates but so far, crickets. The house is in a good area, has been tastefully updated, never flooded, has a pool and sits on a corner lot.

I thought the house was probably worth $515k, but we initially listed at $499k to capture the "below $500k" searchers. Dropped the price to $489k after about two weeks, then stopped again to $479k after two more weeks. I can drop it as low as about $460k before I'm in danger of losing any money on the deal (I've got somewhere between $120k-$170k of equity, depending on actual selling price).

My question is, what now? Should I try to refinance into long-term and lease it out until the market improves? Drop the price again? Wait it out while I continue to make $3k/mo in interest payments? Some other option I'm not seeing? Obviously I'd rather not lose any of my cash investment, because losing sucks and also I don't want the wife to rescind her blessing with respect to my investing - but I also don't want to cut off my nose to spite my face. I'd rather lose a few thousand dollars and chalk it up to a learning experience than lose all of my investment and not be able to try again.

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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
6y

A few thoughts (hopefully helpful but no guarantee): 

Photos: not bad at all but I would rearrange and use a photo of the kitchen as the first or second photo. Also it might help to do some staging and reshoot photos as some of the spaces are large and empty looking (especially the giant open entrance/living area in photo #2, not a good photo to start off with, to me it looks odd without furniture and decor). Aerial/drone photos are hot these days too, you might splurge for one of those. 

Timing: Not sure if it's as critical in Houston, TX as here in CO but one thing to consider is flips of SFH's should be timed so they are listed in the spring (June ideally). Not helpful now I know but something to consider for your next flip, and again this may be different in Houston.

No fridge or W/D? Probably a negative for most home buyers. 

No cabinet hardware? Again probably a negative, looks unfinished IMO. Some buyers may like being able to choose their own, and I assume that is your thought process but even then they can replace whatever is there if they want. Some simple drawer pulls and cabinet door knobs would make it look finished and move-in ready IMO. Or maybe they're the "invisible" kind of slides where you push it in and it springs open on its own?

Flooring on the bar: Looks odd to me, I would take that off and replace with some vertical weathered barn wood, painted wood as an accent, wainscoting or anything different than the flooring material. Also staging with bar stools would make it look more inviting. 

Pricing: can't comment on the pricepoint as I don't know your market but your lack of interest answers that question unfortunately. Also multiple $10k price drops are not as effective as a single, larger price drop. You may consider taking it off the market, renting it for the winter on a 6 month lease, then listing it in the spring for just a little under $500k to begin with and if it doesn't get attention after 30 days, do one big price drop of at least $25k instead of multiple smaller price drops. Asking your agent to host an open house just for agents in order to get feedback from other local professionals may be a good idea as well (if you haven't already of course). You may try a new agent in the spring just to try a different approach, sounds like the working relationship with current agent is less than perfect and she had her chance to sell it already. 

Overall very tastefully done, nice work all around and I especially like the bathrooms. The pool looks very clean and inviting but your agent is correct that not everyone wants to maintain a pool so that will limit your buyer's pool (forgive the pun). Unfortunately you may have made this place too nice for the market, that might be the underlying problem, or it could just be timing and you may sell it quickly in the spring. I've only done one flip before so I'm far from an expert, also don't know your market just FYI. Good job on the classy-looking remodel and good luck selling!

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  • Brandon Roof
    Rental Property Investor · Member since 2019 · 187 posts · 230 votes
    6y

    You already know what to do, it just stings.  If you can't bear it, you've already mentioned some other possibilities that may be worth pursuing.  There are probably a couple other avenues you could explore through various forms of seller financing, but I don't think it's going to lead you to the end result you initially hoped for.

    Not every flip is a home run, and not too many hit it out of the park on their first try.  You've hopefully gained a lot of knowledge from this project that will lead to greater returns in the future.  Do what you can to preserve your investment in this one and begin to position yourself for the next, applying what you've learned from this experience.

