Greenville, SC, April 28, 2021 (GLOBE NEWSWIRE) -- Article by Home Flipper and Real Estate Broker Kris Fox of Fox Homes
It's no secret that this is an unprecedented time (during my 41 years at least) in the world of real estate. All over the country, every house that comes up for sale is receiving multiple offers within 24 hours of listing. There are always several over asking price and the differences between the top few offers are often minor. So, how do we take advantage of this and maximize the value for our clients or in my particular case, for myself where I'm flipping houses and I'm also the listing agent.
Now, this is not an article on flipping houses, interior design, or staging. This is an article specifically on pricing strategy and speaking with realtors after the listing. I'm going to assume that you have done an excellent job on your flip or that you've taken care of the issues that your realtor has advised. We've cleaned our house and the photos have been taken -- by a professional photographer -- not your realtor on their phone. We need to decide how much we should list our house for.
Let's assume that when they were building your neighborhood, they were able to "copy-and-paste" each house and they're all the same. Yes, the shed that you have that your neighbor doesn't does add value, but I'll leave that to your realtor to decide how much. Your realtor will have already done a CMA (comparative market analysis) to determine a rough estimate of value. I reconfirm my numbers as I'm doing the listing and I add somewhere between 5-10%. If it were a $150,000 house, I'd probably add 10%, a $250,000 house might be 7.5%, and a $350,000+ house might be 6% or so. There's no science here. Great! That's step 1. We've listed our house on the internet on a Thursday evening or Friday (this is important and I'll explain why below) and you should be getting showings and subsequently, offers (hopefully many).
At Fox Homes maximize value by getting multiple offers and getting to the highest and best stage of our listing. We get multiple offers by increasing our opportunity to get as many people in the house as possible. This is why we want to have it listed by Thursday night. This way it will appear in as many people's "carts" (for those that have set up an auto-feed for their clients. Hopefully, we have multiple offers by Friday. We'll add language to the listing that notifies realtors that have not shown the property yet to this effect and we'll call all realtors that have submitted offers and notify them that we've received multiple offers and to please submit their client's highest and best by Monday night to be evaluated on Tuesday morning. They typically will ask for a time and I just tell them I'm not evaluating until Tuesday morning, so anytime before then. This will give us 4 days of viewings and therefore 4 days of offers.
It's Tuesday morning and your realtor by this point should create a spreadsheet. The columns should be labeled as followed: Name of Realtor, Offer Price, EMD, Repair Request Date, Closing Date, Financing Type, Any Notes specific to that Offer. This will allow for an objective apples-to-apples analysis of the offers. Obviously, the price is going to be #1 or #2 on everybody's list, but I always try to make sure my repair request expires on a Thursday or Friday that way if they do decide to walk, I can market through the weekend. Maybe you flipped a house very quickly and you haven't reached the FHA seasoning requirements of ownership of at least 90 days. Try giving those realtors a call and see if they can reach out to their client's lender and have them switch to a conventional loan. You're almost there! You've picked your top 3. Now we're going to have our realtors reach out to those 3 realtors and tell them that the differences between the top 3 are so minor that we're going to ask for a second round of highest and best. This is a great opportunity to ask for things that are important to us like higher earnest money, faster repair request, or maybe have them use the attorney that you prefer. Make sure you tell them an equal amount of time and just wait.
So, the first thing we did is we arbitrarily inflated the sales price. The second thing we did is we did a round of highest and best and the last thing we did is a second round of highest and best. There's one caveat and it's a great caveat to have -- you may not appraise. It happens occasionally. As long as we realize this when we sign our contract and we're not worried if it happens, we shouldn't be upset when it happens.
That's it!
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