Difficulty Selling My Flip

Difficulty Selling My Flip

Investor · Los Angeles, CA · Member since 2016 · 11 posts · 15 votes

This is my first try and after a stressful rehab, I've been on the market for 68 days. It is priced at $290k, $13k below Zillow estimate. I've had multiple agents go through the house and run CMA's and they are coming up with $300k as the price. The interior looks nice and is updated. The main drawback of the house that I can see is the lawn. It is rototilled and shows just some dirt with grass seeds on it. But it doesn't look dirty - just not a full green lawn. It is going to take some time to grow.

We've had several open houses, many private showings, but not a single offer has come through. At this point, I can drop price some more but then I'd be erasing any little profit I have left, and potentially losing money. Another option is to convert it into a rental (BRRRR) which would just cover all the expenses including property management.

I've hired an agent to list the house (can't say he's been good). I have my own license but no experience as an agent. I do think I could do a better job selling than my current agent. So I was thinking I could convert it into a rental for a year, slightly pay down the principal with the rent money, hope the market stays on track where it is or even increases, and list it myself. With this strategy, I can also refinance and pull out about $30k cash and still cover all the expenses. With all that and eliminating the agent, I could walk away with a little bigger profit from the sale in a year's time.

What would the experienced investors here do?

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Ormond Beach , FL · Member since 2015 · 345 posts · 223 votes
9y

If you think the lawn may be the problem, lay some sod down....that may be cheaper than carrying it another month or two. Curb appeal is important.

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  • Flipper · Grants Pass, OR · Member since 2017 · 52 posts · 26 votes
    9y

    My first question is have you staged the house? This can make a huge impact. 

    Second question is on the CMAs what are the Days on Market (DOM) for the ones that have sold? Can you look at those homes and see anything different about year built, style of interior / exterior, neighborhood...

  • Investor · Los Angeles, CA · Member since 2016 · 11 posts · 15 votes
    9y

    I have not staged the house. I might look into this. Can you give me a ballpark cost on a 4+2 and 1800 sq ft?

    DOM for the closed listings average out to 75.

  • Ormond Beach , FL · Member since 2015 · 345 posts · 223 votes
    9y

    If you think the lawn may be the problem, lay some sod down....that may be cheaper than carrying it another month or two. Curb appeal is important.

  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    9y

    I don't think the idea of holding it is a bad idea. A lot of buy and hold investors start off as accidental landlords and it ends up working out very well for them. Do you have a lot of your own money tied up in the property, or is it mostly debt?

  • Investor · Los Angeles, CA · Member since 2016 · 11 posts · 15 votes
    9y

    Andrew, a good chunk of my own money is in the property. Even after the cash out refinance, I'd basically have to just sit around for a year saving up money for another flip. I live in LA and flipping is difficult to do without a lot of capital.

  • Erin ChurchPro Member
    Real Estate Agent · North Augusta, SC · Member since 2017 · 254 posts · 233 votes
    9y

    I'm a newbie, but have sold several SFR that were my primary. One that sat on the market the longest was freshly redone and empty. The market was bad, but it was still being shown some with no offers. The problem was a long living room. When I lived there, it was a living room and sitting room with a properly placed couch and a couple of cute chairs behind it. When I bought a couple of pieces of furniture to leave in the house, the next showing bought it - the buyers needed to see how to layout the living room. I think this sort of issue can happen with open floor plans quite often too. I think @ScottCarr is right with his suggestion. :)

    Also, I agree with @EugeneKemp that if you think the problem is the yard, drop the money on the sod and watering it. I know you're concerned about not making much profit. However, you mention that you'll have to essentially sit and wait for a year to be able to get another property.  If you break even and start over now (a bit smarter about the rehab process I'm guessing since you mention it was tough), and can do two flips in the next year, does it make more financial sense for you to break even and flip some more or sit and wait?

  • Flipper · Crown Point, IN · Member since 2017 · 15 posts · 10 votes
    9y
    The right agent can make all the difference sometimes. I had a flip that we had on the market 6+ months and went through 2 contracts. Finally fired the agent and hired another and we had a contract and closed in 5 weeks. Getting out of a contract can be tricky but often if the agent knows you don't want to work with them anymore they will sign a release. We also stage all of our flips in the common areas. Makes the house look so different and gives prospective buyers an idea of what the house would look like. Good luck.
  • Specialist · Indianapolis, IN · Member since 2016 · 841 posts · 480 votes
    9y

    Put down some sod and sell it. 