    11Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    You need to lower the price and get it sold.

    Is a pool a plus in your market? Is the pool filled, clean and attractive?

    If a property doesn't sell, it ALWAYS comes down to price. People will argue otherwise but if you cut your price down to $25,000 it would sell in a hurry. Not suggesting that, lol but there's a price it will sell at and you're not there yet. And apparently it's high enough that people won't bother placing an offer.

    5Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    The timing of the sale can be an influence too but you can't/shouldn't wait until June to find a buyer.

    You should make a significant price cut to get this sold and stop the bleeding. You'd be better off breaking even or making a tiny profit than to let this thing bleed you for months and then wind up selling it at a significantly reduced price anyway. If you are holding it and it's costing you $3k a month, this will eat up the profit margin quickly. Timing is of the essence.

    4Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    @Andrew Taylor

    I do flips for my clients. Many times we’ve flipped a house and the end result is $15-20k profit. To me, kinda not worth it. But to my investors where all they are doing is writing checks, they say it’s worth it as they have no hard labor involved. Drop it to where it will be more attractive, take what you can get, and move on. $3k month is a big nut to sit on, and with winter coming you’ll need to heat the place.

    9Reply
  • Brent Paul
    Rental Property Investor · Shakopee, MN · Member since 2015 · 985 posts · 374 votes
    6y

    Sounds like your price may be too high.  In my area houses in that price range sit on the market a while especially after September.  You are looking for a specific buyer that can afford something in that range.  It's always the risk with flips.

    Have you considered renting it out for a year to recoup some of your costs?  It's possible you could get a renter in there. 

    1Reply
  • Judy Parker
    Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes
    6y

    Single-family houses aren't moving right now. Lease the house and enjoy the passive cash flow.

    1Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    6y

    @Andrew Taylor are you using a realtor? It doesn’t sound like you are. A competent realtor would solve a lot of these issues. Dropping price can help, but that may not be the problem. It could be your rehab work wasn’t done well enough or you didn’t update something that should have been updated.

    I hear a lot of “I think” and “it should” in your post, and very little actual facts. What are the recent comps sold for? What’s the average days on market for those? And so on.

    19Reply
  • Andrew Taylor
    OP
    Contractor · Magnolia, TX · Member since 2016 · 279 posts · 155 votes
    6y

    Here's a link to the listing: https://www.har.com/s/10C96289...

    I spent a lot of time checking out the other houses on the market in the area, and tried to make ours match in overall finish quality. I would like to have installed higher-end wood floors but we were already over budget so I had to go a less expensive route there.

    Our realtor has been, uh, less than helpful. She refuses to answer a question re: pricing, or gives an answer that makes my eyes roll. Example: "A pool doesn't add any value. Lots of people don't want a pool." Which to me is as stupid as saying, "Extra square footage doesn't add any value because a lot of people want a tiny home."

    When I ask her about pricing, she sends a CMA. I can look up comps myself; what I need is an actual professional opinion. She did the same thing when I asked her about potential rental rates.

    I asked her opinion on lowering the price, and she said I was still marketing to the same shoppers at $479k as I had been at $499k, because people search for price ranges that end in 00, 25, 50, and 75 - which kinda makes sense, until you look at real estate apps where the search criteria are either every 10k or every 50k.

    The work has been well done. I've been a builder in Houston for 20 years - I didn't just watch a few episodes of Chip & JoJo and decide I could make a living at this. As someone said above, I think I know what the answer is... It just stings.

    7Reply
  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    6y

    Well, it is apparent you need a new Realtor. Not that any of her info is wrong necessarily but she is not "servicing" her client properly. Makes me wonder how she treats realtors who call about the house.

    Sounds to me like the market has just stalled there like many places. No showings means no buyers looking. You can drop the price in search of a buyer but if the buyers are not there, it doesn't do much good. If you have been doing this 20 years, you know how extraordinary the recent market has been. 

