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Tips on Selling a House
What You Can Learn From House #4
Looking for tips on selling a house? Especially if you are trying to figure out how to sell investment property, these tips come straight from the field.
House #4 (home flipping pictures here) is officially off my books and I am very excited about that. We got this one sold just right before Christmas to a happy couple that just went head over heels over the house.
You might recall that House #4 has been on the market for quite some time. So before I give you my tips on selling a house let me give you a quick recap of what it took to get this one sold.
I first listed this house with a discount broker - one of those brokers that only charges you a set price for listing the house on the Multiple Listing Service (MLS) and no commission. As you can expect they basically do very little for you. That was fine with me since I wanted to be able to market it myself and talk directly with any agents that showed the house to a potential buyer.
I listed the house with them for 90 days and nothing…lots of showings but no offers. Then came my second biggest mistake in getting this house sold (I’ll cover the biggest one soon). I hired an agent that I had never worked with and had no references for. The only reason I did that was because he had sold several investment properties around the area so I thought he would be a good choice. It turned out he did not pick up the phone, did not follow up with agents that visited the house and in 45 days got less traffic to the house than what I had gotten in two weeks with the discount broker.
Needless to say I terminated our contract and went with an agent I had worked with before. Of course the biggest move was not that I changed agents but that I lowered the price. That got the phone ringing again and within two weeks we had a full price offer!
This brings me to these tips on selling a house. If you want to make money in real estate when selling investment property make sure you heed the following tips on selling a house:
- Listen To The Market - This house was listed right after the 1st time home buyers tax credit ended. Although this is a once in a lifetime occurrence, the lesson is to heed the forces of the market. This was a huge force and it was really hard to predict the impact of the tax credit ending.
- The Right Price – Of all the tips on selling a house this is probably the single most important one. I think what hurt me the most was listing the house a bit too high. I first listed this house at $130,000. Another very similar, remodeled, investor property not too far away was listed at $125,000…theirs sold in 45 days and mine did not. Hmmmm….
- The Right Agent – I can’t say that the agent I fired prevented me from selling the house but he certainly did not help. Look for an agent that is actively going to work to sell your house, not just list it on the MLS and then wait for a buyer to find it.
The Right Area – I have now twice been affected by this. House Flip #2 was a similar situation. I should start getting a clue and be more cautious with the areas I pick. Trouble is, that is easier said than done. Not all areas immediately scream at you “bad area…stay away…”
If you can avoid going into an area with a lot of foreclosures, high inventory and/or declining prices then do so. If the area changes on you while you hold the property then make sure you adapt your marketing strategy to that fact by adjusting your price, highlighting the quality of your rehab, throwing in incentives (bonuses, closing costs, appliances, etc.) that your competition cannot offer.
What the buyers of this house liked was the absolute move-in ready condition of the house. They did look at other homes in the area but mine was the only one were they did not have to lift a finger.
- The Right Neighbors – You don’t want to be sitting right next to an ugly looking house. But sometimes more subtle things can be a distraction. For this house, I had a young couple with a baby that absolutely loved the house but they were afraid of the neighbor’s dog (a poodle!) because he was loose, walking around the street. Had they told me that I would have taken care of the dog but the point is you never know what certain people would object to, that you and I would not.
- The Right Repairs – I did not have any problems with this. In 30+ showings I did not get a single negative comment about the house itself. Which probably means I nailed the rehab right. So choose your repairs wisely and put the money where you will get the most bang for your buck. Look at all my house flipping projects so far and you will see the same types of repairs and upgrades from house to house…hey, it works.
- A Realistic After Repair Value (ARV) – this is the single most important skill you need to master if you want to make money flipping real estate. How much can that property sell for when you are done with it. Ignore this skill at your own demise…
It takes practice, looking at a lot of houses and constantly tracking sales in your area. The ARV is the number that triggers every other decision when flipping a house.
- Bonuses To Agents Don’t Work – I know other investors that will not agree with me but in this house I offered everything from 4.5% to $1,500 cash to the buyers agent as a bonus…and nothing. When I finally got an offer on the house I was just offering the standard 3% commission. In the future I would rather put any bonus money instead towards price reduction and/or closing costs for the buyer.
Tips on selling a house; I think it was Anthony Robbins who said that in life you don’t get failures, you get results. Whether they are the results that you wanted is up to you to determine. I am a better investor because of House #4, I don’t want to repeat it but I am glad I went through it.
Now, I am sure you are wondering…did I make any money? The answer to that is coming up in the next article…
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