Help! Flip’s not selling…price-lowering/marketing strategies?

23 Replies

**Apologies in advance for the “freak-out” tone of this post…but that’s why I come to you guys! ;-)**

Hi, guys…I'm trying not to go crazy over this (and maybe my expectations were/are too high), but I'm getting anxious that my flip has been on the market 16 days with no offers yet. I know some might think, "16 days is nothing!"…but I feel like every minute counts in minimizing those HML carrying costs, unloading the flip and moving on, especially since the rehab itself took about a month & a half over the initial timeframe (due to no fault of the contractor's).

Here's the listing, w/ address, pics, MLS #: http://www.mlsfinder.com/kwls/kw/index.cfm?action=listing_detail&property_id=422699110773

(Also, related posts about this property herehere)

I put it on the market (I’m also the agent) June 28, initially listed at $254.9. The first week, I had 5 showings; the general feedback from agents was that although buyers liked the overall rehab & staging, the bedrooms were too small for them (something that I’ll definitely take into account in future flips—but being that this was my first, I didn’t at first recognize this as a potential liability.)

A week ago I lowered the price to $250k, thinking that would bring a rush of buyers? Nope, not so much. Since the July 4th weekend, I’ve had one other showing & an open house this past Sunday which brought out a lot of people, but no offers. Feedback the same--house looks great, bedrooms too small. I thought I’d done the right due diligence re. comps & the pricing, but now I’m like, “Jeez…was I that far off?”

I'm totally open to dropping the price even further, but now my confidence in my comp-assessing ability's been shaken a little, lol. I'm thinking a reduction to $245k might do it, but I don't know…I'm just afraid that I'll keep dropping & dropping with still no activity. I've done lots of marketing—MLS, agent email blasts, featured ListingBook & Facebook ads, a SEO single-property website, open house, flyers, Craigslist, etc. Is there any more I can do? Is there something I'm NOT doing? Or, is the extra stuff just moot because the price is just too high?

I’m open-minded re. doing whatever I have to in order to get this sold quickly. I hate to sound like I’m jumping the gun, but time is money! Should I do one more bigger drop $5k down to $245,000? Or, more frequent, smaller increments (i.e. $500-$1000 a week, for example?)

This is the hardest part to me…because at least I felt like I had some control during the buying & rehab process. Now, I feel like I’m at the buyers’ mercy, lol. Heck, at this point if need be, I’m resigned to making just a small profit or breaking even—like BP-ers say, “Consider it tuition!” :-/ 

I work with rehabbers, and one thing I learned was that, sometimes even the best comp doesn't mean that the property will sell, don't let the slow market discourage you. If you are really desperate, how about posting it up on ebay real estate for 99 cents then letting the bid take over. MAKE sure you close the bid and cancel it before 3 hours. If you want to know the full detail on that, let me know, I can get you in contact the person who does this expertly. 

If you don't mind me asking, what was the purchase price, and rehab. And what were the rates from the HML and terms?

@Vonetta Booker

Great job!

Few things, just coming from a designers aspect. While the house looks great, maybe add a little more warmth and welcoming manner to the house. I would add some patio furniture on the front porch and a boxwood wreath to the front door. 

Then for the bedrooms. Maybe you should add some beds to show how they would look and fit in the rooms? Air mattresses and 5 gallon buckets are a cheap solution.

Then for the staging in the living room, I would pull the chairs and couch facing one another so it seems to be more of a conversation area. Right now it feels like everything is so spread out. 

 Also I noticed the sunroom wasn't included in the online photos. That might help bring in more buyers. 

And then maybe just market more. Put up flyers or bring in more buyer agents, add it to your FB feed if you haven't already. Send out postcards to the neighbors, maybe they know someone looking for a house.  Have another open house for buyer agents, get their input. As for comps, what were the DOM in your price range? 

My best advice is don't loose your confidence. Take a step back and figure out what you need to do to sell the property fast. I feel like if it was price that would be buyers major complaint, but that doesn't seem to be the case. It seems to be more size, so show them how things would work in those problem areas. 

Hope this helps:)

The buyers have already told you what the problem is, (small bedrooms) and the price has nothing to do with it. Lowering the price will do you a disservice as it is not fixing the problem. The question you must ask yourself is what you are willing to do about it. Can you bang through a wall and increase the size of a bedroom? Look at the comps, see what their bedrooms are sized like. See if you can equate it somehow. 0-6 showings is saying something.

Thanks everyone for your replies! 