    In our MLS, you can do a reverse prospecting kind of search to see Realtors who have exisitng auto searches in which match your specs. So you can see how many people are searching for 4/2 over 2000 SF in your area under 500K vs over 500K...for example. You can see how many more people are looking at one price point vs another.

    Good Luck

    8Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    6y

    A few thoughts (hopefully helpful but no guarantee): 

    Photos: not bad at all but I would rearrange and use a photo of the kitchen as the first or second photo. Also it might help to do some staging and reshoot photos as some of the spaces are large and empty looking (especially the giant open entrance/living area in photo #2, not a good photo to start off with, to me it looks odd without furniture and decor). Aerial/drone photos are hot these days too, you might splurge for one of those. 

    Timing: Not sure if it's as critical in Houston, TX as here in CO but one thing to consider is flips of SFH's should be timed so they are listed in the spring (June ideally). Not helpful now I know but something to consider for your next flip, and again this may be different in Houston.

    No fridge or W/D? Probably a negative for most home buyers. 

    No cabinet hardware? Again probably a negative, looks unfinished IMO. Some buyers may like being able to choose their own, and I assume that is your thought process but even then they can replace whatever is there if they want. Some simple drawer pulls and cabinet door knobs would make it look finished and move-in ready IMO. Or maybe they're the "invisible" kind of slides where you push it in and it springs open on its own?

    Flooring on the bar: Looks odd to me, I would take that off and replace with some vertical weathered barn wood, painted wood as an accent, wainscoting or anything different than the flooring material. Also staging with bar stools would make it look more inviting. 

    Pricing: can't comment on the pricepoint as I don't know your market but your lack of interest answers that question unfortunately. Also multiple $10k price drops are not as effective as a single, larger price drop. You may consider taking it off the market, renting it for the winter on a 6 month lease, then listing it in the spring for just a little under $500k to begin with and if it doesn't get attention after 30 days, do one big price drop of at least $25k instead of multiple smaller price drops. Asking your agent to host an open house just for agents in order to get feedback from other local professionals may be a good idea as well (if you haven't already of course). You may try a new agent in the spring just to try a different approach, sounds like the working relationship with current agent is less than perfect and she had her chance to sell it already. 

    Overall very tastefully done, nice work all around and I especially like the bathrooms. The pool looks very clean and inviting but your agent is correct that not everyone wants to maintain a pool so that will limit your buyer's pool (forgive the pun). Unfortunately you may have made this place too nice for the market, that might be the underlying problem, or it could just be timing and you may sell it quickly in the spring. I've only done one flip before so I'm far from an expert, also don't know your market just FYI. Good job on the classy-looking remodel and good luck selling!

    24Reply
  • Account Closed
    Eastern Michigan · Member since 2018 · 81 posts · 144 votes
    6y

    It's a really pretty house.  For some cheap things that could make it stand out you could do  virtual staging. The front could also look nicer with more color,  maybe paint the door a bright color and add some colorful flowers around near the front.  Overall,  the front of the house just didn't seem welcoming.

    The only other thing i noticed is there are a TON of houses for sale in this neighborhood. So you have a lot of competition and need your house to look way better than any of the others. 

    13Reply
  • Julia Calderon
    Realtor · Southern California · Member since 2019 · 1 post · 18 votes
    6y

    @Andrew Taylor I had a similar situation. However I am a Realtor so I was able to answer pricing questions myself. Our flip in Temecula CA is gorgeous, but wasn’t selling. People loved it that viewed it but no offers. I changed the pictures, increased the commission to the buyers agent by 0.5 % and still nothing. We were getting very discouraged. Then we decided to stage the home. We got quotes from $3500-$6800 and decided to stage it ourselves! We spent close to $6,000 but we get to keep everything and move it in to our next flip property. Within 4 days of staging it we got 3 offers and we are now in escrow for close to the number that we originally listed it for!

