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Pricing a Home to Sell Fast in Any Market

Pricing a Home to Sell Fast in Any Market

Selling a home fast is the key to any flipping project, and it’s a skill you need to learn in any market. While you’ll usually have no trouble when supply outstrips demand, you can run into trouble in a slow market without a solid pricing strategy.


Can a Home be Priced too Low?

Pricing a home to sell fast in any market

Many real estate agents argue that you can never price a house too low, as the market will always take care of it for you. Low asking prices also come with a big advantage: more foot traffic, more interested parties and competing bids. In one case, an agent listed a home for $535,000, even though it was appraised at $560,000. The home sold in weeks for $575,000.

If you start your price too high, however, you’ll just end up lowering it and chasing the market. When you start lowering the price, people will wonder what’s wrong with the house. After it’s been sitting on the market, people will start giving lowball offers.

When you’re flipping a house, you also can’t afford to sit and wait like a homeowner can. The holding costs will quickly eat into your profit and turn the deal into a losing proposition.

Always price your home conservatively. Look at comparable properties currently on the market to determine a fair price, and always look at the nearby homes that aren’t selling. There’s a good chance those sellers are pricing them too high!

Shaving just a few thousand off your asking price is a guaranteed way to increase foot traffic and create a buzz around the property. This is a winning strategy to get your home sold as fast as possible.


Selling in a Buyer’s Market

sell a home fast in any market

Trying to sell a home in a buyer’s market can feel like an uphill battle if you’re not prepared. If prices in the area are dropping 1% per month, and you need to sell quickly, you should start by taking 3% off your asking price right away. If homes are priced around $400,000, you should be around $388,000.

The advantage of this strategy is you get ahead of the market — and your competition, who are probably dropping their price every month and giving off the scent of desperation. In markets with falling prices, you’ll also make more money the faster you sell.


Your Exit Strategies

If you had an enter strategy, make sure you have an exit strategy for every property. Consider what can go wrong, and work this into your exit strategy for pricing the home.

If the home isn’t selling quickly, options to consider include:
  • Lowering your price. Make sure you know your break even price.
  • A lease option, which can get you the price you want for the home.
  • Renting the property.

Never forget that pricing can be an ongoing discussion. Don’t think of pricing as a set-and-forget process, as many factors come into play. You’ll need to be flexible and quickly react to any changing market conditions as an aggressive plan of action will net you the best price in the end.

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Picking the Right Contractor

Picking the Right Contractor

Picking the Right Contractor

Most people put more work into choosing a car or television than they do into picking the right contractor. While some get lucky using this approach and hire a contractor who does good, timely work, many more get burned in the process, hiring someone who cuts corners or disappears from the job.

This situation is bad enough when you’re hiring someone to remodel your bathroom — what happens when you hire the wrong guy for a house flipping project on a tight budget and time line?

Choosing the right contractor means the difference between having complete confidence and getting the project finished on track and a lot of sleepless nights and money thrown out the window. Before you hire your best friend’s uncle or the guy with the cheapest bid, follow these tips to pick a winner.


Finding an Investor-Friendly Contractor

One way to find investor-friendly contractors who will give you a good deal and know the value of having reliable work is asking for references. You’ll find most investors won’t tell you who their go-to contractors are, as they don’t want you to tie them up or pay them more. Still, sometimes investors get tied up with too many projects, and they’ll help out their contractors by referring them in the meantime.

You can also search for rehabs in progress. When you see construction in progress, stop and ask to speak to the boss. Ask if the house belongs to an investor. If the job site looks clean and orderly with everyone busy, it might be worth your time.


Checking Credentials and Getting Bids

Blog Pick the Right Contractor

Find out anything you can about prospective contractors before making your choice. Make sure they’re fully licensed, and ask for references. Do the follow-up and make sure the work they’ve done in the past is up to your standards. Be sure to ask how long they’ve been in the business, and what they specialize in. You’ll find many contractors specialize in just one or two areas. You’ll also want to know if they do the work themselves with a team or if they sub out all of the work.

Once you’ve narrowed down your list to a few contractors, get bids on your project. You want to get at least three contractors to make a bid. Once you get various perspectives and prices, you’ll start to learn about the cost to fix up a home, and who is overcharging.

Don’t be tempted to go with the cheapest contractor, either. This is a common mistake, and it can be disastrous. That contractor who gave you the lowest bid may have several other projects on their plate without the ability to stay within your time line. They may also be low-balling their offer with the intention of cutting corners or bailing.


Red Flags to Watch For

Quality Contractor

Watch out for these signs of a bad or suspicious contractor:

  • Wants a substantial up-front payment or payment completed before the project is finished
  • Gives you a final price without seeing the job
  • Tries to give you a deal on materials left over from a previous project
  • They tell you they don’t have enough money to finish the project and need more (If you already paid, this usually means that money didn’t go to your job but somewhere else)
  • Tries too hard to convince you of their qualifications
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New Room Additions

New Room Additions

New Room Addition

What do you do with a property that has an ideal location and good bones — but not quite enough space? If built properly, new room additions can bring additional value to a home, and make the property easier to market to the right people.