@Account Closed , thanks but the issue w/ that is even if there was money left in the budget to do that, it would leave only 2 bedrooms--and buyers are looking for at least three.  So I think either way, they'd find an issue w/ the br. situation.  This is something I'll DEFINITELY look out for in the future...it's one of those "live & learn" things, I guess!

I've calmed down a little from yesterday, lol--done a "whoosa!" and am moving forward with whatever needs to be done.  @Nicole Pettis , I like your marketing ideas; I'm going to keep going hard w/ what I've been doing & implement some new things suggested by you & others in this and a couple of similar threads I've seen.  I'm going to continue w/ the FB & Craigslist ads, also look at Postlets.  

I especially like the broker/agent open house idea; going to start putting that together.  Today I have a fellow agent from my brokerage (Keller Williams) who's more experienced in that neighborhood (I found he actually sold the house in the past for a previous owner) coming through to assess things and give me some feedback on what price I can possibly tweak it to in order to sell.  

All in all, I've regained my confidence that it WILL eventually sell...the question is, at what price.  I've accepted the possibility that I might not make as much of a profit as originally thought, but hey--you live & learn, especially in this business! The important thing is doing what I need to to sell & move on as quickly as possible, and applying what I've learned from my mistakes to my next deals. :-)

@Vonetta Booker GREAT job on that house! Stratford is a really odd market in that DOM is much longer than surrounding towns. We sold one last summer and went through the exact same experience you are having now! Panic, marketing, price drops, more panic. Finally someone came along and loved the house and paid almost full asking. The issue in Stratford is simply due to the high number of listings - there is so much housing supply that buyers get to be picky. But you did a great job - its a beautiful house!

Host a broker's open house (or two) but don't expect more than 5 agents to show up. Again, Stratford is odd. 

Offer an agent bonus ($1,000 worked for us) to get more showings - just put that in the confidential agent remarks.

I see it has no AC - have you thought about putting in a few window units? I've heard arguments on both sides from investors and agents - window units are less pretty than sunny open windows, but a hot and muggy house makes for a shorter showing. I'd be interested to hear what other people think about putting in window units for showings (and do you include them or exclude from sale?).

I had to wait 60 days (it was near torture) for a buyer in Stratford, but the price came in right and afterwards, I looked at average DOM for sales and realized that it wasn't me - it was Stratford!

Good luck

@Travis Lloyd Wow, awesome local feedback--that's a relief to hear, somewhat! ;-) Yes, I'm definitely open to throwing in a couple of window units...but actually, I've noticed that even when it's sweltering outside, the house still manages to stay comfortably cool inside (could be due to the ceiling fans, especially when the windows are open to allow a nice cross-breeze), but I should probably add to the MLS listing's agent remarks that window units can be supplied w/ a sale.

Did you offer the agent bonus instead of or in addition to a price reduction? And once you did, did you immediately notice an increase in showings?

This post has been removed.

Hi @Vonetta Booker . It looks like you did a great job on the house!

I agree w @Katie Neason about some kind of staging in the bedrooms. Also a couple of the bedroom pics make them look extra small and narrow.

My biggest feedback though is on your pricing strategy. Your initial price drop though 5k was only about 2% of the asking price. With showings and no offers it should have been 5% IMO. Price drops of 500-$1000 will probably do little to help-I would offer it as an agent  bonus if you wanted to go that route. 

Hope this helps and good luck!

Your listing doesn't say which school zone the house is in.  If I were buying a family house, "per board of ed" would not cut it, for me.

@Vonetta Booker

I know you will get it sold. Grit and persistence go a long way and I know you have both:)
Just remember buyers can be very picky these days based on everything they see on HGTV, pinterest, Houzz and all of those other sites. Sometimes it sets them up with unrealistic expectations.

One more thing I thought of for staging. You might want to add a texture blanket over the couch. Add some natural wood touches for warmth(basket, simple crate, candle sticks) and some bright green apples in bowl in the kitchen. Adding levels of color and texture will help with the feel of the house. 

Hopefully this doesn't seem to frivolous. I know you already have a lot of time and money in the place. But I also know you want it sold;) Can't wait to hear how it goes!!

Don't get too anxious yet. Sometimes these things come in spurts. My last listing had no activity the first week and I was about to cut the price, then I got five calls in one day. so you never know. Also don't assume every showing is a legitimate buyer. There are lots of new be agents out there wasting time with tire kicker lookers.

I think having another agent's eyes on it and helping you with the comps is a great idea. It never hurts to have more eyeballs on something.

That said, you did put it on the market in the middle of summer, right before a huge holiday weekend. I like the agent' bonus idea.

