House #35: First Contract

August 28, 2012 · 2 comments

The Rookie House is still not finished renovation, and we already have a “surprise” offer…

The awesome NACA agent who sold our previous two properties (The H2O House and The Unexpected House) called me on Sunday morning to tell me he was outside the property with a potential buyer, and wanted to do a showing. The house was barely finished being painted (it still has no cabinets, light fixtures, plumbing fixtures or flooring), but this is the same agent who was able to get The H2O House under contract when it was torn down to the studs, so we had no problem with him showing it.

Ultimately, his buyer loved it, and we negotiated a very fair price. We’re hoping to finish renovations in the next week or so, and then we’ll let the buyer do his inspections and start on the appraisal process. I’ll have more to say once renovation are completed…

2 responses to “House #35: First Contract”

  1. Nathan says:

    Sounds like this realtor is worth his weight in gold for you guys… are you finding the commissions he is making on the sales enough to keep him coming back or do you provide other incentives?

    Also, while I understand the “if it ain’t broke don’t fix it mentality”… I understood you targeted your current price point and rehab budgets to minimize holding times (i.e. spend up to a budget when possible for a faster sale)… but now that you’re selling homes faster than required (less than 0 days on the market), in theory you could begin to refine your price point and upgrades to move that closer to 0 while increasing profitability… given any thought to tweaking your secret sauce?

  2. J Scott says:

    Hey Nathan,

    Great questions! In terms of working with this agent, he’s a NACA agent and only represents NACA buyers; NACA won’t allow us to give him a bonus or part of our commission (they would keep it themselves), so we don’t offer any financial incentives. But, he’s interested in getting into flipping himself, so we’re doing some mentoring and helping out with his investing goals. So, we’re definitely doing what we can to give back.

    As for your question about increasing profitability, yes, we’re definitely starting to do more of that. We’re making finishing decisions more based on cost than on marketing appeal — things like sticking with carpet/vinyl instead of hardwoods, staging with a shower rod/curtain instead of putting on glass shower doors, going with 30″ cabinets instead of 42″ cabinets, etc. Of course, in the higher end houses, we’ll still be doing what’s necessary to get those sold, but for the stuff at the lower end — where appraisals are coming in low — we’re doing a bit less.

    When this house is done, I’ll talk about this some, as House #19 is just a few doors down (same floorplan) and we made a lot of different decisions on this house than we did on that one, for the reasons you mentioned above.

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