Finished Flip, No Traffic - Now What?

Finished Flip, No Traffic - Now What?

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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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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  • Contractor · Magnolia, TX · Member since 2016 · 279 posts · 155 votes
    6y

    Actually the black countertops were a conscious choice. We felt like the rest of the house had such a 'cool' pallette that we wanted something that popped. They're actually really pretty (to us, anyway) figured/veined quartz, and they cost less than granite.

    I actually wouldn't mind refinancing into a long-term loan and renting the property until the market improves, but I'm not having a lot of luck there. Maybe I just don't know where to look. My hard-money payoff is about $321k, so I've got a significant amount of equity in the property, but I'm being told (by the one lender who's answered me) that I can only borrow up to $260k - and only after I have a tenant in place. That's less than I paid for the house when I bought it and, obviously, doesn't even pay off my hard-money loan.

    AirBNB would be an option, but I'd have to furnish it, which I'm not in a position to do. Same deal with corporate housing, although if I could get a long-term(ish) commitment from a corporate housing tenant, I'd be tempted to figure out a way to furnish it. I'm not opposed to owner financing it for the right buyer (that's actually how we put together the cash we used to buy this place), but I'd still have to refinance out of my hard-money note. Not sure how that deal would work.

    This is a cautionary tale for a different post (deal diary, maybe), but we made some stupid mistakes and managed to not only bust our budget, but also blow completely through our cash reserves, and now I'm paying the price in Tums and bourbon. (The mistakes weren't construction-related; rather, they were project management-related - taking too long to complete the rehab, scope creep, etc. Stuff I've read about around here a hundred times, but didn't realize it was happening to me until it was too late.)

  • Rental Property Investor · New Orleans, LA · Member since 2018 · 87 posts · 45 votes
    6y

    @Andrew Taylor when you initially looked at the comps before you purchased the house to flip how long were those comps sitting on the market before they sold?

  • Member since 2019 · 8 posts · 7 votes
    6y

    @Andrew Taylor. Make up postcards and hand out to everyone you see - advertise in every paper, Craigslist, Facebook marketplace and renew it regularly. Go big to move it, believe it sold and the right buyer will come along.

    Some markets it makes sense to rent each bedroom - not sure if that’s true in your market or if you want to do that. Airbnb the bedrooms individually? Just throwing out ideas.

  • Yuma, AZ · Member since 2015 · 140 posts · 137 votes
    6y

    @Andrew Taylor I agree with that price range staging may be needed..good luck.

  • Real Estate Consultant · Lancaster, CA · Member since 2014 · 423 posts · 223 votes
    6y
    Everyone else is saying the magic word: staging.
  • Real Estate Broker · New York, NY · Member since 2019 · 1 post · 2 votes
    6y

    @Andrew Taylor

    Saw the listing, and it looks great. I’m a real estate broker in NYC and mainly work with sellers who didn’t sell with their previous agent. And after viewing tons and tons of properties it boils down to a few things why they are not selling.

    - Price

    - Maintenance/taxes

    - Layout of home

    - Marketing (Pictures, videos, staging, etc)

    Make these changes and you will get people through the door and hopefully an offer!

    After viewing your place, here are a few things I would personally do if I were to put it back on the market.

    First - Price

    I would not only just look at what sold in the area, but also see what is currently in contract. Why? To see what people are currently looking at and buying. Where is the location? Price? How does it look? What are the taxes? Maintenance/HOA? What do the pictures look like? Etc.

    I would then call those brokers and ask if they were getting a lot of traffic before getting into contract. If they don’t mind, I would also ask how many offers they received? And lastly,if they are nice - ask what do they currently have the unit in contract for. Mention that you are trying to sell your place as well, and if there are any buyers who didn’t win the bid to check your place out too! And of course you will pay the commission.

    Also check the supply in the market. Only within the neighborhood, to get a better idea. This is your competition! I would look at each one of these too and see what they are doing. And where they are priced.

    Pricing is a science and an art. Price to high, you scare buyers to see it. Price it to low, and people will wonder what is wrong with it. Price it just right, there will be a line out the door.

    Now that you know what sold, in contract and on the market - you can then find your price. Make sure to be competitive with your pricing!

    Second - Maintenance/HOA and Taxes

    Not much you can do here, but other than see what it is compared to what has sold, in contract and currently on the market. If your in an area where taxes are high, or the maintenance/HOA fees are high - mention in the description that you can give a credit to the buyer for 3, 6 or 12 months of free maintenance or tax payments. These incentives help!

    Third - Layout of the Home

    I don’t think you have a weird layout, so no worries there.

    Fourth - Marketing!

