sell investment propertySelling Your Investment Property

This is the final step; the moment you reap the financial reward for your efforts.

A successful flip is not a flip until you attend your closing and receive your funds from the transaction.

Knowing how to sell a flip will help you not only increase your bottom line but can provide you with your funds sooner rather than later.

When to Start

There are several theories centered around the proper time to sell investment property. Most often, such considerations address the current condition of the property compared to the finished product.

For example, you just closed on a duplex that needs some serious repair and in fact from the street is really an eyesore.

Yet you realize the property’s potential and make an offer on the home. A few days later, you close. Do you place the duplex in the MLS with pictures of the property in its current shape?

When you buy a property that needs a full rehab, you may not want to provide photographs of the property’s sagging roof or falling chimney.

Instead, can you provide an architectural drawing of the property to resemble its final form? If not, don’t place a photo at all but instead enter a full description of the improvements you intend to make.

Few things about an existing property attract more buyers than a listing that says, “Brand new kitchen, new bath and a complete remodel throughout!”

So do you wait until the property is completed or perhaps wait until certain stages of the rehab have taken place? How about neither?

The best time to start selling an investment property is before you even make your offer to buy the home. As a real estate investor, one of the first considerations when evaluating a project is, “Who do I know that I can sell this property to?”

Successful real estate investors keep a database of potential buyers and have their agent constantly in the market looking for new clients.

Some investors like to specialize in certain types of property or neighborhoods. For instance, a real estate investor likes to buy condominium homes near colleges or universities. If you find a good deal on a condo in a college town, you know who to call first.

Even during the rehab, you should market the property. Get your flip in the MLS as soon as possible and have your agent present your flip to as many buyers as possible as quickly as possible. It’s never too early to begin finding buyers when selling your investment property.

Sell Investment Property Yourself

This is an age-old discussion that permeates a conversation when a property owner thinks about selling their investment property.

Should the owner sell the property by himself or enlist the services of a professional real estate agent? The initial thinking is that when an owner sells on his own, he can save a few thousand dollars in real estate agent commissions.

This process is commonly referred to as “For Sale by Owner” or “FSBO.”

Real estate agent commissions are indeed an expense that will be deducted from your gross profit on a flip but are commissions really an expense if the agent sells the home for more than you can on your own?

In order to get your home in front of as many prospects as possible the first order of business is to get your property listed in the multiple listing service, or MLS.

In this manner, real estate buyers can be found from all parts of the country and even from around the world. Can an owner effectively do the same with a FSBO?

Look at it this way: if you want to sell your investment property for the most you can get, do you want 100 people to see your advertisement or 100,000? It’s simple; you want to get your home seen by as many prospects as possible to not just achieve your asking price but to close sooner rather than later.

A professional agent will help you properly price your home based upon your time frame, market your property and help find as many buyers as possible.

And by committing all your real estate sales to one real estate agent, you’ll find your commission agreements will be reduced, which will even further increase your net profit.

evaluating real estate offersEvaluating an Offer

When you originally purchased your flip, you did everything you could to make your offer the most attractive one. You did your research, looked at recent sales in the area and let the seller know you can close within five days.

When you’re the seller, you want to get the highest price you can while at the same time being assured the person buying your property can afford to do so.

As an offer is presented, find out if the buyer is paying cash or getting financing. If the buyer is paying cash, that’s the best possible offer you can get. There’s no concern about the deal falling through because the buyer couldn’t get approved for a mortgage.

If your buyer is not paying cash but getting a home loan, make sure you review a letter from the mortgage company that has pre-approved the buyer’s mortgage application.

The pre-approval letter should spell out exactly what the bank has reviewed prior to issuing their pre-approval.

At minimum, the letter should indicate that the buyer’s credit, income and assets have been verified and all the buyer needs to do is find a property within a certain price range: yours.

If the buyer does not have a pre-approval letter or the letter does not identify what the bank has reviewed, ask that the buyer’s lender contact you directly to let you know the buyer is qualified.

If you can’t get any of that information or you can’t determine whether or not the buyer is a serious buyer, insist upon such a letter before considering an offer.
The very last stage of the flip, selling the property, should be held with as much care as any other stage.

Don’t get into a rush during negotiations simply to cash in on your profit. Begin to sell your investment property before you even close on your initial purchase.

Make sure your buyers are truly qualified to buy your investment property and have their financing in place. Once this is done, you can begin finding your next successful flip.

Oh, and congratulations!

David Slabon