Level of Rehab vs Timing Market

Investor · Jackson, MS · Member since 2021 · 660 posts · 561 votes

You only get one chance to make a first impression and some of the issues you are talking about are curb impressions. Going into the winter is always a slower period and the interest rate issue is not helping the buyer pool so those factors weigh into the mix. Is there any way you can contract a handyman to get the issues knocked out and get it listed in the final state? The cost can quickly be recouped with a better offer and who ever sees it not done will likely not come back to see it in the final state.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

3y

Few builders wait until their houses are 100% complete to list them for sale. But they have floorplans and drawings, etc. to convery what the house will look like when done. They also usually allow buyers to choose colors and other finishing touches. BUT - that is what buyers have been trained to expect, so builders can get away with it.

Since markets are all somewhat unique and changing right now, would recommend you ask your favorite agent to tour it with some associates from their office to give you their professional opinions.

Also figure out what you can do to CONVINCINGLY present the property as what it will look like when 100% done.

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Dan White

Flipper/Rehabber · Haymarket · Member since 2022 · 76 posts · 70 votes

3y

I feel like - the sooner the better. But...if there are major things to be done, get those done. I have seen plenty of homes on market that say they are waiting for windows and they will installed on a certain date.

@Andy Sabisch is right though. It may not get a second look if the first impression wasn't great. That's why I think getting the major things done is important.

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Scott E.

Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes

3y

Finish the house. And stage it. You say there are many other listings in the area active. If you list your house with these cosmetic issues and without staging it, your house will blend in with the many other available homes. It'll sit on the market, listing will become stale, you will be forced to drop the price, and 3-4 months from now you will be back here wondering if you should take it off the market and rent it out.

As others have said you only have 1 opportunity to make a good first impression. When brokers and potential buyers walk through your house for the first time, you need them to be wow'd (especially in this market).

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Conner Olsen

Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes

3y

Quote from @Bryan Normal:

Looking for some advice from the flipping vets out there... On my 3rd flip, going really well. Bought it $197K, will put about $70K into it, hope to get $400-415 out of it. Rehab budget is not an issue, but time is... My market Grand Rapids has been largely unscathed by the economic downturn so far, but it's October and mortgage rates keep climbing aggressively. I think I can get it to about 90% flipped and list it by mid-November (maybe some doors and windows don't look very updated, garage left looking somewhat tired, a couple landscape aesthetics left unresolved). Or, I can get it to more like 98% finished if I hold it for another month and list in mid December (will take me that long because I have a crazy November schedule IRL). It's a upper-middle class neighborhood in a desirable area of town, without many other listings in the area active.

So, generally speaking, get it on the market now at 90% in a better month while mortgage rates are a little lower, or wait a month and get it looking more brand new but selling in December in Michigan? Obviously holding costs for waiting a month as well. Any insight would be helpful, it's weighing on my mind daily.

Thanksgiving to Christmas extremely slow for home buyers. If you want more people to see the property I'd list it as early as you can.

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Ricardo S.

Flipper/Rehabber · Atlanta, GA · Member since 2014 · 166 posts · 88 votes

3y

I would list it as early as possible. Give the potential buyers an opportunity to select their finishings

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Bryan Normal

OP

Member since 2020 · 20 posts · 10 votes

3y

Thanks for all the responses, very helpful... Yeah I'm putting in like 2 weeks consecutive of 12-14 hr rehab days trying to make the pre-Thanksgiving self-imposed deadline. Note that I said there are NOT many other listings in this area, and it is a pretty nice area. So I have that going for me... At this point I think I'm going to make my punch list prioritized, and whatever I don't get to by mid November, it is what it is. The thought of listing it after Thanksgiving is just too scary. The kitchen and baths look lights out, its all fully repainted with new flooring throughout, and the exterior of the house is great. Just some ugly windows and doors mainly... I will think about calling a handyman as well, that was a good point.

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Randy CharboneauBusiness Member

Residential Real Estate Broker · Grandville, MI · Member since 2016 · 109 posts · 78 votes

3y

Hey @Bryan Normal! Congrats on getting a flip asset in this competitive market! I'll be glad to chime in my advice for you. I've flipped some homes in Grand Rapids since its my home market and as a Real Estate Broker my focus is on investors and flips so I have quite a bit of experience in this sector.

Let's look at the Grand Rapids market right now

Back in Feb of 2022, Grand Rapids was in a bit of a crisis. There is a chart on here called the absorption rate. That chart represents the time it would take for the market to sell out of all the inventory if sellers stopped listing property and buyers kept buying at their current pace. A healthy/normal market is about 3 months. In February, Grand Rapids was down to about 10 days!! Crazy times. Since then, the absorption rate has steadily climbed and its up to about 1 month now. Far from a healthy stable market but improving. As long as its below 2-3 months we can consider this a "seller's market" and buyers will be forced to compete for homes.

I'm not exactly sure which neighborhood your flip is in, but overall you're in good shape right now and with this type of inventory imbalance the holidays really don't mean that much. Buyer's need homes and when the supply is this low, they'll be out shopping for a house even when they'd rather be doing other holiday things.

As to the comments about rushing it to market vs. waiting until its done/first impressions - I tell all my flippers to get the house completely done. 100%. You don't want to leave unfinished things that are obvious to a buyer because that buyer will assume there's important things not completed they can't see. As such they'll be nervous about your workmanship or what kind of a mess they are getting themselves into and that means a lost buyer or a lower offer. Some flippers have gotten away with some things when our absorption rate was down to 10 days and people were super desperate but that has changed as you see. Also, the $400,000+ market is well above the median here so you're dealing with 2nd/3rd time buyers who are much more wise and savvy and who will not overlook sloppiness or unfinished work. So my advice is get it ALL done and THEN list it and you'll be much happier with the results.

@Bryan Normal

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Level of Rehab vs Timing Market

Level of Rehab vs Timing Market

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