    This is big, and this is where an experienced agent will be able to help in person. Just by viewing the place, it needs to be staged. I don’t mean try staging it yourself, (which I see a lot of investors do and get burned), I mean hire a professional pay them $5 to $7k and get it staged. Will make a huge difference in photos, and when potential buyers are inside the home. If you virtually stage the place, it may look nice online and bring some buyers, but once they see it in person, it’s less likely they will pull the trigger and make an offer.

    Include appliances! Potential buyers are always looking at the kitchen, and having stainless steel nice appliances can make a huge difference in traffic.

    Hire a professional photographer! Take photos of the place that will make potential buyers feel something, feel excitement! Buyers buy on emotion, so show it from the photos. No need for far away wide lens shots, straight on shots always work for me! If you can do video, that would be great too! Video is a powerful tool to get shared easily online.

    Make sure it's not only just getting on the MLS, but on every real estate website as well.

    Whenever your contract ends with your current agent, or if you have an out before it expires - I highly recommend using a Compass agent to take advantage of their services such as “Compass Concierge” where you can get money upfront to cover your staging fees, etc. You can then pay it back once the place sells. Best part, no hidden fees or interest - just have to list with a Compass agent.

    If interested, I am happy to recommend someone in your market who will give a full analysis on what is going on and do everything I mentioned. Or if you have questions, feel free to reach out to me. Happy to help!

    Good luck!

  • Developer · Closter, NJ · Member since 2016 · 392 posts · 109 votes
    6y

    @Andrew Taylor

    Have your agent send you comps

    If your comps are supporting your price then wait a bit

    If not drop ten grand increments.

    I recently had a property that I had dropped 75k till I got some good action. Sold 105k under my price. I had enough room to walk out with 75K for myself and 75 k for my partner.

    It hurts to drop but the market dictates your price action. If your getting no showings you have to re-evaluate.

  • Rental Property Investor · Baltimore, MD · Member since 2015 · 12 posts · 3 votes
    6y

    @Andrew Taylor

    If it were me in this situation I would want a realtor who I could trust and who would tell me “sell for $400K because that’s where the market is, etc...” It sounds like right now you have a realtor who is being overly nice because she doesn’t want to lose your business.

    On a side note, the house looks really nice!

  • Member since 2018 · 1 post · 0 votes
    6y

    I do some flipping and one of the property took 8 months to sell, Staging the property did help us to attract footsteps.

    Every house has a buyer. It a patience game. Either you lose 25k by bringing the price down now OR wait for some time and you will not lose this much. On the other side if you sell now you can use the money to invest in your next project.

    We do have some big players here on the site, and I am just the tip of the iceberg but this is my experience. Cent on a dollar ;)

    Your property will indeed sell soon.

    Thanks

  • Developer · Houston TX · Member since 2018 · 423 posts · 400 votes
    6y

    @Andrew Taylor

    Great looking house. I think the market is just slowing down. A suggestion might be to remove off the market and resist a day later so it can look like new listing.

    As many others suggested. Front door can use a nice accent color like maroon color representing Texas A&M.

    If you stage it with your own nice furniture you might be able to do AirBnB during hold time.

    My partner and I have a new build that’s slow to move but we can refi and use brrrr strategy to make into rental.

    If you don’t want to spend money to stage your agent should have someone who can do virtual staging. If she doesn’t know a person look at competition and find one that has virtual furniture and contact agent. Of course tell agent u have property on opposite side of town lol

    Hope that helps. Best of luck

  • Leclaire, IA · Member since 2016 · 161 posts · 130 votes
    6y

    @Andrew Taylor

    I assume it's on the MLS. Get feedback from agent

    After showings. Sometimes pool is a detriment.

  • Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
    6y

    In many locations, the market is very soft.  I have faced this recently, and price reductions do help get showings and offers.

  • Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    6y

    It doesnt need to cost a fortune to do some staging. I would go to the better thrift stores and see what they have. You could furnish it for 500 :)

    Also agent is not going to work hard for that amount. And what are you offering buying agent?

  • Investor · Boise, ID · Member since 2016 · 42 posts · 19 votes
    6y

    @Andrew Taylor @Andrew Taylor Kudos to taking on such a big project and sticking to it. You're a smart guy and already have some of the answers, but here's my perspective.

    I'm a window and door design consultant for the number one Remodeling company in the nation.

    This is just my opinion re the rehab style; it's missing a wow factor and contrasting colors. All the colors just seem to run or blend together except for the counter. Looks like pretty good quality materials except the floor as you mentioned. I would have done a dark wood floor. Front entry looks like a church entrance with that narrow archway. It's a cool style but needs modernizing. I think you have 2-3 styles mixed together that aren't complementing each other. For example The farmhouse country grids between the glass on Windows doesn't match the high end granite and fixtures. Your modern chandelier doesn't match your 1990s wood ceiling fans.