  • Las Vegas, NV · Member since 2017 · 32 posts · 18 votes
    9y

    If i were you i wouldnt try another Flip,  not yet!     Staging is overrated.   Do you really think a  few Petunias and nice pillows will help .  The market is telling you are overpriced.  

  • Kuba F.Pro Member
    Real Estate Investor · Los Angeles, CA · Member since 2013 · 2k+ posts · 694 votes
    9y

    @Chris C.

    If it's in SoCal PM me the address and I'll be glad to give you an opinion on it.

    Good suggestions from @Account Closed

    Staging? 99% of the time it is worth it.  When I've hired it out the minimum it cost me was $1,500 for a 1000 sqft property.

    Curb appeal is important, and I would have used sod instead of seed.

    If you're so deep into it that you're at break even or worse selling with someone else, then definitely put your license to use and sell it yourself. 

    If you've had many showings but no offers then the most likely culprit is price.  The second most, is some deficiency that buyers can't get over, and therefore price again.

  • Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Why not post the listing here. The members do a good job offering help when they can see the location, comps, and photos. No one can comment on the lawn really without seeing how bad it looks. Also Zestimates are notoriously wrong. I have never really been close to one in my buying or selling.

  • Investor · Castle Rock, CO · Member since 2017 · 27 posts · 29 votes
    9y

    @Chris C.

    Couple of basic principles I'm sure you've heard before....

    1) Anything with the right price will sell - (Your market may be softening.  DOM & competition will affect this. Adjust accordingly).

    2) Only one chance to make a first impression - (For the relatively low cost of sod & some staging, maybe worth it to help potential buyers see your vision). 

    Get it sold!

  • Specialist · Toronto, Ontario · Member since 2016 · 564 posts · 425 votes
    9y

    Has it been 68 DOM at once? That would be a pretty stale listing. If you lower the price at all, it will push it up again and people will see it again.

    I would lower the price to $279k, but if you really don't want to lower the price because the numbers are so tight, then lower it to $289k. Before you lower the price, do any minor additional improvements you plan, then re list with a few new photos of what has been done. Staging is a good idea. It's not just the furniture, but the art on the walls really makes a place feel like a home rather than an empty box.

    Staging really helps make a place feel better. 

    I had the living, dining room, kitchen, master bedroom, and all bathrooms staged. Cost me a little over $2,000. It's the little touches that really finish the space. Some ways for you to save money: Go to a furniture rental place, and rent the furniture and have it delivered along with decorations. Should cost you under $1,000. Alternatively, if you have a van and time, buy furniture and accessories on Craigslist, and once you have sold the house, sell the furniture again. It takes a lot of time but you should pretty much be able to break even on cost.

    Congrats for trying your first flip. It takes guts to get started. It sounds like you may need to buy at a bigger discount next time or keep a tighter reign on reno costs, but if you can break even on your first deal, you will be in a much better position to do your second.

  • Investor · Los Angeles, CA · Member since 2016 · 11 posts · 15 votes
    9y

    https://www.zillow.com/homes/for_sale/house,mobile...

    My $/SQ is quite a bit lower than the competition. This is not a premium neighborhood and I'm not seeing others stage. That might help differentiate the property. Not pictured on MLS is the front yard which is below.

    Let me know what you think.

  • Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    I didn't see any exterior photos in your ad. The photo you posted lacks lots of curb appeal. Are you getting any feedback that the prospective buyers are turned off by the front of the house? It's just white with zero landscaping.

    Other than that a very brief look around the neighborhood and almost every house sold for mid $200s or less. I see yours is larger, but that might be hurting you. Having the biggest house in a neighborhood doesn't always mean you will get top dollar.

    Personally I would work on the curb appeal, I truly think people are turned off when they pull up.

  • Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
    9y

    You did great on the interior, but the outside doesn't match the inside at all.Take it off the market. Put sod and a little landscaping in, paint the exterior something other than stark white, and then put it back on the market maybe at $299k. 

  • San Diego, CA · Member since 2015 · 273 posts · 226 votes
    9y

    Is there a backyard?  Also, I'd put in more photos of the kitchen from different angles, dining room, living room, etc and fewer photos of empty bedrooms with carpet and white walls.  