    The right Realtor, great pictures and making it feel cozy and setting the stage for Buyer’s to see themselves in the home is all key.

    Biggest suggestion...get rid of your Realtor. Sounds like they aren’t worth the money you’re paying them to educate you, suggest things to you instead of continuously dropping your price making you appear desperate to sell.

    Best of luck!

    18Reply
  • Effram Barrett
    Real Estate Agent · Houston, TX · Member since 2017 · 159 posts · 161 votes
    6y

    As a few others have said, that side of town is mainly family based so people have settled in for the most part for the school year. It'd be different if it were an area like Montrose or downtown with young professionals who can move whenever they feel. 

    The house looks great for the most part, but I'm noticing a lot of houses, especially ones at higher price points, sitting on the market for the latter part of the year in Houston. There's houses in my neighborhood that have been on the market 115 days and up. I wouldn't worry too much about 30 just yet. Not sure if you can hold off until after winter break, but I'd imagine that's when you would see more traffic. Good luck and great job on the flip

    0Reply
  • Anthony Rosa
    Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
    6y

    Nice house, I wish you luck!  I also had realtors tell me that the pool doesn't add value because not everyone wants one especially families with very young children. I did find it to be true and witness beautiful in-ground pools getting backfilled. 
    Also, too many price drops in too little time so the potential buyers are just gonna keep waiting for the price to keep going down. Don't give your bottom price yet because everyone will negotiate but be in the right range and stay there.

    IMO - The interior is beautiful, the exterior is neat & clean but the exterior is too much plain vanilla.  Do something to the front of the house to make it pop & give curb appeal. Some detailed perimeter landscaping with accent lighting, a red front door, maybe a new color just for the front facade and different color in the foyer, new large exterior wall sconce, paint/stain the fence in the yard.  

    2Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    6y

    @Andrew Taylor 

    Magnolia, TX isn't that Joannes and Chip Gaines market?!!! You have some tough competition there lol.

    More seriously, we had the same exact issue with one of our flips, so we ended listing it (or your case, try VRBO or renting to a group of young professionals).

    Chalking it up as learning is always better than holding costs every month!

    1Reply
  • Mike HayesPro Member
    Investor · Member since 2019 · 18 posts · 39 votes
    6y

    I’m in the exact same spot you are, but I’m the West U area of Houston. It’s my first flip. I partnered with a realtor/real estate investor who has been flipping for about 15 years in Houston and one of his regular investors. The house has been on the market for 4 months now with hardly any showings even. He priced the house 20k more than what we initially had decided to list it for. We listed it for 479k, and it should have listed for 460-465, from the comps I looked at. We’re down to 429k now which is our break even point. He went 20k over budget which he still needs to explain. The house looks really good and all of the finishes are high end finishes that are probably more than we needed to spend. It’s not selling. I like the advice about staging. I don’t think dropping the price is going to help at all

    4Reply
  • Todd Kruger
    Flipper/Rehabber · Albuquerque, NM · Member since 2019 · 61 posts · 64 votes
    6y

    @Andrew Taylor

    It stings and we have all been there at one time or another! I am a 20+ year real estate broker and can say not every partnership is a good fit. If you do not feel like your Broker is giving you the attention and respect you need and deserve, terminate the listing immediately.

    Find the best broker in your market and develop a long term business relationship that is a win/win situation. A real estate Broker is a very important part of your team if you are flipping homes.

    Best of luck!

    2Reply
  • Matt Polinchak
    Real Estate Agent · Raleigh, NC · Member since 2017 · 23 posts · 35 votes
    6y

    @Andrew Taylor I am a full time Realtor and the first thing I noticed in your flip is that it felt cold and empty... It did not feel warm and welcoming. You need to have the home staged and get the photography re-shot. I don’t know the Houston market but I know here in my market (Raleigh, NC) having a pool is a liability not a plus.