    I agree with so many others on staging. It will help warm the place up, add some life and not point out anyting unusual for those Buyers who notice the little details like me 😁

    The entryway looks like your typical 70s brick that's just been painted and needs something like partial cedar, wood type material boost that would match some of the other colors inside the house.

    the front door with the mailbox slot doesn't work for me at all. It almost looks like you're entering a business. it may be worth it to change out that door and put something with decorative glass. Entry doors are one of the highest value ads you can do. According to Henley wood statistics, changing out or updating garage doors are the highest value-add with a 152% cost to recoup. Entry doors are about 65% and vinyl windows put 70% of the cost back into your pocket ($10,000 spent on window upgrades can recoup $7,000 which means you really only spent $3,000).

    I'm not sure if you're advertising outside of Zillow and the MLS, but it may be helpful to find out if the buyers in your area are from a certain demographic and then market to them directly on Facebook, Craigslist etc. Or wherever they're hanging out. For example we have a massive influx of people coming into Idaho from California and they are the largest sector of buyers for our area. if you can't rely on your realtor you may need to start posting advertising and other places. have you advertised on BiggerPockets marketplace?

    If you haven't done it yet, I would try to get at least three professionals (other than your agent) in your area, even if you have to pay them, to give their perspective and opinion.

    For a higher-priced home your buyer market is much smaller, so regarding the little activity, I wouldn't be too concerned unless it's been on the market for two or three months. Have you had any open houses? That's a great way to see more activity.

    There's definitely a lot of great advice on this forum and hope you can figure it out soon and sell it. It's not a bad idea to get a tenant in there to help offset that three grand each month, because going into winter slows down the opportunity to find the right buyer, but you already know that. All the best!

  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    6y

    Renting it works if the numbers work against the monthly mortgage payment.  If they don't, it's just a band aid.  Likely you are over priced .  When price meets condition, demand will move it. There is always a price that eventually works.

  • Investor · Beaumont, TX · Member since 2016 · 171 posts · 277 votes
    6y


    I disagree with all the other posters saying the market has stalled.

    710 Walnut Bend Lane, 77042 sold in 4 days for $460,000 no pool

    10614 Deerwood Road, 77042 sold in 2 days for $495,000

    10726 Holly Springs Dr, 77042 sold in 19 days for $485,000 no pool

    Clearly the demand for that price point is there. 


    Didn't read the whole thread, but based off the listing:

    1) The front is not too appealing, but its not bad

    2) It needs to be staged

    3) The black counters may be killing you. Looking at the comps, white counters are whats selling with european brushed nickel pulls.

    4) They also have white subway tile backsplash, you just have a 4" matching backsplash, no tiled backsplash.

    5) All the comps I list below do NOT have carpet in bedrooms, while yours does. Also their ceiling fans are modern brushed nickel remote ceiling fans while yours has a more outdated look in my opinion.

    6) I can't tell, but looks like you have older windows (single pane, metal frame).  Comps have newer vinyl windows.

    7) People nowadays are NOT fans of skylights.  See if it can be sheetrocked in?

    What I would do:

    Take it off the market.  Replace carpet in bedrooms with the flooring from rest of house.  Swap out ceiling fans to the $100 Harbor Breeze Brushed Nickel w/ Remote from Lowes.  Buy some brushed nickel cabinet handles for like $50 and throw them on all the cabinets (including bathroom vanities).  

    That's just my 2 cents.

    Best of luck my friend, and don't let it deter you!


  • Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ 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.

    Hhhmmm... Interesting. 

    Corner lot with a pool ... well, not everyone wants the exposure of a corner lot, or the added yard work. The pool is likely a big negative, also, as it limits your pool of potential buyers: not everyone wants the liability / risk / work / expense of a pool.

    "The house ... has been tastefully updated ..." 

    To whose taste? ... and how does that compare to the updates preferred by the buyers in your area?

    "... never flooded ..." 

    ... but, is it in a flood plain?

    "I thought the house was probably worth $515k ..."

    What made you think that? CMAs? Your own assessment of recent sales for comparable homes?

    "... but we initially listed at $499k ..."

    A long-time broker and mentor of mine teaches us to price on the even thousands. At $499k, you're not included in "$500K-$600K" searches, for example. Similarly, you're not included in "$xxxK to $400K" searches. Any agents / brokers among your network contacts? Ask them about it.

    I think a better statement of your position on this property would be acquisition + closing costs + rehab / repair versus recent comparable sales to see your POTENTIAL equity position.

    "... I don't want the wife to rescind her blessing with respect to my investing ..."

    Oh, dear ... your spouse is not on-board with you. That's likely to pressure you into making potentially costly decisions. You may want to rethink how you're going about that. My recommendation, since you seem to need to some education, is take her along into that, even make her your learning partner so she can quench her fears and see the opportunities. Two heads are often better than one, for sure.

