Your first flip is remodeled and ready to sell. Now what? Move out of the way and wait for the non-stop flow of buyers coming to see it? Maybe on reality TV shows that glamorize how easy it is to flip a house but not in real life. The best realtor in the world can’t sell a house if it’s not buyer friendly. Your work didn’t end when the renovations were finished. As the temporary homeowner, your work has just begun.
Most home buyers are looking for specific items. The most commonly expressed motives for buying a particular house are location, square footage (more or less room than previous house), yard for the kids to play, and the right decor. You can’t please everyone. If the house has 1,200 square feet, there’s no sense trying to persuade a couple to buy if it they’re looking for a house over 2,000 square feet. If a buyer is looking for a house located in-town, you won’t be able to persuade them to even look at your house if it’s located fifteen miles outside of the town limits. The most you can do is try to present the house so it appeals to as many buyers as possible.
Most (but certainly not all) home buyers want a house that feels homey, a modern kitchen, rooms that feel spacious, and bathrooms that aren’t cramped. If the house you’re trying to flip has one of those bathrooms in which you can brush your teeth, shower, and use the toilet all at the same time, you might want to consider going back to the renovation phase and figuring out how to enlarge the bathroom. Without a doubt, the two most important rooms to home buyers are the kitchen and bathroom.
You’ve undoubtedly heard of staging a home. Staging a home is intended to increase its appeal to buyers. Among other things, staging could entail strategically arranging furniture in the rooms to make them feel welcoming when visitors first walk in. Staging is difficult, as outlined in the second paragraph of this lesson. You don’t know exactly what will appeal to any given visitor. You might think that a sectional sofa seems homey. One visitor might love it, and the next ten might hate it. At this point in the process, we assume the house is empty and has no furniture or furnishings. You’ll have to decide whether you want to completely stage the house or leave it empty. Remember, it’s difficult for visitors to feel that a home is one they could live in if the rooms have bare walls, floors, ceilings, and windows.
If you decide to stage the home with furniture and furnishings, you’ll have to decide exactly how you’re going to obtain them. If you intend to flip houses for a living, you can always reuse the furniture and furnishings for the next flip. Perhaps you’ll find a buyer who wants the house completely furnished as is. If so, you’ll need to negotiate an exact price for the furniture and furnishings. Somewhere in between, you might find a potential buyer who wants all the furniture in the livingroom but nothing else.
We highly recommend working with a reputable realtor throughout the buying and reselling process. If you’re anti-realtor, there are plenty of books on selling houses without one. Now that you’ve renovated and staged the house, it’s time to list it for sale. Before visiting a realtor, determine your bottom line. Figure out exactly how much you put into the house including the purchase price, property taxes, renovation costs, staging costs, and interest on the financing. The realtor will probably suggest having an appraisal done. You’ll be holding your breath until you see the final appraisal. If the appraised value is less than your bottom line, you’re probably going to lose money by selling the house. An experienced realtor will be able to tell you the maximum price you could expect to receive.
No lesson on flipping a house would be complete without including a warning that very few realtors will mention. When dealing with potential buyers for the home, be prepared to defend the fact that you’re flipping the house. Online services like Zillow reveal everything about most houses. If a buyer uses Zillow, he or she will instantly know how much you purchased the house for and how long you’ve owned it. Be prepared for a lot of blunt questions such as “You bought the house four months ago and jacked up the price $50,000. Did you do $50,000 worth of work to it?” House flipping is now extremely transparent. Buyers who use online services will know without a doubt that you’re a house flipper. Prepare your answers ahead of time, because the questions will come.
Your realtor should answer most questions from potential buyers, even if you’re present. An experienced realtor is worth his or her weight in gold because they’ve heard the same questions over and over and know the perfect response. How do you justify asking $20,000 more than every other house in the neighborhood? An astute realtor would respond, “This house was just completely renovated. The other houses in the area were built 12 years ago and probably haven’t been updated.” Unless you know the perfect answers, leave the questions to the real estate professional.