  • Developer · Little Ferry, NJ · Member since 2016 · 426 posts · 226 votes
    9y

    @Chris C. The house does look very plain on the outside, the inside is a standard 200-300k Rehab. Check out.... 26 Independence Drive, Roselle, NJ 07203... that is one that I Just sold. It is basically the same finishes, except look at that pictures that I had my photographer take and look at that he focused on and how the outside looked. I know that CA and NJ are 2 totally different markets, but just take a look and see exactly what needs to emphasized and what kind of finishes you need to focus on. 

    This was a standard 250k house, it was a total remodel and we sold it in 5 days. Great house. Had water problems tho when it rained because Roselle is built on clay not dirt. 

    Just like you, I originally wanted to put the house on the market for 275k because of the fact that it was bigger WITH a garage and everything was flying for 250k, but then you have to realize this KEY fact... Someone can offer you 500k for the house... IF IT DOESN'T APPRAISE, you will get 250k... Listing the house for more won't necessarily mean that you will get that price, most often than not, 250k price point is FHA and those appraisals are very strict. And @Brian Pulaski said that most of the houses in the area sold for <250k, so even if someone offered 300k for it, chances are, they won't buy it for more than 260k.

    Take it off the market, fix the things that you can compare the my house , and then put it back... When people see higher DOM, they think that there is something wrong with the house.

  • Irvine, CA · Member since 2016 · 545 posts · 614 votes
    9y

    @Chris C. the important question I have is what is this property really worth? Pricing in the area seems to be lower than what you've projected to sell your property. If I were a buyer what is this going to appraise at?  

  • Investor · Los Angeles, CA · Member since 2016 · 11 posts · 15 votes
    9y

    Nice to see some positive people like @Account Closed

    Who says I need $2.5k rent to profit? I can profit on $1800 rent.

    Here are a couple comps.

    https://www.redfin.com/CA/San-Bernardino/3415-N-Fa...

    https://www.redfin.com/CA/San-Bernardino/1123-E-37...

    https://www.redfin.com/CA/San-Bernardino/5519-Elm-...

    The ones in the $250k range are all dated inside with less bedrooms and less sq footage if you actually look. Anyway, it's back to the drawing board. I'll have to consider the next options with perhaps another price cut in the near future.

  • Las Vegas, NV · Member since 2017 · 32 posts · 18 votes
    9y

    Holy cow!   Your curb appeal is horrible compared to 2 out of the 3 other examples you cited.  It isnt a surprise you are having difficulty.  Your street is Drab like another poster said.

    Sorry but not all of us are UNICORN type of people.  See everything peaches and cream.

  • Investor · Brooklyn, NY · Member since 2016 · 56 posts · 40 votes
    9y

    Like others mentioned put some sod, also staging is a big plus. Also, if it comes down to it buy some nice but not too expensive furniture and give it for free with the house. You'll be surprised how well it works. I believe someone on BP mentioned this before. This is all provided you still have some profit margin left. Also, more pictures and pictures of outside would be great. 

  • Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    9y

    @Chris C. At least virtually stage. On BoxBrownie.com (not affiliated with me, I just use it), they can add in the grass and landscaping, and virtually stage to give your buyers a better feel for potential of the property. Cancel the listing on Tuesday, then on Thursday morning activate it with the new photos and a revamped description. I'll hit everyone's inbox again and with the new photos, they won't even know its the same house. If you can afford it, definitely get professional photos.

  • Las Vegas, NV · Member since 2017 · 32 posts · 18 votes
    9y

    How about putting in some real landscaping.

  • Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    9y

    Zillow is the last place to estimate your price - you need CMA by an agent. If you have license but not experienced in this particular area - get an agent who works in that place.

    The difference might be critical even if the subject property is one street away from comps.

    Also, it's better if the agent would've seen each sold house inside - sometimes pictures over photoshopped or won't make justice. 

    I agree about staging: it makes huge difference - no need to hire a company, it cost $2K+\- with furniture. Simple staging to make it feel like a home would help.

    Curb appeal is the must. I can't open whole listing but main picture with the front of the house is not attractive. The greener the grass the better your sale. :)

    Next time you'll do better - we all learn from our experience 

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