    My $0.02 ...

    P.S.:

    Looked at the listing pics. The double vanity in the hall bath seems "unusual". Not saying good or bad, just not sure of the intent ... live-in in-laws? How does the local community feel about short-term rentals?

    The rest of it is kinda generic ... If I were to tour other properties in that area at that price point, how would this one stack up on amenities?

    Are other area listings professionally staged? That might help.

  • Rental Property Investor · East Longmeadow, MA · Member since 2019 · 154 posts · 64 votes
    6y

    @Andrew Taylor

    Refinance and rent out then repeat

    Brrrrr

  • Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    6y

    @Andrew Taylor - rip the bandaid off.  I had a bleeder like this a few years ago.  Couldn't figure out why it wouldn't sell.  Kept dropping the price... It was a beautiful wooded corner lot with a stream, in a suburban neighborhood.  I had heard a couple concerns about the tall trees early on but didn't think much of it.  Eventually I had a few large dead trees taken down, others pruned back, staged the place and it sold immediately after.  I took a pretty hefty loss on the property but if I would've spent that money sooner on trees and staging and would've dropped the price sooner I would've save the $3K a month and broken even on the property and been done with it a year sooner.

  • Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
    6y

    @Andrew Taylor it’s up to what your exit strategy is and what the numbers tell you.

    If you hold on the 3K interest there is no guarantee it will sell soon, so it eats away on your profits on the flip.

    Refinancing to a R/T 30y is a quick option to hold to the earning as much as you can and recapturing some of the refi costs with the rent. Also if it’s rented it’s very attractive to an investor looking for a turn keys property witch might earn you some equity on the deal and you don’t have to low ball your price.

    Also if you refi with a cash out (70-75% LTV of the ARV) this gives you your equity upfront and you can continue your flip business.....The rent will pay for the costs in a few months time. Also consider the next 3 months are traditionally slow.

  • Contractor · Magnolia, TX · Member since 2016 · 279 posts · 155 votes
    6y

    Again - thanks to all of you for the thoughtful replies. I once read a quote by Stephen King that went something like, "Show your work to everybody you can, and ask for feedback. If they all say something different, you can ignore all of them. But if they all say the same thing, then you need to fix it."

    What I'm hearing is that pricing and staging are the two big issues. I'm leaning towards doing something akin to what @Steve Vaughan mentioned in his post above: remove it from the market, stage it, set the price to whatever the comps support less commissions, and then re-list using FSBO/Zillow etc. By doing that, my break-even number actually drops by about $10k, giving me some more breathing room.

    Question on staging: is it normally left staged until it sells? Or is it staged just for photos and an open house? Something in-between? I've never done it before, so I'm not quite sure what I'm getting into.

  • Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Andrew Taylor:

    What I'm hearing is that pricing and staging are the two big issues. I'm leaning towards doing something akin to what @Steve Vaughan mentioned in his post above: remove it from the market, stage it, set the price to whatever the comps support less commissions, and then re-list using FSBO/Zillow etc. By doing that, my break-even number actually drops by about $10k, giving me some more breathing room.

    Question on staging: is it normally left staged until it sells? Or is it staged just for photos and an open house? Something in-between? I've never done it before, so I'm not quite sure what I'm getting into.

    Andrew, I staged my last sale with rented furniture from RAC or Buddy's or whatever big chain is in your area.  No commitments except week to week and they deliver and pick up.  We did a couple couches, coffee table and a bedroom set. An idea for big stuff anyway.  We did accents and smalls from our own stash of extras. 

    We kept the staging going until after the inspection contingency was cleared and we were confident the buyers' loan was solid.  Good luck!

  • Investor · West Monroe, LA · Member since 2015 · 196 posts · 70 votes
    6y

    @Andrew Taylordo you have a link to the listing?

  • Realtor · Atlanta, GA · Member since 2018 · 103 posts · 28 votes
    6y

    Hey

    @Andrew Taylor I am in a similar situation. I purchased my flip back in August and completed it in mid-September and just made my first interest-only payment today. I'm listed at $174k in Decatur, GA which is very reasonable, but the time of the year is a big impact. MY plan is to hold the property until feb.march and make the $1100mon interest-only payments opposed to dropping the price or refinancing into a traditional mortgage.

    The downside of refinancing is that it will require closing costs and most will have a decreasing prepayment penalty (3-2-1) based on the years that you hold it. 

  • Investor · West Monroe, LA · Member since 2015 · 196 posts · 70 votes
    6y

    @Andrew Taylor, disregard, I found it in an earlier reply. I would probably pull the listing and re-list at 6% with a 2k-4k bonus commission added to motivate more realtors to show this house. 

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