At last, we can discuss the greatest part of real estate investing…selling the flip.
No doubt, one of the most exciting parts of house flipping is selling. It’s the culmination of months of work and many house flipping steps. Thee was a lot of work put into this. You got money from other people using OPM. You bought the house and did the rehab and the home looks ready for a buyer to move in.
The ARV number when you first started the project is now the benchmark you'll use to sell with your real estate broker. It’s an exciting time. You’re looking forward to cashing that big check, and cash in on all that hard work you’ve put in over the past three to six months. Enjoy this time! Enjoy it before you go onto the next house flip.
I’ve talked about ARV or after repair value multiple times. ARV is a the sale price you think you can get when you first did your house flipping analysis. ARV is an especially important number for you to know as it is the basis for all your work and costs associated with the house flip.
If you stop and think, the price you sell for is the most important number to crunch when you flip. That number sets the tone for the entire project. Even if you buy a house super cheap, it does not mean it will translate into dollars and profit for you in the end.
So the ARV from your initial assessment is a huge number that sets the tone for the whole house flipping project. The ARV from 6 months ago is important for sure, but what really matters is the price you can sell it for in today's market. This is the number of what you can sell the house for today.
For example, your broker tells you can sell your house flip for $200,000. She got this price through a competitive market analysis using compilations, or otherwise referred to as “comps”. Now, six months after you started, the house looks very nice and you feel that the ARV you projected 6 months ago, you can get it…or maybe more. Your broker's job is to find you a buyer who will see the value and pay the price.
So because the broker tells you the price should be $200,000, do you go out and list the house for $200,000? Definitely not.
Especially when you’re first learning how to flip a house, and even if you’ve flipped dozens of houses, always get the advice of your team. Selling is the time to get your real estate broker involved, ask her opinion and lean on her advice. No one knows the market better than she does.
Ideally, you want to use one real estate agent to sell and to buy… but its not required. And if you’ve agreed to list the house with the same broker you found the house through, now is the time to show your allegiance to them and keep your word.
Keeping your word will certainly help your house flipping reputation. It proves to the real estate broker that you are a credible and honest person, which will come back to you in the end. If you did promise them the listing when you are looking to sell, then make sure you stay honest and keep your word.
Keep your promises and be honest. If you start crossing people, they will remember and will not want to do business with you.
When your real estate agent does the competitive analysis, listen to what it tells you. Like most house flippers, you’ve been keeping an eye on the market so you probably have a good idea as to what the new price might be…but the truth is in the numbers.
When you do get all the data back, there are two scenarios: higher or lower than your original ARV. If it’s the latter, that’s when the 70% Rule will save you.
Make sure safeguards are in place when you do your initial analysis to make sure you ensure against loss. You do this by buying at 70% or more below what your ARV will be and the 70% includes your repair costs as well. If you do this properly, you will make money flipping houses.Using these tips will help you to sell and profit when flipping houses.