Self-Marketing Your Investment

Before you get ready to close your property, you should already have an idea on how you intend to sell the home. You could actually choose to go to a trusted Realtor or a Realtor that was referred to you and presumably someone with a sense of confidence. Although selling the property yourself is what I would recommend, and is the preferred route in flip methodology since it results in reaping the most from each flip, utilizing a Realtor is still not a bad idea. There are certainly lots of valid reasons as to why you should go with an experienced Realtor to sell your home. First, there’s a sense of confidence that someone actually knows what he’s doing. Second, there’s even an “insurance liability” angle to it, figuratively and literally, which acts as a margin of protection in the event that the sale goes bad and the buyer of your flip property exercises their legal recourse in a bad way. All Realtors carry errors and omission insurance by way of their membership to the National Association of Realtors (NAR), a 1.3 million-strong alliance of the best real estate professionals in the country. When things do go bad in a residential real estate transaction, it is usually a result of not properly disclosing a known or unknown condition of the home. But if you have signed-up and are utilizing a private Internet-based MLS, that would already have available state specific disclosure forms to their subscribers, the problem of not getting disclosures signed by the buyer is eliminated. My rule of thumb is that when in doubt: disclose, disclose, disclose! And one of the great aspects about preconstruction real estate investing is that since you’re selling a new product, you’re virtually guaranteed that you’ll never run into these types of problems.

Notwithstanding the myriad of ways to nip and tuck away at expenses during the acquisition of preconstruction opportunities-which you may find yourself needing to do in order to squeak out as much profit as you can-the single biggest contributor to fattening the bottom line will require you to actually sell the home yourself. Doing so will save 2 percent to 3 percent on the gross amount of the sale price. Since the average commission percentage on each side of the real estate transaction to the sell-side and buy-side agents is usually 2 percent to 3 percent, which aggregates out to about 4 percent to 6 percent of the gross amount of the property-those amounts are definitely negotiable. However, my experience has been that I incur an estimated savings of anywhere from $5,000 to $15,000 per property by selling the property myself. This is extremely crucial when you end up with a flip that may not sell for as much as you would like.

Think of selling the home yourself as a built in insurance policy in the event that you end up reducing the price of the property more so than you had anticipated. Saving $5,000 to $10,000, or $15,000 depending upon the size of the flip, could be substantial and may be the difference of making money or not making money-or worse yet, writing a check at escrow. Without question, these commission costs rack up quickly, so please be very conscious of them. Besides, selling the property yourself not only saves you substantial money, it familiarizes you intimately with the escrow, marketing, and due diligence process of buying and selling real estate. Clearly, this hands-on experience is invaluable.

I think after rereading this article completely, you’ll be convinced that not only is selling the property yourself cost effective, it’s the only way to go-not to mention that it’s a heck of a lot of fun.