Of course, adding a new room is basically building a mini-house, and you’ll find there is a great deal that goes into the process. This includes hiring the right contractors for the electrical, heating and cooling, and making sure the proper permits are in order.

Before you sell yourself on the idea of adding a room to your property, here are some things to keep in mind.


Will the Addition Really Make You Money?

New Room Addition value

Before contacting contractors and checking with the city about permits, you need to ask yourself, “Will an addition really make me money in this situation?” A room addition is not always the right choice, as you may risk over-improving for the area. In general, it’s not a good idea to have the largest home in the neighborhood, as the nearby homes will drag down the resale value.

Three- and four-bedroom homes with at least two bathrooms are also the most popular among homebuyers. If the home only has one or two bedrooms, adding a room is probably a smart investment to appeal to a wider range of buyers.


Preparing the Design

Design of New Room

For the home addition, you’ll need a contractor who is able to prepare rough sketches, technical diagrams and give you an accurate and fair price quote. It may also be worthwhile to consult with an architect, though, who will work with your contractor to design the addition.

While planning the new room addition, be sure to research any legal restrictions. Many cities have setback requirements, for example, which state how close a structure may be to property lines, along with height restrictions and design covenants.


Getting Permits in Order

Permit new room addition

Many homeowners do home remodels without permits, but it’s not a risk you can take as a flipper. If you begin work without a permit, the city may have the right to shut you down, effectively halting your entire rehab process while you eat the costs. In the case of an addition, the square footage will not even be included by a home appraiser if the work was done without a permit.

Unfortunately, permits can be a cause of great stress. The costs can eat into your budget, slow down completion of the project and may force you to deal with conflicting requirements from different inspectors.

The local building inspector’s office will need to see the contractor’s finalized plan before issuing you a permit. A permit will also be required for plumbing and electrical work in the new addition, plus a permit for the general construction. Because many permits are based on the cost of the project, be prepared to submit cost estimates along with drawings of the addition. This process may take up to two weeks, so it’s best done early to avoid unnecessary delays.

Additions are one of the most cost-effective ways to add value to a property — but only if they’re done right. Consider whether adding a room is really necessary for the property, and make sure you do it legally and properly to keep your project on track.

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Staging a Home

Staging a Home

Staging a home is key to selling quickly and for the most money. Unfortunately, a lot of house flippers end up leaving money on the table by trying to market an empty house. After you’ve put so much care into choosing the right cabinets, tile, paint and flooring, why throw money away by bringing potential buyers in to try to envision a real home?


People Buy Homes, Not Houses!

Staging a home

When potential buyers walk through the home, it’s hard to picture their lives in the home if it’s empty. Empty homes can also feel depressing, putting buyers into a melancholy mood instead of feeling excited about possibilities.

Buyers also need reference points like dining room tables and sofas to gauge the size of the room. This will also help them visualize how their own belongings will fit.

Don’t overlook how easy it is for potential buyers in an empty home to zero in on tiny negative details that would otherwise be unimportant. Small flaws will be magnified if there’s nothing else to look at!


Effective Home Staging

Staging a home requires furnishing, organizing and decorating the property to make it showcase ready and get it sold as fast as possible. While it’s possible to stage the home on your own, many investors choose to hire a home staging professional who rents the furnishings.

Home staging should be used to highlight the strengths of the property while camouflaging weaknesses. After all, no house is perfect — no matter how much work you’ve put into it. If a home has a large window facing a sunset or a beautiful fireplace, for example, arrange furniture to make it the focal point.

Don’t forget to stage outside areas, too. Decks, patios and garden areas are great selling points, so set up a table and a few chairs to help buyers visualize the space and imaging themselves hosting barbecue parties and relaxing with family.


Avoid Congestion in Rooms

Always consider the placement of furniture before bringing in potential buyers. Think about creating conversational arrangements to show buyers how they can use the room. With small rooms, furniture should be pushed against walls to create space in the middle. For larger rooms, pull furniture to the middle to emphasize the space.

Always make it obvious how traffic should move around the space, as fluid walking areas are always better than a maze for buyers.


Create Purpose with Accessories

Home Staging to sell

Finally, add a sense of home and purpose with accessories, like fresh flowers in the kitchen and a checkerboard on the patio. Accessories give each room purpose. A room can be transformed into a study with a few books, a globe and a desk light. Rather than walking into an empty room and trying to figure out its potential, buyers will immediately recognize the value of the space.

Above all else, remember less is more, and remember that staging is about an illusion. Set the mood, draw attention where you want it and keep in mind who you will market the home to as you stage the home for sale.