Flip Tip Summary
Many real estate investors put all focus on the buy side of the transaction, and of course, buying right is critical. However, many investors lose significant amounts of their profit by handing the sale side off to someone else, where they lose all control and make costly decisions. Jordan Fisher joins us on FlipNerd to tell us why it’s critical that you focus more on the sale side of your transactions.
Flip Tip Transcript:
Mike: Hey, it’s Mike Hambright from FlipNerd.com, and we have a quick Expert Tip to share with you from Jordan Fisher, who’s going to talk about the importance of focusing on the sale side of your transaction. A lot of us focus on the buy-side, and when it’s time to sell it, we just hand it off to somebody else, but Jordan’s going to tell us why that’s all wrong.
This Expert Tip is sponsored by RealtyMogul.com, B2R Finance, and VirtualStaffNow.com
Jordan: Yeah, in order to keep… really you want leverage in your transaction. When you have leverage, you’re reducing the time it takes to sell. You’re selling it the way you want. I would say you want to be on the top of the seesaw, all the time from when you start rehabbing a house, until you sell it. I think a lot of people, I don’t think they take that into consideration.
One of the things that they should do, number one is to deliver a quality product. Make sure that when you rehab a house you do it right. You don’t leave things off because you’re running out of money. You don’t leave things off because you just don’t want to do them, or you think I’ll wait for a buyer to ask for them. You do the house, deliver a quality product that you know will sell well and sell quickly.
Number two, when you sell a house, just make sure that you don’t, that you underestimate, you underestimate what you think it’s going to sell for. That way you’ll be like over excited when it sells for more than you estimated, rather than the other way around, where you’ll just be stressed out. So make sure you list a property really low. I always say list it low, because, to be honest, if you’re selling it to a retail buyer, a retail buyer they typically will not buy a house until they step foot in the house. If you take that as a big picture, just forget everything else you know about real estate.
They will not buy until they step a foot inside the house. You’ve got to get buyers to your house as soon as humanly possible, and if you have a quality product, they’re going to love the house, especially if it’s at a low price. So put a low price out, that’s like a big sign that says… it’s like having a big sign when you have a low price. Have everyone come to the product, the house now, look at the house, love the house, make offers, and then you have something to work with to get them to bid up. That’s number two, really important.
Keep leverage, don’t forget that when you sell a property too, how you sell it again, is just so important that you don’t leave money on the table, and you’re able to sell it quickly. Being able to keep that leverage. You’ve got to make sure that buyers are, number one, they’re excited about the house, and number two, you’re always at the top of the seesaw. I think a lot of people what happens is, and investors think, “Okay someone made an offer for $150,000 down here. I want $170,000, so I’m going to counter $170,000.” And what happens if the buyer comes up and says, “Okay $170,000.” The investor shakes hands, and says, “Hey I got what I wanted. I got a buyer, fantastic.” Your seesaw, do you see what happened? It came down like this, because you both agreed and now you’re on a level playing field.
Now the buyer has a bat to beat you over the head with during inspections and everything else, because they got the house they wanted and it’s fair. You’ve got to keep it up here where you have leverage, where you control the transaction all the way through the escrow period, until the title, until it’s confirmed, recording. The way to do that really is just thinking about every decision I make in selling this house, in every decision I make, did I put leverage in play.
Did I create it in my favor, leverage, where I have more control and more power and more knowledge about the transaction than the other party? It doesn’t mean it isn’t fair, it just means you have an upper hand. And keep that upper hand that stronghold, so you don’t get beat up in the transaction, have a buyer waste your time or cost you money.
So just think about that next time you’re selling a house. Yes, the buy-side is important, but there is so much money, and so many errors made on the sell-side, people just don’t focus on. They just turn it over to the realtor, and think realtors just do what they do. No, as an investor, take control of that process, work with your realtor, and make sure they understand how to sell houses the right way, quickly, maintaining leverage all the way through, and you’ll make a lot more money.
Mike: We’d like to thank Colony American Finance, National Real Estate Insurance Group, and Mid Atlantic IRA.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.