How to Avoid Vampires (Time Sucking Wanna Be Buyers)

Trying to sell your flip house?

If you are selling a house without a Realtor, we are certainly hoping your phone rings off the hook….  that your ads, flyers, social media efforts and word-of-mouth marketing all pay off.

We hope you get LOTS of phone calls…

But then we are faced with the biggest potential Time Suck of the entire process.Unqualified Buyers.

The sad truth is the majority of people calling without a realtor are going to be unqualified.  They may want your house…. but they can’t buy it.

They just don’t have the cash or credit.

That WON’T stop them from calling.  It WON’T stop them from wasting your time.  It WON’T stop them from asking to see the house… or making an offer… or writing a contract.

See…. unqualified buyers want to buy a house.  They just can’t.  But that isn’t going to stop them from shopping.

If you don’t have a process for screening unqualified buyers, you are going to waste an inordinate amount of time driving to your house, turning on the lights, giving a great sales pitch… without getting paid.

So how do you get rid of Unqualified Buyers?

1.  Don’t discriminate.

Even without Fair Housing laws, you don’t ever want to “judge a book by its cover”.  Never pre-judge a potential buyer.  You want to sell your house to the first interested buyer who can actually make a closing happen, right?

Race, national origin, religion, sexual orientation… none of these are reliable indicators of whether someone can successfully close on your flip house.  So why would you eliminate a possible buyer (not to mention it’s illegal).

Every experienced investor eventually ends up selling a house…. usually for all cash… to someone who didn’t look like they could rub nickels together.  But that ole’ redneck in overalls? Might just be the guy who buys your house.  So never pre-judge.  And don’t break the law.

2. Discriminate.

“Uh… but didn’t you just say…?”

I said don’t pre-judge.  Don’t illegally discriminate.  But by all means, eliminate people who can’t or won’t buy from you.  You do this by pre-qualifying interested buyers.

Look, buying a house isn’t a mystery.  A buyer either has good credit… or they don’t.  They either meet a lender’s income requirements…. or they don’t.  They have the cash…. or they don’t.

Don’t waste time with people who don’t meet lending criteria- unless they have cash to buy the house.  Ever.

INSIST on buyers who have already gone through the loan approval process.

3.  Pre-Qualified vs. Approved

We work a lot with Realtors.  They will often say their buyer is “pre-qualified”.

I don’t know what that means.

Someone is either approved for a loan or they are not.

If someone has talked to their bank, told a loan officer how much they make, and asked the loan officer how much house payment they can afford… that’s NOT approval.  That’s a loan officer telling someone how much house they can afford IF the buyer is accurate about their finances (newsflash: they ain’t very accurate).

Loan approval requires a few simple things:

  • Tax Returns
  • Bank Statements
  • Pay Stubs
  • Tr-Bureau Credit Report

You will find that at least 70% of the people who call you to see your house simply will not qualify for a loan… and they don’t have enough to pay cash. One or two late car payments, and your “buyer” is someone asking to get their deposit back.

Why would you waste time with these people?  Why would you show the house, or take it off the market, or tie it up under contract for 20 days?

INSIST on loan approval.  If a buyer can’t tell you the loan officer that approved them already, send them to your own loan officer.

You do have a loan officer or mortgage broker to send leads to… don’t you???

NEVER show a house to someone who has not gone through this approval process.  Otherwise you are simply wasting your time.

4.  “But I don’t know if I even want your house yet”

Get used to hearing that.

When you tell a prospect you won’t even show them the house until they meet with a loan officer or mortgage lender… expect a little guff.

Really, you should expect a fair number to get mad at you.

After all, you just told them you don’t want to waste your time with them.

That’s a little insulting.

Imagine if you went shopping for a car… and the salesman required you to go meet with the finance manager before he would pop the hood or even get the keys.

Yup.  That would be insulting.

But the difference is that lots of car dealers have loan programs for people who wouldn’t be able to get a bank loan.  In fact, they usually make more profit on those customers.

That USED to be the case with houses.  But not any more.  Buyers either qualify for one of the few remaining financing options… or they don’t.

