The goal for any investor, who is flipping a property, is to get in and out of the deal as quickly as possible at the price they want.
There are many books on flipping. Rather than reading an entire book (or several books) on how to sell your property faster, I am going to list my top 10 steps you need to take to achieve this goal.
There are so many examples where investors skip one or more of these and completely blow up their deal. However, if you follow these, you will be in a much better position to sell your property faster and for the price you want.
Top Ten Steps for Selling Faster
- Make sure your rehab is 100% complete before you market the property. This means you have done everything, including the final make ready so that it is clean and green. This means clean inside and out, with the landscaping and drive-up appeal looking great as well.
- List your Property on MLS – To get maximum exposure, you want to list the property on the MLS, preferably with an agent/broker that works your area. Discount brokers are generally a bad idea, as they have the potential to be unresponsive to buyers and their agents. You may have heard the saying, “You get what you pay for.” That totally applies to discount brokers.
- Photos – Before the property goes active on MLS, be sure all of the photos look good and you approve of them. You’d be surprised at the ones we see that still have a mop and bucket, cleaning supplies, etc., in a photo from the final make ready. Or, have some area of the house that looks dirty online. Don’t be the seller with that listing.
- Discuss the proper pricing with your agent, and be sure not to overprice the property relative to the overall subject’s market. This is a common mistake that will force an early price drop so you can ultimately get showings. If you get showings right away, that’s an indication that you are properly priced. If you don’t get showings right away, that is a strong indicator that you are overpriced. The market will generally tell you what the price needs to be based on other active listings (your competition) and recently sold comparable properties.
- Once it’s active on MLS and you start getting showings, make sure your agent gives you feedback from the buying side. It’s important to know what the market is saying. It may be something you can address quickly and maintain your pricing level. If it’s something out of your control (i.e., your property is on a busy street) you may only be able to address this through a price adjustment.
- If you have to lower the price, be strategic about it, and lower it to the correct amount. Large price drops don’t look good, and too many reductions in price can give a false impression of something seriously wrong with the property. That can make your property sit even longer on the market, forcing you to be more motivated to further lower the price to get it sold.
- When you get an offer(s), make sure your agent gets an approval letter from the buyer’s lender. This is often overlooked as everyone assumes that all buyers that submit offers are qualified. However, nothing could be further from the truth. Not getting this confirmation can end up costing you time and money, if the buyer has to back out of the contract because they were never approved to buy it in the first place.
- The best offer is the one that is the most qualified financially and will close on time. Usually, but not always, your first offer is your best offer. There are some exceptions to this that I address as it’s own topic here. Once you select the best offer, get ready for the inspection process.
- You are most likely going to get an inspection report from the buyer that has a list of everything they want you to do in order for them to close. While it may be frustrating to get this request, maintain your composure and focus on the right things. If you overlooked something major that any buyer is going to discover, you will probably need to get it repaired. Things like the roof, foundation, HVAC, hot water heater, etc., are big items that you can expect to see if they have any defects. Your agent will help you negotiate these items. It is always better to concede with some agreed-upon dollar amount, credited to the buyer, so they can repair the item(s) themselves, and you can continue to move to close. This will save you time, money and headaches. You don’t want to fix a bunch of items, only to have the buyer back out, and your next buyer request totally different things. Get these worked out with this buyer as best you can.
- Appraisal – Once you are through #9, one final remaining requirement is the appraisal. Access needs to be given to the appraiser, and if it’s on a lockbox, that makes the process easier. Once this appointment is set up, I encourage you to meet that appraiser at the property and give them a copy of your original appraisal, if you have one. This gives the appraiser valuable information that they can use for their own research. It helps them understand how the value was originally determined and hopefully arrive at or above that same value, depending on the market conditions at the time. If the value has been met, chances are you will be moving toward closing very shortly.
That’s it! Follow these steps and you will be on your way to faster sales.
Mike Hanna is a real estate investor, mentor, author, and public speaker. He has been an active real estate investor since 2002 in both single family and multi-family properties, and has been in the hard money business since 2005.