Buying & Selling Houses: Your Quick Guide

If you think flipping houses is easy money, you better reconsider. There is a lot of work required on the backend before a single property gets sold. In addition, considering the global economic impact of the pandemic, real estate properties have been majorly affected. In a report released by ATTOM data (2021), the first quarter of 2021 had been the lowest level of flipping houses since 2000. There has been a significant price drop in flipped homes. Developers and individuals buying and selling houses have to endure the smallest profit margin in a decade. ATTOM’s report pointed out that only 1 out of 37 houses gets sold. It also takes about an average of 5 months or more to get a house sold. However, cash transactions showed positive traction on flipped homes. 

Despite the challenges of flipping houses, one can still make some profit out of the transaction if the process is done right. Whether you are planning to purchase a foreclosed property, an old house in need of fixing, to be sold later on, it is highly recommended to carefully evaluate your options. Assess your financial standing and check your knowledge about the market. Several things have to be considered and mistakes to be avoided to protect yourself and your money from getting burned.

Things to Consider Before Making a Purchase

In terms of making a profit from your property after renovation is done, Smallbusiness.com mentioned that your asking price for your renovated property (total amount paid upfront plus renovation cost) should be at least 20% less than the houses around the neighborhood.

Consider if you are going to use a real estate representative to help you in selling the house. Real estate agents have the knowledge and experience of selling houses. These agents will take care of everything from the documents required, to ocular inspections, house tours, and other things needed to get things done. However, getting some professional help means that you have to pay them a commission fee or professional fee.

Mistakes To Avoid in Housing Flipping

Rushing to get the house sold when the property itself is not ready. Do not put the property out in the market if it is not ready for moving in yet. When there are still a lot of renovations going on and the property is already posted as up for sale, ready to move in, you will have problems dealing with your prospective buyers. Potential buyers will lose interest in a cluttered property. Take time to clean up the house and make sure that decors and furniture are clean and fixed. 

Diving into house flipping without careful planning, or knowledge is a recipe for failure. Just like any business or investment, you have to know what you are getting yourself into. If you are buying and selling a house just because your friends or neighbor is doing it, you should think again. Flipping houses demand a lot of your time as well as your financial resources. You have to be ready for both. 

Too eager to make a profit without reading the market trend is another mistake novice home flippers are doing. To make some money from your investment, you should be patient and be able to read the market trend. Selling in too early could mean that you’d missed out on a much higher gain. Selling too late could also mean that you missed out on your opportunity to make some profit. Remember that the main idea behind house flipping is to gain a profit margin from selling an investment. Right timing is a key and speed is vital. The sooner you can sell the property, the lower the risk that your capital might not be returned. As each day passes with the property remaining to be unsold, you are absorbing the cost. Since the property is still under your name, you are paying for the property tasks, utility bills, insurance, and mortgage.