Just starting your flipping business? READ THIS FIRST.

[Dan Gandee]

Quick story that made me want to write this.

Over the last few years I’ve had a bunch of conversations with newer flippers getting ready to list their first or second deal. We’ll walk the property, talk through pricing, and I’ll usually mention a few things they should do before putting it on the market.

Things like checking nearby new builds, running fresh comps, getting an inspection done first, staging, making sure lien waivers are collected.

Almost every time the response is something like “yeah that makes sense, I’ll probably do that.”

Then a few weeks later the house hits the market and none of it got done.

A month or two goes by and suddenly the house is sitting, price reductions start happening, buyers start asking for credits, or a deal falls apart after inspection.

And honestly it’s frustrating to watch because most of those problems were preventable.

Most of the time the issue isn’t even the renovation itself. It’s the stuff that gets skipped right before listing the property.

There are a handful of things that can prevent price reductions, inspection fights, and buyers backing out. When investors rush this stage thats usually when problems start showing up.

Here are a few mistakes I see people make all the time.

Ignoring nearby new construction...

In a lot of markets right now new construction is serious competition for flips.

Builders are offering incentives that many investors forget to factor in when pricing their property. Buyers might be getting rate buy downs, closing cost help, upgrade packages, or appliance credits.

So while your flip might look comparable on paper, the buyer could be getting tens of thousands in incentives from the builder next door.

If you don’t check what nearby builders are offering you can easily price your property in a way that makes it harder to compete and sometimes investors dont even realize why their house is sitting.

Setting the price using old comps...

Another mistake I see pretty often is people relying on the ARV they calculated when they first bought the property.

Markets move. Sometimes quicker than people expect.

Before listing you really should pull fresh comps and see what’s actually happening right now. Look at the most recent sold homes, active listings, and homes that just went pending.

Sometimes you’ll realize the market moved up and you underpriced it. Other times the market softened and the property is overpriced before it even hits the market which happens more than people want to admit.

Skipping staging...

This one still surprises me how many people skip it.

A vacant house almost always feels smaller and colder to buyers. People walking through have a harder time picturing how the rooms work or what living there would look like.

Staging helps buyers emotionally connect with the home and it makes a huge difference in photos too which is where most buyers see the house first.

I’ve seen very similar houses in the same neighborhood perform totally different just because one was staged and the other wasn’t.

Releasing the final contractor payment without a lien waiver...

This is one that can cause real problems later.

If subcontractors or suppliers havent been fully paid they can sometimes file a mechanics lien on the property. That can turn into a title issue when you try to close.

Before sending the final payment it’s a good idea to get a signed lien waiver confirming everything has been paid and there won’t be any liens filed.

Its a simple step but a lot of investors skip it.

Not getting an inspection before listing...

A lot of investors just rely on the contractors punch list and assume everything is good.

But an independent inspection will sometimes catch things that got missed during the rehab. Sometimes its small stuff but sometimes its mechanical issues buyers will definitely find during their inspection.

If the buyers inspector is the first one who finds the problem it usually turns into repair demands, credits, or sometimes the buyer walking away all together.

Getting an inspection ahead of time lets you deal with problems before they become a negotiation.

None of these steps are complicated but skipping them creates a lot of unnecessary problems.

Price reductions, repair negotiations, delayed closings, deals falling apart… most of the time it traces back to something that could of been handled before the property even hit the market.

Curious what others here do before listing their flips. Anything else you’ve added to your process that helped prevent last minute deal problems?