Flipping Houses – When To Hold Out For More
As the saying goes, you have to know when to hold ‘em and when to fold ‘em, and that’s as true as anything else in the world of real estate investment.
The process of selling a home is arduous enough even as a homeowner; it’s doubly difficult when the return on your investment is contingent on the transaction. Flipping homes, or buying properties below market value and reselling them quickly (usually after renovating them extensively), is probably the most challenging facet of real estate investment.
Usually glamorized as a quick way to turn a profit, flipping homes is quite the opposite, often requiring months of planning and work. When it comes time to sell, keeping these things in mind will help you fetch the best price for your investment property.
If you’ve just listed the home, don’t take the first offer.
To be clear, what we’re talking about here is an offer that comes within a week of initially listing the property. First offers are likely to be a little lower or exploratory in nature, where the buyer is getting a feel for what you, the seller, will accept.
You’ll want to consider holding out for better in this case, because it’s reasonable to suppose that you might get more offers in the weeks to come. If you play your cards right, you just might find yourself in a bidding war, which is great news for you as a seller.
Obviously, this really only applies to offers that come soon after listing. If your property has been on the market for six months without any offers, you may have priced your home too high or the market has only lackluster interest in it, so in that case you’d want to consider accepting an offer.
If other homes in the neighborhood are selling fast, hold out. You can get a better price on your home by not pulling to trigger too quickly.
If other homes in the neighborhood are selling like hotcakes (which isn’t unreasonable, given the fact that we’re in a seller’s market these days), you as an investor may be a better position to hold out than most homeowners.
This is because someone selling their home while dealing with purchasing and moving to a new one may not have much time to spare and, because of that, may be more willing to take a lower price in exchange for a quick sale.
So leverage your position as an investor. This isn’t your “home,” so to speak, and you’re not trying to move out of it into a new one. You have the means and the financial incentive to wait for the best offer, so if offers are coming in quickly, hold out for the best one.
If the neighborhood is a transitioning one, or it’s close to a hot area, understand that the motivation is on the buyer’s side to purchase.
Transitioning neighborhoods are those that are being developed, usually adjacent to an already booming area. As desirable areas grow, they inevitably spread out. You can actually gauge this by looking at building permits issued in the area your property is located in – although, smart investors look at this information beforehand and factor it in to their decision to purchase there in the first place.
If the neighborhood is forecast to grow, keep in mind that prospective buyers are probably aware of that information as well. If they didn’t find out through research, they’re almost certainly aware of the neighborhood’s growth potential on an intuitive level. Increased commercial development, rising property values, and high transaction volume are all telltale signs, and they’re not lost on most buyers.
As an investor and seller, you want to be ahead of the game here. Where most buyers are beginning to see the area’s potential, you should have known about it prior to investing. This effort isn’t for nothing; use it to your advantage. Hold out for the best offer in these circumstances, because as an area grows, so does buyers’ willingness to pay top dollar for properties there.
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- Get It Right Solutions