Top 10 lists are always fun, but let’s put a twist on this. Let’s look at the top tips to incorporate if you don’t want to sell your house fast, get a good ROI, or have a low DOM.
How to Estimate Rehab Costs!
Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.
The Top 5 Ways to NOT Sell Your Next House Flip
Overprice With the Assumption You Will “Negotiate” Down
As we all know, price is the greatest motivating factor in all of real estate. It boils down to the subject property, its location, amenities, etc. at that price point. Sometimes investors get greedy and go in with the mindset of “if I price it high from the get go, I will have room to negotiate down.”
This is wrong for several reasons. First off, you should always fairly price the house for its market value. Setting the price correctly will create more demand, more showings, more feet in the door, more offers. When you have a lot of interest and multiple offers, guess what? We are now in a multiple offer situation where you can pick highest and best.
Here in Dallas–Fort Worth right now, it’s not uncommon to see offers come in at $15k-20k over asking. Setting the bar high from the onset will generate less of the aforementioned and might lead to the what I call the “what’s wrong with that house” effect. If the house sits on the market (because you didn’t price it right) and it doesn’t move quickly, people and agents alike are going to start to wonder what’s wrong with the house — when the only problem is you didn’t price it right.
Don’t Market It
Marketing is for the birds. Who has time to do that? Just stick a sign in the yard and cross your fingers and hope it sells. That’s my favorite method (not). Let’s not do that. Instead, you need a plan to market the house.
Flyers, a single property website and postcards to neighbors and buyers are all things that can help move the house. If your subject property is in a neighborhood with 5 other similar houses on the market within a quarter mile radius, you need to distinguish yours because those actives are now your competition.
Don’t Use Professional Photography
This one is kind of an extension of marketing. It needs to be its own point, though, because it is that important. Ninety-five percent of homebuyers are starting their home search on the internet on the big sites that I am sure need no introduction of their own. Buyers shopping online have all sorts of distractions coming at them — ads on the sidebar, popup ads, and other houses listed on the left, right and bottom tool bars.
If they pull up the house you just put your blood, sweat and money into and you took some amateur shots with your newest iPhone, they are going to browse to the next house faster than you can say NEXT! Good photos are not just about the professional equipment, but they’re about having an experienced professional capture great angles that flatter the house and help weave a story that the buyer can visually see that gives them an idea of the layout of the house.
Cheap Out on the Rehab
Over-rehabbing a home is never a good thing; after all, a neighborhood will only support a certain price floor and ceiling, and if you go way over, you are not going to recover all those extra dollars pumped into the rehab.
But at the same time, if you do the bare minimum and don’t build a house out to neighborhood standards, be ready to be excited watching that “for sale” sign stay in the yard for weeks or months, followed by “reduced” sign riders.
Neglect the Exterior
I have seen many beautiful homes after they have been flipped. The problem is the buyer has no idea it’s a great home because you neglected the outside. How is the buyer supposed to know how gorgeous your rehab is or how open the kitchen is or how nice the new granite tops in the master are if on the outside you have bare flower beds and half alive shrubs with dead grass? The short answer: They won’t. You need to lure them into the house, and that starts with the first impression on the exterior.
That’s it for this week, folks. So the next time you have a rehab, and you think to yourself, “Hmmm… I don’t think I want to sell this one,” just follow these steps and you will be well on your way!
What other tips would you add for those wanting their listings to sit on the market?
Leave your best (worst) tips below!