    Also, based off your feedback, you may not have the best Realtor representing you. What has the feedback been from the showings and Open Houses you have had?

    3Reply
  • Account Closed
    Member since 2019 · 21 posts · 12 votes
    6y

    Hello Brandon! You might ought to hire an Agent that is hot and experienced at selling many houses in that area. You might need to partially furnish it. Good luck to you!

    0Reply
  • Dominic Madrid
    Specialist · Albuquerque, NM · Member since 2019 · 6 posts · 7 votes
    6y

    @Andrew Taylor here is what I do....

    When planning costs, I contemplate what I know someone will ultimately want, but i can leave out without bringing down the quality of the house... ie in my area refrigerated air is big upgrade, so may leave existing swamp cooler. Maybe make the house spectacular but not focus on yard too much other than cleaning, or maybe, windows arent perfect, but not junk etc....but make sure it has the cosmetic appeal

    Now my realtor hat on...once you've done everything, now you're just chasing price you would like. Whether or not overpriced is somewhat irrelevant because once those DOMs accumulate, you've now lost all your negotiating power and at mercy of buyer.

    Ex...I go all out and in for 140 and would like 200 as perfect comps...may get brought down to 180 if dont move right away. Instead may go in for 120, list at 180 (20k below comps). And offer as incentive if would like xyz price hike of 10k. Now that's 60 vs the 40, quicker sale, happier buyers and flexible as maybe someone cant afford the 200 and will pay the 180as is which is same result to me.

    Now make same without stress and really helped someone as customized instead of having a specific need. Also I always list little higher, offer all the buyers cost and broker bonus with acceptable offer in first 14 days.

    So to answer your current situation. A price drop costs you alot more than a buyer. 25k to you is only 100/mo to buyer. Soi would do a small proce drop to get the listing fresh but also add an incentive.

    (excuse grammar from phone text)

    Hope this helps

    1Reply
  • Dominic Madrid
    Specialist · Albuquerque, NM · Member since 2019 · 6 posts · 7 votes
    6y

    @Andrew Taylor

    Aside just re-read I realize now my answer may be more applicable for your next one, lol... anyway here we go again. The best thing I learned is "you dont make money when you sell, you do when you buy."

    That being said, how is your deal structured? The non equity, is it high hard money/short term? One thing I've became good at is having several outs with different resources to control the deal. I may borrow 100 at 10-12% put my own 30 in to be ARMVof 200. If not getting results quick, i can open up owner financing of say 215k 30k down and carry the 185k. That still leaves me negative cash after costs so I could possibly simultaneously refi the house instantly with a lower 7% investor of 140k. (60-70% ltv of awesome house ). I got my 30 plus 10 and prob clear 20 of the down as llesscostsinstead ofnetting 40-50 with unknown holding costs, now got money back 30 profit and a 45k notewith 7 % interest. Which later can sell, fet back or make deal w buyer if they want to move to buy at a discount etc etc..

    My point being is lot of flippers focus and buy and sell

    But there are many other variables to control your business instead of hoping or conforming. So

    To get you thinking...do you know someone that had good amount of cash that would appreciate virtually risk free investment if you can give them 50-60 ltv...if so, just align those resources and can try to offer a owner contract, or a lease option to buy. Or a combination of them both.

    Maybe someone you know changed jobs and has big 401k..they can roll that issue a mortgage and make 6-8 or whatever all day and they are now controlling their retirement with certainty and things people understand.

    Wow I sound like a self help seminar...good luck

    1Reply
  • Andy Freeman
    Rental Property Investor · Orange County, CA · Member since 2019 · 37 posts · 23 votes
    6y

    @Tiffany Roberts @Andrew Taylor

    Right? That’s a crazy amount of homes for sale in one area, and it doesn’t look like there are too many that have sold recently, so I don’t think it’s anything you are doing wrong. There is just a ton of inventory. The house is done really well, so if you can get $2600 or so in rent, it might make sense to do that instead of taking a loss, or just breaking even on the deal.

