Top 10 Ways to Sell Your Rehab

Selling a house in today’s market is not for the faint of heart.  But if you are one of those investors who loves to buy shabby houses with lots of problems and rehab them into beautiful homes and sell to retail buyers, these quick pointers ought to help.

1. Price to  sell
2. Market and advertise the heck out of it
3. Hire a super-duper agent
4. Consider curb appeal
5. Be frugal, don’t overimprove
6. Instead avoid deferred maintenance
7. Don’t forget the driveway
8. Keep with neighborhood style and current style
9. Have open houses 
10. Staging is key

1.  Cash is king

Setting the right price is key to selling your house quickly and maximizing your profit.  Price is more  important than ever in today’s market, which is characterized by inventory that just keeps stockpiling. But each house has that magic selling point at which it becomes more attractive than the competition.

The trick is to price it well from the beginning instead of starting high and dropping the price. Most people selling property, even in today’s market, have an unrealistic expectation of the selling price.  Research has found that houses whose prices had been changed sell for less than homes whose prices had never been revised. The longer a house sits on the market, the more it becomes stigmatized in the minds of buyers–and the harder it is to sell.

So you must do your research.  Study comps (check out online resources like zillow.com and trulia.com), ask a few realtors whom you trust and who are real experts on the local market. Figure out what your competition is charging.

2. Become a marketer

Marketing and advertising are super important right now. You must capture the buyers’ attention. Place lots of ads in the paper and on the web, as well as post your property on sites like realtor.com, zillow.com, etc.  Whatever everyone else is doing, do more of it.  Put signs in the yard and around the community, talk to everyone you know, leave flyers around the places that your target demographic may frequent: bars, cafes, restaurants, grocery stores, gyms.  Figure out the profile of the buyer.  Is your house in a “B neighborhood”?  Then your target market may be someone moving up from a “C neighborhood”, because finally the price is right.  Leave some flyers around some of those neighborhoods. Are you targeting renters?  Leave some business cards on the premises (but don’t break any laws or upset the landlords).   Join local investment clubs and send notices through them.  And don’t forget about Facebook and other online venues where your target demographic may hang out.

3. Hire a super-duper agent

 Yes, you may need to hire a realtor with a proven track record for success.  In a market where houses are selling like hotcakes, you may get away with selling it yourself. But today, you must pull out all the stops.  Make sure that the realtor can get the job done, ask your investor friends for referrals.  You want to partner up with someone who understands real estate investors and what your objectives are vs. a homeowner.  And pay them.  Pay them more than your competition would.  Guess whose property they will show first?

4. Don’t curb your enthusiasm

To be competitive, you must also make sure your property is easy on the eyes.  Be sure your home isn’t an eyesore on the outside. At the very least, buyers visiting your home will expect a decent paint job. If the body of your house is in good shape, you may just need to touch up the trim. In addition to being attractive, a quality paint job (two topcoats) also protects against destructive effects of moisture, mildew, and the effects of the sun.

Clean up your yard as well; it’s one of the first thing potential buyers see before entering your home. Depending on the condition of the yard, you may also opt for some landscaping.  But don’t go nuts; the NAR recommends that you spend no more than 1 or 2 percent of your home’s value on sprucing up landscaping before you sell.  And if the season is right for blooms, place flowerpots around the entry and in the patio.

5. Be frugal, don’t overimprove

As you rehab the property, make it look updated, but don’t sink all of your budget into a state-of-the art kitchen and bathroom. I recently read (the source escapes me now), much to my surprise, that kitchens and bathrooms remodels, long considered the most profitable improvements to undertake, may return only 50 percent to 75 percent at sale–and only if you sell a year after the project is completed.

Making too many changes is a game of diminishing returns. Think twice before adding expensive upgrades, and ask yourself if it’s a ”must-have” or a  ”nice-to-have.”  Sticking to a frugal rehab budget will enable you to price competitively, pay your realtor well, and make a nice profit as well.  So avoid expensive appliances and state-of-the-art systems. Even swimming pools can decrease resale value, as they cost a lot to insure and maintain, and many buyers don’t want the hassle.

6. Deal with deferred maintenance 

Rather, spend your rehab budget on items that will protect the home from deterioration and damage, such as roof replacement, plumbing and electrical upgrades. These items will help preserve the property’s value, and you will be able to score bonus points with the buyer by showing them proof of recently completed work. Brand new equipment and warranties that are in place on move-in day will make the buyer feel secure about this significant of a purchase

7.  It’s not your asphalt’s fault

If the driveway hasn’t been resurfaced in a while and doesn’t have major cracks, go ahead and reseal it.  Just pick up some asphalt resealer and a spreader at the nearest hardware store. It’s a quick and cheap way to make it appear more attractive.

8. Don’t “One-Up” the Joneses  

Make sure your house fits in with the rest of the neighborhood.  You’ll get the biggest bang for your buck by keeping up with the Joneses, not by going them one better.  So don’t add a third story on the house if all the other houses only have two.  On the flip-side, if most houses have three baths and yours has only one and a half, adding a new bathroom will boost the value of your home. The same goes for bedrooms.

Also, remember to update your house’s overall style, if it looks like it’s stuck in the 70s or the 80s.  But avoid making it too trendy to where the buyer will anticipate changing everything the very next year.   Stick with the basics; simple white or beige walls provide potential homeowners with a clean slate on which they can envision their own personal touches.

9.  Open your house to an open house

Hold open houses.  A picture is worth a thousand words, but a house that the buyer can touch and feel is worth a thousand pictures. Make sure that your open houses are well-attended, even if you have to invite your friends and fellow real estate investors to make it seem fuller.  If a homebuyer sees many other potential buyers in the room (i.e. their competition), she will be more likely to pounce on this great property.

10.  All the world is a stage.

Let’s face it, home buying is an emotional experience.  Some of your buyers may be buying their first home.  Make them feel at home, appeal to their senses and emotions. Transport them to a happy time in the near future when they have already purchased the house and are moving in.  When you hold open houses, stage the house: make it look inviting and ready for move-in. Furnish it to make it look like a home, and not just a house, but avoid cluttering up the property.  Clutter can make a room seem smaller than it is.  You can rent furniture for the duration of your open house.  There are even special companies that you may hire that specialize in staging. 

 

A bright, tidy home will sell a lot faster than a dingy one.  So open up the curtains, show off the fresh paint job, turn on the lights.  Hang guest towels in the bathroom, set the dinner table with the best china, and place fresh flowers in an attractive vase. Appeal to the potential buyer’s sense of smell as well. Clean carpets and drapes. Light scented candles.  To make it seem more homey and to make your buyers salivate (literally), bake something right before the open house.  You will be able to put out the muffins / cakes / whatever else you make to treat your visitors, as well as fill the house with the smell of freshly baked goods.  Yum!

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