I have 20 house flips going right now. I own a brokerage, and I have sold thousands of homes as an agent/broker. I have a lot of experience selling houses and have learned over the years how to sell houses to maximize profit. I post all my flips on YouTube, and many people tell me my houses should have more repairs done, more landscaping done, different materials, etc. In a perfect world, it would be great if I could make every house perfect, but that is not possible. It takes time, money, and aggravation to make a house perfect. In reality, most people are happy with a house that is mostly perfect with some minor flaws. If you are flipping houses or even selling your personal house, the major systems should be in good shape; the house should look nice and smell nice; but it does not have to be perfect.
How much work does it take to make a house flip perfect?
I have worked on my flips in the past, but at this point in my career, I have contractors, subcontractors, and employees make the repairs. My time is more valuable working on the business than it is working in the business. I know how much work it is to repair a house. One of my biggest mistakes in my career was trying to repair an entire house myself to save money. Every contractor loves to do the demo work on a house. They also like to install the major pieces like cabinets, doors, windows, etc. Repairing and replacing those items is fun because you can see the work that you have done and the huge changes you created. Finishing work is when a project slows down. Most contractors do not like to work on the fine details like making the drywall look right or removing plant hooks before they paint (one of Nikki’s biggest pet peeves). We have to spend a lot of time blue taping the work that is done to make sure it is acceptable.
While we spend a lot of time blue-taping and working on the final touches of a flip, we cannot make everything perfect. Time is your biggest enemy on house flips. The longer it takes you to flip a house, the less money you will make due to financing costs and carrying costs. The longer you have a flip, the more exposed you are to the market as well. If the market is going up, great, but if it is going down, you can get hurt by holding a flip too long. Many people ask me why we do not stage houses, make the yards look perfect, add crown molding, or fix everything. It costs money to make all those repairs; it takes time to make all those repairs; and in most cases, making all of those repairs will not cause the house to sell for more money.
For more information on financing, finding, repairing, and selling house flips check out: Fix and Flip Your Way to Financial Freedom Finding, Financing, Repairing and Selling Investment Properties.
How will over-improving a house flip cut into your profits
People love to comment on YouTube about how if I would have done this or that I would have been able to get more for the house. Sometimes their suggestions involve moving kitchens or drastic structural changes. I love the comments I get on YouTube, but you have to be careful with the repairs you make.
One problem that we run into all the time is a house not appraising for the contract price. When a buyer gets a loan the bank will require an appraisal to be done to verify the value. If that appraisal comes in low the bank will only loan on the appraised value, not the contract price. In most cases, this causes the seller to have to sell the house for less than what the buyers are willing to pay. There is a much better chance of having low appraisals come in when you over-improve a house. You do not want to have the nicest, most expensive house in a neighborhood. It is harder to sell the most expensive house in the neighborhood, and it’s much more likely the appraisal will come in low.
Will the house still sell if it is not perfect?
Many people worry that if they do not stage a house or make everything perfect, it will not sell. I am also told that the Home Depot materials we use are cheap and we should use more expensive materials. However, think about what builders do. Most new house builders do not make their houses perfect either, and they are brand new. Many house builders will not install sprinkler systems, fences, landscaping, appliances, air conditioning, or other extras without extra fees. The builders know their houses will sell without everything included because they look nice, everything is new, and they know buyers are willing to do some work on their own. The house builders are also not using high-end materials because they will not make any money if they do.
I would love to be able to make every house look like an HGTV house, but that is not possible when I am doing so many projects. I also have to keep my costs down, and time it takes to repair a house in order to make money. I make sure the houses are safe and the major repairs are done, but we do not make everything perfect. It would take too much time, cause more appraisal issues, and cause more aggravation. If you want to see some of our flips, check out the house flip playlist we have on YouTube.