As the real estate market has shifted and adapted to the pandemic, we have had a unique opportunity to discover new ways of operating our real estate businesses remotely.
Bill interviewed Therese Anderson from our 7 Figure Altitude group. She and her husband lived in Colorado and moved to Florida. They were flipping houses in a high end market and decided to make a shift to a lower price point market. They unexpectedly discovered how to work in both markets by utilizing ‘boots on the ground’ resources in Colorado. Therese is a real estate agent for Keller Williams and has four kids. She has found a way to successfully raise her family while selling properties in two markets. She runs a team in Colorado that has 31 transactions under their belts for this past year which is lower than usual due to covid and the transition to virtual flipping.
The first question you might ask is: Can you virtually flip (or flip at all) in an expensive market?
Therese confronted this question when she decided to continue flipping virtually in the Colorado market. What she discovered is that thinking you can’t flip in an expensive market is a limiting belief. It is possible, though you may think there isn’t enough of a margin or deals out there, you simply have to be more aggressive in finding the deal. With mentorship and more experience Therese and her husband were able to analyze things from a different perspective. This article is full of her tips on how to successfully virtually flip and sell in a higher end market like Colorado.
You have the property, you have completed the contractor work, you have hit your punch out list, and now you are ready to sell. What do you do?
How to Ensure the Property is Sale Ready
The first thing you want to do is make sure the contractors have completed the flipping job to satisfaction. As you are not physically there you want as many eyes on the property as possible before you take the steps to begin marketing.
Immediately after the contractors say the job is complete hire a Cleaning service to do a deep clean on the property before any other eyes are on it. There is debris from construction and also the cleaning service can keep an eye out for any small details the contractors may not have completed.
Replace your HVAC filters after construction! Put it on your punch list and make sure the cleaner checks it. Having HVAC filters not operating correctly can be a huge expense later on.
We highly recommend hiring a Stager. It gives the property a presence of how you live in this house and adds tremendous marketing traffic and often value to the property. Staging is a sensory experience. Professional stagers pay attention to things like smell and choose scents that people are attracted to that say ‘home.’ Quite simply to walk through and see a house beautifully laid out makes your property value go up. Staging draws the eyes away from the little imperfections and brings people back to the big picture. They look up and out at the vision of what it would be like living there.
Therese says her team stages almost everything. If it is a smaller house they do a lighter stage rather than a full furnishing. If you build a business and have multiple houses to stage you might consider buying your own furniture and moving it from house to house.
The average cost of a Stager is 1% of the listing price which gets you 3 months with the furniture included in that price, and if you need additional time after the 3 months, you will just pay the rental fee for the furniture. Find out what the going rate is in your area by asking local groups in the industry.
We recommend paying the holding fee for the furniture at least through the appraisal. The homes that are staged tend to get exactly what you want for appraisal or higher.
The stager sends photos and does a video walk through. You now have had two sets of eyes on your property!
We highly recommend a realtor walk through the property prior to listing and note any details out of place. There is something we call a Contractor finish vs. a Realtor finish. A realtor looks at the property the way a buyer would.
Having a great Realtor on your team is crucial to virtual flipping. Further down in this article we will detail just how much a Realtor is a part of the process!
When hiring a realtor to join your team, look for someone that is already marketing their properties that way that you want to market your property.
After the property is staged and the realtor has done a walk through, it’s time to hire a professional photographer. Your first impression with a buyer is now digital and a great visual representation is crucial to marketing your property.
How do you find the right photographer?
Ask your realtor or other realtors in the local market what photographers they like and take a look at the product. When you have found a photographer whose work you like, send them to take photos and video of the property. Many real estate specific photographers offer a video virtual tour service which is incredibly helpful when selling homes virtually.
When the photographer is finished they will send you their choice pics and then your realtor will also put eyes on it. You can either leave it to your realtor or be more significantly involved in this part of the process. If there is anything missing that you feel will sell the house, you can then ask for the photographer to go back and capture it. It’s marketing and after all your work to flip, make sure your photos and video are the best representation of the property.
Matterport is a service that walks you through the property every step of the way virtually. Not only does this help your home sell significantly faster drawing on higher traffic with the right lighting etc., the level of detail can help you catch small things you need to fix that may have been missed by your team.
Marketing Your Property Virtually
If you have a realtor on your team, your realtor puts your listing in the MLS. How you construct your listing itself is important!
Make sure your caption draws people in along with the first or second picture. Describe how that person will live in the property. Evoke images that help them imagine the life they would live on that property. This description is what will help your listing get traffic after the first two photos. You have to get people to the property and get realtors excited to sell it.
The Appraisal- Now you have to sell your property to the ‘highest buyer’ in the neighborhood. This can be an easy step to overlook by assuming the appraiser will give you the value you want, but if they don’t it can really put a wrench in your profit.
We highly recommend going the extra mile and giving your appraiser a letter/description of the area/trends that your property is in detailing how you came to the number you arrived at regarding value. It is an explanation of why you are pricing things at a certain level. Get detailed! ‘This new kitchen with granite counter tops is the only one I have seen in this neighborhood, after visiting 5 properties in a 3 mile radius. You are essentially selling the house to the appraiser. Give the appraiser comps and details that they can use to assess value on other properties in the value.
Your realtor should be pulling comps for you and if they are not, find a new realtor! You sometimes get what you pay for and if you are paying commission allow the realtor to do the work they are hired for in full.
Making the Sale: Tips and Tricks
In this stage of the process there are multiple hidden pitfalls that can sneakily drive up your costs. These tips will help you avoid these extra costs in the final hour of closing.
When you get offers and are negotiating on offers, consider the title company that closes and the type of loan that your buyers are offering.
There are different rules for different loans that can drive up closing costs for you as the seller. For example, with an FHA loan you are going to have to wait 90 days to get an appraisal. VA loans do not have that requirement so we have sold multiple properties through them. The other half were conventional and cash. The conventional buyer has more room to play, so if your appraisal comes in low, the buyer can potentially make up for it if they agree to negotiate when closing the deal.
Vet the lender by asking: How many deals are you closing on time? How approved is this buyer? Where are you on getting the buyer’s documentation? How long does your underwriting take?
Execute a smooth and timely Closing by avoiding unexpected closing costs.
No one really cares about the closing time besides you the seller, and holding and closing costs can add up quickly decreasing your estimated net profit if the closing date keeps getting pushed. As you are negotiating the contract, lay out the inspection dates, and closing dates. In the contract you can include a fee the buyer pays for every day over the closing date. You are not making money on this but it does cover your holding costs and give the buyer impetus to close the deal on time.
We recommend doing a pre-inspection before closing. We pay an inspector (this is generally a reasonable cost) to come out after the contractors leave and sometimes we include the buyer. This pre-inspection catches anything unseen and we can head straight into appraisal when the deal is approved.
To find out additional information on costs and where to find every hire we mentioned in this article as well as a solid title company, we recommend asking and looking in your local REI Facebook groups! If you have built a network now is the time to use it.
As we navigate the changes brought about by the pandemic, we are always searching for ways to adapt and learn as well as the silver linings! We hope this article with all we have learned on how to successfully virtually flip, will help you adapt and prosper in the changing market.