Mindy Jensen, Real Estate Agent in CO (#FA100049656)

Thanks again, everyone! I decided to hold a broker/agent open this Friday (with a gift card raffle for those who fill out my agent pricing feedback questionnaire)...I figure that's a good start to getting some opinions & hopefully buyers. Next is most likely the agent bonus, as well. 

Originally posted by @Vonetta Booker :

 I’m thinking a reduction to $245k might do it, but I don’t know…I’m just afraid that I’ll keep dropping & dropping with still no activity. 

 @Brandon Turner shared a similar experience in one of the more recent podcast episodes. In his case, I believe the property was on the market for much longer, and I think the market was only getting worse as time went on, but he was in a similar position.

In the show he said he just kept dropping the price in 5k increments until he sold it far below what he had originally comped. One of the things he said in hindsight on show was that he should have considered a larger price drop (15-20k) b/c it may drawn more buyers, potentially result in multiple offers, and get the home sold faster than when he slowly lowered the price in smaller increments over the course of months. 

You should definitely do what you think is right for your investment, but I thought I'd share this. I believe the conversation was on show 130 of the Bigger Pockets Podcast! 

Good luck and let us know when you get the place sold!

Clinton

I would stage the smallest bedroom as an office space- it won't seem too small for that. Not everyone will need three proper "bedrooms"; my own house is a 1bdrm 2 office house! The house is beautiful on the inside, I agree with Nicole about improving the approach. Can you get a photo from different angle of the front so that it doesn't have such an expanse of asphalt?  And a big colorful planter/fake plant by the front door would be nice.

Originally posted by @Clinton Holmes :
Originally posted by @Vonetta Booker:

 I’m thinking a reduction to $245k might do it, but I don’t know…I’m just afraid that I’ll keep dropping & dropping with still no activity. 

 @Brandon Turner shared a similar experience in one of the more recent podcast episodes. In his case, I believe the property was on the market for much longer, and I think the market was only getting worse as time went on, but he was in a similar position.

In the show he said he just kept dropping the price in 5k increments until he sold it far below what he had originally comped. One of the things he said in hindsight on show was that he should have considered a larger price drop (15-20k) b/c it may drawn more buyers, potentially result in multiple offers, and get the home sold faster than when he slowly lowered the price in smaller increments over the course of months. 

You should definitely do what you think is right for your investment, but I thought I'd share this. I believe the conversation was on show 130 of the Bigger Pockets Podcast! 

Good luck and let us know when you get the place sold!

Clinton

  Thanks, Clinton...I'm going to check out that podcast this morning!

If you can't sell it can you keep it as rental?  Is there any possibility that that might work for you?  What are the rents in Strattford for a 2 Bedroom house in that Location?

I would definitely say beds in the bedrooms these will help people imagine the size better. Also a planter on the steps next to the porch to decrease that perception of asphalt expanse.  I would not say anything about window AC as it just points out a reason not to see the house. If it gets hot upstairs install a window AC to cool it before showings but other then that leave it alone.  Alternately you can get a floor AC that you can roll around but if it stays cool maybe you don't even need it.  you need to list the schools for sure.

Looks good and I appreciate your willingness to post. Real life cases like yours are very helpful to everyone.   pictures and all  hope it helps!

Originally posted by @Barbara G. :

If you can't sell it can you keep it as rental?  Is there any possibility that that might work for you?  What are the rents in Strattford for a 2 Bedroom house in that Location?

 Actually, Barbara--although I didn't plan that as my original exit strategy, that is certainly my next step (and soon) instead of just letting it sit.  Rents for a 3/2 SF in that area are $1700-$1800, so I'd be getting some cash flow at least instead of watching it ebb away each month in interest costs, lol.  A rent-to-own situation is another one I've been considering.

The loan is via a HML...so I guess I'd refinance, right?

What is your total cost here?  Your purchase price + the renovation?   If you got $1.800 a month for renting the house what would the numbers look like?  A rental can just turn into a flip eventually.  

Would a bank give you $75% of the assessed value and if they did that where would you stand?

As an agent myself the pictures look great.  Nothing in the staging looks out of line except I would stage the bedrooms.   

I think 250 and 254 price is the same buyer its not gonna do much for you.  Going at 249,900 might help

I think your main issue is no AC.  Someone buying a rehabbed house wants Central AC.  You have Hot Water heat so not much you can do cheaply.  May want to look into 2 Mini Systems like the Mitsubishi Units.  Get an estimate and offer it as a sellers credit if you want to move the property.