But if you show your house to people just because they called… without first verifying they have the financial capability to close on a contract?  That’s just wasting time.

So get used to it… or get used to wasting your time.

What other tips do YOU have for screening buyers? Please leave a comment or share this post!



How To Sell a Flip on Your Own

So we bought a house, rehabbed it and are finally ready to flip it to a buyer.

Time for that important question… Sell it ourselves or with a Realtor?

We’ve previously discussed why to use a Realtor and how to pick a good one.

Now let’s look at selling the house WITHOUT a realtor.  If you are saving all that money on commissions, you better roll up your sleeves…. the real work is about to start.  While you can hire contractors to rehab, you are going to sell the house all on your own if you don’t have a real estate agent on your team.

Let everybody know you have a house to flip

Tell everybody.  Tell your friends, family, co-workers, people at church, folks you run into at the grocery store.  Other investors.  Realtors.  The tellers at your bank.  Tell everybody you have a great house at a great price.

You never know what connection might result in a sale. Use social media, email, phone calls.  Tell everybody.  When you are on your fifth house, you can slow down and quit bugging everyone.  Until then…. tell everybody.

Make a great flyer

Paper and ink are cheap.  Take the best photos you can, and design a full color single page flyer.  Give a complete description of the features of the house… but also give the benefits of the house- the emotional description, not just the facts.

“Large back yard” is a feature, while “huge backyard perfect for entertaining” is a benefit.  “New kitchen cabinets” is a feature….”brand new cook’s kitchen” is a benefit.  People buy based on emotion, not facts.  So appeal to your buyer with your wording.

Make sure your flyer uses words and phrases that sell.  Then give it to everybody.  Put a clear plastic box at the home. Mail them to friends and family.  Give them to everybody.

Online ads and Classified ads

Buy a cheap ad on Craig’s list.  See if your local paper offers online classifieds cheaper than the print version.  Check out your local “thrifty nickel” convenience store give-aways.  To really move a house, ask your local newspaper about a single color on neon paper flyer, stuck in the Sunday coupon section (sell the back side to a contractor).

Use words that sell

When talking about the house, creating the flyer, or drafting an ad, use the right words and phrases.  Beautiful, over-sized, impeccable, immaculate, mint, gorgeous, “walk in and fall in love”, “new landscaping”, “turn-key”, “move in”… etc.  These descriptions result in faster contracts at higher prices…. guaranteed.

What to avoid?  “Must sell” or “Motivated seller” are kiss-of-death phrases- they will slow you down and result in low ball offers.  Think about it… when you see these in an ad, don’t you expect a great deal?

Buy a big sign and/or banner

A standard yard sign is great, but why not spring for a 4’x4′ sign– it grabs a lot more attention, and you can put more information on the sign.

Also consider a 5’x3′ vinyl banner for a fence or the front of the house.  Especially in election season, when people start to tune out yard signs.

Price your house right

If your price is just 5% too high, you will get half as many calls.  Do your market research, and price the house right the first time.  It is tempting for new investors to initially price high so they “don’t leave money on the table”.

But time is money.  A fast nickel is better than a slow dime.  Repricing your house means new ads, new flyers, and new signs.  Get it right the first time.

Rehab your house right

If your house isn’t selling, and your price is right, then look at the quality of your rehab.  What isn’t done right?  What is scaring your potential buyers? Are they worried about the quality of that tile work… or do they think the house needs a new roof… or is the painting a little shoddy?

If your potential buyers aren’t offering, look to the quality of your work.  Only perfect houses get top dollar.

Ask for Feedback

Your best source of feedback is the people who see your house and don’t make an offer.  But you have to ask the right question.  Ask “what scared you”.  Then listen carefully.

They may hem and haw, but if you ask and then shut up, people will tell you exactly why they didn’t make an offer.  And if all it takes to get a contract is a new air handler or dishwasher… but your buyer is afraid of incurring that additional expense… seal the deal by agreeing to make that part of the contract.

ONLY work with Qualified Buyers

The single biggest mistake most new investors make is wasting time showing the house to a bunch of people who have no possible way of buying the home.