    0Reply
  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    6y
    Originally posted by @Andrew Taylor:

    My wife and I just finished our first flip. We put the house on the market about a month ago and have had almost zero traffic (two showings). Empirically, I know this means it's overpriced, despite an initial listing price that I *thought* was under the market, and two price drops since then.

    We've also listed the house for lease but aren't getting any bites there either. Again, I think I've got it listed at or below market rent rates but so far, crickets. The house is in a good area, has been tastefully updated, never flooded, has a pool and sits on a corner lot.

    I thought the house was probably worth $515k, but we initially listed at $499k to capture the "below $500k" searchers. Dropped the price to $489k after about two weeks, then stopped again to $479k after two more weeks. I can drop it as low as about $460k before I'm in danger of losing any money on the deal (I've got somewhere between $120k-$170k of equity, depending on actual selling price).

    My question is, what now? Should I try to refinance into long-term and lease it out until the market improves? Drop the price again? Wait it out while I continue to make $3k/mo in interest payments? Some other option I'm not seeing? Obviously I'd rather not lose any of my cash investment, because losing sucks and also I don't want the wife to rescind her blessing with respect to my investing - but I also don't want to cut off my nose to spite my face. I'd rather lose a few thousand dollars and chalk it up to a learning experience than lose all of my investment and not be able to try again.


    I would raise the price back up to what I thought the actual comps support. I've done that several times and sold the property. Counter intuitive I know, but price isn't the only aspect of buying a house. Presentation is everything. Also, remember, most people use a bank to buy a house so an appraisal is done. If the asking price is too much above the appraisal they can't get financing no matter how much they agree to pay. But ask a fair price and don't reduce the price until it's been on market for over 90 days. You are not being patient enough or you simply don't trust that your asking price is accurate. Be confident about your comps.

    IMPORTANT: I would stage the house with color in the kitchen & baths, (flowers, canisters, some nicely done drapes or blinds, etc) We stage our properties and we spend less than $500 - there are plenty of inexpensive materials to use for accents that don't cost much. We don't stage with much furniture at all, simply color accents. It warms up the atmosphere. Remember, people see your property online first, and you have to draw them in. Also, most people don't have the extra money to buy a stainless steel refrigerator so it catches their eye if one is provided. Given two equal houses, people will take the one with the stainless steel every time. You could even put a used one in and benefit from that.

     Your Zip's basic sales information:

    Overview of 77042 Real Estate Trends

    Calculated using the last month

    • Median List Price $389K
    • Avg. Sale / List 95.6%
    • Median List $/Sq Ft $144
    • Avg. Number of Offers1
    • Median Sale Price $310K
    • Avg. Down Payment 20.7%
    • Median Sale $/Sq Ft $127
    • Number of Homes Sold 43

    This of course doesn't tell the whole story but gives you an idea of what has recently sold. The fact that the house has been on the market for only a month seems to play into the equation. I'm in the Phoenix metro area and a HOT market. Even so, average days on market is 76 days. 30 days seems too soon to worry. And it is true that having a pool limits your buyer list. They are expensive to maintain. The house will sell, probably close to your original asking price if your comps are good, by making those simple changes.

    4Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    6y

    @Andrew Taylor do you actually have the house listed with an agent?

    What are the comps showing? Is your home comparable as far as quality of finishes, etc? Size of home?

    Some pics would also help us.

    What is the local market like? What us median price of a home? How many homes have sold in the area in the past few months?

    The devils in the details.

    0Reply
  • Timothy Winfield
    Rental Property Investor · Baton Rouge, LA · Member since 2017 · 78 posts · 26 votes
    6y

    @Andrew Taylor drop your Realtor and get another one fast! You can do bad buy yourself. You are paying her for a service and she is not fulfilling her end of the bargin.

    0Reply
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