After you have gone through all the trouble of finding, purchasing, and rehabbing a property, the last step is to try to sell it fast and for a profit. Most people think, incorrectly, that very little planning goes into selling a property. Here are some recommendations to help you sell your fixed and flipped property:
On the commercial side:
Unless you are a seasoned Flipper with more than ten flips under your belt, do hire an experienced real estate agent. Their knowledge and network will help you navigate what appears to be a simple process but can sometimes become a complicated process.
- A realtor will assist you by preparing a reliable Comparative Market Assessment (CMA). You can set your property's asking price accordingly based on that information.
- A realtor will list your property in the MLS listing so that you can reach the largest number of potential buyers.
- They will provide you with legal advice on the escrow process.
- A realtor will show the house and negotiate the sale with the buyer’s agent. These activities can be time-consuming and sometimes stressful for a novice.
Sellers are known to be bad about disclosing issues. You should disclose everything you know to be an issue. It will speed up the transaction and prevent you from having weeks go by when a problem is found and you must negotiate around it.
Never let anyone know how much money you are actually making on the Fix & Flip deal. As a rule, do not let people know what you are making on the flip (for example, your realtor, the buyer, the title company, or a contractor). Things could get muddled up at closing time: you will soon find out that some people get jealous sometimes.
Keep the house clean and stage high-quality photographs with proper lighting. People love light and bright, and the best way to show off your property is to have lots of light. The cleaner your windows, the better it will be for your property. Since most buyers will do an Internet search, you should have at least 24 to 30 high-quality photographs. Hence, they get motivated to show up to an open house or schedule a visit. You might want to invest in having a professional photographer shoot them and maybe even invest in a high-quality video that can get posted quickly on your realtor's site.
Do not overprice the property expecting to then offer a discount if asked: overpriced homes generally don’t sell. In a survey conducted by the informational home sale website HomeLight.com, 70% of real estate agents said that overpricing is the top mistake that sellers make.
-On the financial side:
Fixing the asking price is not all that happens on the financial side of selling a property. Once you have determined the asking price, there are other things that you should be taking into consideration.
Ask your realtor to prepare for you what is usually known as a seller's net sheet before you even list your property, which details what you can estimate to make when selling the property. These calculations are usually prepared based on a format known as the HUD-1.
Prepare yourself for less-than-ideal scenarios. Decide what the lowest amount you are willing to accept for the property way beforehand you are faced with such a decision. If the market is getting colder, you might have to accept a less than ideal offer just to make sure that you can move on to your next flip.
Have the property insured; you want to make sure you are insured in case someone visiting your property has an accident on the premises and tries to sue you for damages. You also want to make sure there are no obvious hazards at the property or that you take steps to mitigate them.
Try to sell the property to a qualified buyer and, if possible, reject any offers from unqualified buyers. You should expect a buyer to bring a pre-approval letter from a mortgage lender or proof of funds (POF) for cash purchases to show that they have the money to buy the home. Signing a contract with a buyer whose ability to pay you may be contingent on the sale of their currently owned property may put you in a severe bind if you need to close by a particular date. It is not rude to ask if this last is the case so you can make an informed decision.
Set up a contingency fund for final utility bills and unpaid property taxes. You are liable for them until the day you sell the property.
Summary
Do not wait until you have finished fixing up the property to start thinking about the sale process. There are decisions you can take in advance and actions you can schedule. Remember, the more planning is done, the better the financial outcome to be expected.
If you have decided to invest in a Fix and Flip property, choose to consult with AMI Lenders. We are one of Houston's fastest closers and could become your financial ally. We fund our loans and can move as fast as the law allows. Borrowers in Houston will also have difficulty finding lower rates for hard money or private loans than we offer. We want our customers to succeed and take advantage of the financial opportunities provided by real estate investments. Visit our website today and fill out an application for a loan backed by an investment property.