A Qualified Buyer is someone who has already sat down with a lender, given all the necessary documents (tax returns, pay stubs, etc) and had a credit report pulled.  If you are showing the home to someone who has not been through that process, you are simply wasting your time.

If you are showing the home yourself, you must screen buyers.  Ask if they are paying cash.  When they say no, ask which lender they are using.  If they can’t tell you, have them meet with YOUR loan officer or mortgage broker to get qualified…. BEFORE you agree to even show them the house.  Yes, you will piss people off.  You will hear “well I’m not even sure I want your house”.  You will have people tell you it’s none of your business.  But you will avoid wasting countless hours showing the house to people who can’t buy it.

What other tips do YOU have for people selling their own Flips?  Please leave a comment and share this post!


7 Keys to the Perfect Real Estate Agent

Well, you bought a house and fixed it.  Time to flip.

So….are you going to list with an agent or sell it yourself?

There are lots of advantages to using a local Realtor:

  • Access to MLS
  • Someone to screen buyer calls
  • Someone to show the house
  • Someone to handle offers, contracts and closing
  • Someone with knowledge of fair housing laws
  • Someone to give you unbiased advice and support

The biggest disadvantage is you have to pay a commission– and that is a REAL disadvantage.  Remember you pay the commission based on the selling price… not your profit.  If you bought a house for $70k, put $15k into rehab and plan on selling for $100k, after closing costs you and your realtors might make about the same amount… even though you were the one taking all that risk.

So how can we make sure we are picking the best Realtor?

1. Look for top “selling” agents, not listing agents

Listing agents list.  Selling agents sell.  When you hire an agent with a bunch of listings, you are hiring someone who does a good job working with sellers.  But a good selling agent has a list of qualified buyers… and helps those buyers put houses under contract.  If all your agent does is list the house on MLS, you have not received the most bang for your buck.

2. Buyers agents know a good deal when they see it

A selling agent (also called a Buyers Agent) is the one dragging buyers around to all the properties in the area.  When they see your top-of-the-line flip, with a well done rehab, they know it.  They know to show your house to their qualified buyers first… and they help convince those buyers to put in a top-dollar offer.

3. Buyers agents have good prequalified buyers

An experienced selling agent knows not to waste time with unqualified buyers.  So the good ones will have their buyers get loan approval (and all the required loan documentation) before they start showing houses.  By working with an experienced buyer’s agent, you eliminate most of the offers from people who will never be able to get through the loan process.

4. Give the top selling agents a 3-day preview

Even if you’ve listed with a specific realtor, compile a list of the Top 10 selling agents in the neighborhood where your flip house is located.  Give them a call as you are finishing your rehab, and let them know the house is about to go on the market.  Let them see the house before it hits the market, and make sure they know you are giving them a preview because they are a top producer.  This gets the agents most likely to sell your house a head start on identifying the perfect buyer… which gives you a head start on a contract.

5. Offer top selling agents a 4-5% commission

If your listing agent says something like “we take a 6% commission and split it evenly with the selling agent”, offer a better incentive.  Offer an extra 1-2% to the selling side if they bring a contract that closes within 30 days of the initial listing.  This gives agents an incentive to move quickly on your house, and the extra commission is well worth the quick contract.

6. Avoid part time or inexperienced agents

Everybody has to start somewhere.  But not on your house.  And while there are some great part time agents, you have to wonder about anybody not committed 100% to their day job, right?  The top selling agents are not new to the game and they are not part time.  I would not consider listing with someone who hasn’t brought at least 25 buyers to the table in the past year, nor would I look to someone with less than 5 years in the real estate game.

7. So how do I find the top selling agents?

First, run an MLS search for the neighborhood where you are trying to sell a home.  Look at the selling agent on all the close by homes in the past year.  Likely, you will see the 80/20 rule applies… 80% of the sales in a particular area will come from 20% of the agents.  Those are your agents for that area.

If you don’t have MLS access (a bit of a chicken and egg problem), ask loan officers, title companies, listing agents or investors at your local REIA who sells the most houses in your particular area.  They will know.

So what Keys do you follow in picking the perfect real estate agent to sell your flip homes?  Please let us know in the COMMENTS below!  Thanks!

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