Flipping Houses For Dummies. Ralph R. Roberts
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on evaluating specific properties for purchase.)
Ensuring that your offer has appropriate conditions in place to protect you. For example, you may want to make your offer contingent on the sale of another property you own, the property’s passing inspection, and the title company’s assurance that the title work is in order. (See Chapter 12 for details on offers and negotiations for buying a home.)
Negotiating price, financing, terms, date of possession, and other sticky areas of a purchase agreement.
Expediting the closings (whenever you buy or sell a property) to ensure that nothing goes wrong at the last minute — and offering solutions when everything goes wrong at the last minute.
Helping you estimate the cost of repairs and renovations or putting you in touch with someone who can.
Referring you to reputable contractors, subcontractors, and other professionals (see “Calling In Your Rehab Team,” later in this chapter).
Broadcasting your rehabbed home to every real estate agent in the neighborhood via the Multiple Listing Service (MLS) — a listing of homes for sale that goes out to all the real estate agents in your area — and helping you sell it in half the time (on average) it would take you to sell it yourself. (See Chapter 21 for more about marketing your rehabbed home.)
Evaluating offers on the rehabbed home in a way that doesn’t compromise your position in the market. Some offers, for example, can tie up your home and leave you little compensation if the buyer backs out. (See Chapter 22 for info on negotiating and closing the sale of your rehabbed home.)
Advising you on how much rent you can charge for a property if you want to hold on to it for a while and you need some cash flow.
REAL ESTATE AGENT OR REALTOR: WHAT’S THE DIFFERENCE?
A real estate agent is anyone who has a state license to negotiate the sale or purchase of a property and works for a real estate broker or brokerage company. A Realtor is a real estate agent who’s also a member of the National Association of Realtors (NAR). The United States has more than 2 million real estate agents, but only 1.5 million are Realtors.
What’s the difference? Because the qualifications for obtaining a real estate license vary from state to state, the quality of real estate agents varies much more than the quality of Realtors. NAR requires its members to complete additional training and testing to improve their knowledge and abilities and encourages members to follow a strict code of ethics. The association also provides its members with additional resources and tools to assist in finding and marketing properties effectively.
Of course, association membership doesn’t mean that a particular Realtor is more qualified than a given real estate agent, but the odds are pretty good that you’ll receive superior advice and service from a Realtor. To find a bona fide Realtor, look for the Realtor logo on business cards and stationery. Almost all Realtors make a point of proudly displaying this logo. You also can search for a Realtor in your area at www.realtor.com.
Picking an agent with the right stuff
Any licensed real estate agent can help you find, purchase, and sell a house, but you want someone whose experience and training are rooted in the business of flipping properties. Look for these qualities:
Specialty in your target area: The agent should know the market in which you want to invest and be well versed on property values, market conditions, and neighborhood news that may affect future property values.
Experience in other methods of finding homes to purchase: Shop for a real estate agent who specializes in your area of interest, such as these types of homes: For Sale By Owner (FSBO, pronounced “fizz-bo”), foreclosure, Housing and Urban Development (HUD), Veterans Affairs (VA), probate, or bankruptcy. With this approach, you become the fox in the henhouse with an inside connection. Consider choosing agents with different specialties. All agents are familiar with traditional sales marketed through the MLS, but some branch out into other areas, such as FSBO properties, sheriff’s sales, probate, bankruptcy, or real estate owned (REO) properties — repos owned by banks. When you have multiple agents who specialize in different areas, you broaden your selection of inventory. If an agent gets bank listings, buy from that agent because they receive both sides of the commission. When you flip the house, list it with the same agent. With the agent getting the listing and the selling commission (in my industry, it’s called a double dip), the agent will be more motivated to help sell the home.
Proactive approach: The agent shouldn’t wait for you to call but should contact you with any leads for properties in your target area. A tech-savvy agent can enter your contact information into an automated system that notifies you whenever a property meeting your criteria becomes available.
Eagerness to show houses: The agent should be willing to show you many houses before arriving at the right one.
Availability on short notice: If you see a For Sale sign in someone’s yard and want to see the house, you should be able to quickly contact your agent to set an appointment for viewing the house at a convenient time for you. The agent should have a cellphone number, a home number, and an email address; check for messages regularly; and respond promptly to text and voicemail messages. If your agent is traveling out of town, they should notify you of the dates and line up someone to field your calls.
Comfort with presenting low-ball offers: An agent who cringes at offering a price well below market value, is not the agent for you. The agent should be willing and able to pitch one or more lowball offers with a poker face.
Top-seller status: An ideal candidate is skilled at not only finding good deals but also marketing and selling properties for top dollar and in a reasonable amount of time. As you search the classifieds and notice For Sale signs and brochures in the neighborhood, note which companies and agents do a better job of marketing their properties.
Tech savvy: Real estate deals move at warp speed, and you want an agent who takes advantage of all available tech tools to find, buy, and sell properties. For example, your agent should have access to more powerful property-search tools than you can access on the web and set up automatic emails or texts to you when properties that match your search criteria become available. If an agent seems uncomfortable with technology, choose someone else.
Personal experience flipping properties: Personal experience isn’t a necessity, but it’s a big plus, because the person knows what flippers require to turn a profit and typically has a strong network of affordable contractors to perform repairs and renovations. Preferably, the person is no longer in the business of flipping properties and will alert you to all the best deals instead. Don’t use experience in flipping houses as your sole criteria for choosing one agent over another. You want a quality agent — experience in flipping is a bonus.
The best way to find an agent is by a referral from another homeowner (buyer or seller) — preferably, a friend, relative, or neighbor. When you have a list of 10 to 15 names, start calling around and interviewing your candidates to compare their experience, education, and certification, as described in the preceding list.