Challenge in fix and flip, not getting right price at sale.

Challenge in fix and flip, not getting right price at sale.

One of the biggest challenges Fixer and Flippers will have or maybe having right now is getting the right expected sales price for the home, they just fixed. Spending a lot of money with the upgrades and so. Now, how can you fix that? Or how can you get the right value? Here are some solutions. Welcome to Wealthy Wednesday. 

Because of the shifting market, as you know, many buyers are not qualifying anymore. The interest rate went up and the qualification  amount compare to two months back is different now. Also, some of the lenders are very strict about the appraised value. They need to have enough comps to justify the value by the appraiser. So the challenge the Fixer-Flippers are having is getting the right value at the sale. Even though there are one or two comps to justify the value, but may not get the value you want. Sometimes you may make the property very nice, very beautiful. The buyer loves it. But may not be appraised. So what can I do? 

Number one thing, when you acquire the property, either from a wholesaler or wherever from, don't try to over-compete and give them a high price because you got to be conservative at the purchase right now. That's number one. 

Then number two is when you're doing the repairs, make sure that you have a calculation or calculative expense on that property repair. Because everything in the last 3, 4, 5 months, all the stuff, the repair stuff, the supplies actually went up a lot. You got to be careful because everything went up 10-20-30% compared to last year or two years back. So you've got to be very careful  when you're spending the money. 

And the third thing, if you have one buyer,  have a contract, and this is very crucial, if that particular appraiser does not appraise the property, cancel the contract, get another buyer. Because we saw multiple times the second appraiser giving the right price. The first one is trying to be so conservated even though we talk to them. Look, there are the other properties here. They support the comps with the square footage and the condition, but they don't want to listen. So go with another appraiser because you spend so much time, so much money on this property. Make it from property someone couldn't live in and then you made it beautiful with this modern style. The buyers love it. I understand that the buyer has no control over that. But hey, you got to, this is an investment. You got to get your money back and you got to make a profit actually on that. So get another contract and get the property appraised. Don't be desperate after you finish the repair, you got to sell it now, and have enough time. Don't take a lot of time for the repair. Repair it, and put it back on the market as soon as you can with the timeline. so you have enough time in case one appraiser does not give you the value, move on to the next contract, the next appraisal. 

So hopefully this information is going to help you make enough profit for your next fix and flip. Give me a call if you have any questions. Shawn Bhakta from Remax Presidential, South Florida Home Finder Team. 15 years in real estate investment, 23 years in real estate itself in the sales and with my experience, I'll be glad to help.

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