Looking for quidance....selling unfinished flip?

Question

A fellow investor recommended I list a flip that is unfinished. I am considering a sweat equity "credit" off list price when purchased. With purchase price and "value of sweat" being set up front. Anyone done this, including listing sweat equity opportunity on BP as compared to other sites such as Zillow?

Mike Dymski · Answer

The market is on fire.  Just list it or sell it as-is and the market should save you.  Any buyer is going to price in the cost of finishing the project whether it's you finishing it or another contractor.  Pricing it in up front just narrows your buyer pool significantly to those who want to hire you to finish it.  This is not selling a completed home to a homeowner...it's selling an unfinished home to a flipper, plus contracting services.  Good luck...stuff happens and this is an excellent market for stuff to happen in.

Bill B. · Answer

When you bought the property. Did you pay finished price minus “sweat equity”? Or did you want to get paid for your sweat equity? Most people want to be paid for their work.

If I can buy a $300k property or a $250k property that needs $50k worth of work to be worth $300k, my offer is closer to $200k.

By selling it unfinished you are eliminating the buyers who pay the highest price, owner occupants. If you ran out of money or skill, partner with someone better to finish it and split the profits.

Eric James · Answer

The problem in this situation is potential buyers will realize you didn't know what you were doing and got in over your head. They'll have to assume you did a lot of shoddy work and cut corners, so they may need to redo a lot of the rehab you'd like to be compensated for.

Wayne Brooks · Answer

It’s doable, if the numbers work.  But, no one cares about your assignment of “sweat value”...they’ll look at it like any other flip.  You’ll Net the most if you get it on your local mls though.....a much larger pool of potential buyers.

Steven Foster Wilson · Answer

I would finish the flip if you have the opportunity. You will always make more money that way. If need be, bring in a partner to help finish the project.

Chris Carruth · Answer

Have had both opinions...same as MLS...same as anywhere no?

Jonathan R McLaughlin · Answer

@Chris Carruth listing it unfinished is the equivalent of trolling chum through shark infested waters. You will definitely attract interest, but not the kind you want.

Will Gaston · Answer

@Chris Carruth this only my experience in my market but I would finish it. Even if I had to borrow more money to do so.

The market is insatiable for a finished product that is move-in ready. I've got a few properties listed for sale that have good upside but nobody wants them because they need work. I can't blame anybody for that because it is hard to find reasonable priced contractors right now, especially for the average person.

You'll sell it faster and for more $$$ if you finish it. I doubt you'll regret doing so.

Chris Carruth · Answer

so price?

Chris Carruth · Answer

I guess people can draw whatever inferences they want.

Looking for quidance....selling unfinished flip?

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