Selling 1st flip: what should I expect from a "great" realtor?

[Ilya Z.]

We're trying to sell our first flip near Hagerstown, MD. The whole project, which we started back in September, has been a huge learning experience for us, as expected. Unfortunately, the selling part is not going so well and we will probably end up losing money on the whole deal. We put it on the market in mid-January and have had close to 20 showings but just a handful of people still interested afterwards and no offers. We're getting antsy since we're bleeding money on the borrowed money we used to finance the project, paying utilities, insurance etc etc.

My main question is, though, what our expectations of the seller agent should be. To me the difference between a great one and a not so great one are:
1. PRICE: They can set the initial price right and provide the seller with a fairly precise estimate of how much we can sell it for, and can be fairly assertive when discussing with the seller the listing price
2. MARKETING: They can market the property creatively to the types of people who might be interested in a house like ours
3. SALES: Once someone shows interest but hesitates, they can convince them to submit an offer

Of course, once there is a potential buyer, they need to be vetted and then there is a process of completing the sale that has to be done right. But our feeling is that our agent has not done such a stellar job on the first 3 items, even though she's supposedly a top agent in the area.

We probably set the initial price too high because we wanted to recoup the costs of the rehab that, as if often happens, ended up being a lot more expensive that we originally thought. But we were looking to her for guidance on what's right. Now she's telling us that the price was too high and, even though we lowered it twice, we lost valuable time. Also, our followups to showings where people seem to be interested is fairly short: we answer their questions right away and in detail, then there's silence and when we ask our agent for a status update, she either says they are no longer interested or that they are still thinking. In which case our next questions is, what else we could do to help the other side produce an offer, and her answer is "You can't force anyone to buy a house". Well, yeah, I know that, but when I shop for a car, I can go to 5 dealerships and walk out of 4 of them and then go to the 5th one and buy the same exact car I looked at at the other places. And this is not because they forced me to, it's because they negotiated with me and convinced me that it was a good deal. Buying a house is not the same but to me being a good salesperson is one of the main characteristics of a great seller agent.

It's getting warmer now so people are coming out of winter hibernation, and we're hoping for a lot more traffic. If the house still does not sell soon, one option would be to change agents. But then we need to assess other agents to make sure we're actually getting someone better. So hopefully any words of wisdom you can provide here could help us with this. Thanks!

[Doug Smith]

That is a really great question and, believe it or not, I have found that it’s what the agent brings to the table from before you even purchase the property to rehab that makes them valuable. Here’s our interesting story of real estate agents.

Finding the right realtor proved to be a challenge for us as well. When Castle Rock first started, I quickly realized that the realtors that we were using simply slapped our listing on the MLS, put a lock box on the house, and showed up at the closing to collect their check. What really got my goat was when I saw that the realtors were making more money on our projects than I was.

Enter my wife. Her degree was actually in Interior Design. For those of you that are unfamiliar with the term Interior Designer, that term contrasts with the term Interior Decorator in that a real designer has a formal education in the field. It’s more than just picking paint colors. It’s moving walls, knowing codes, and building a cohesive plan for a renovation or construction project. She joined our company and took over running our construction crews. She was an integral part of the purchase in that she helped us envision what a dilapidated property could become. She worked with the GCs in making the property look amazing while controlling costs. When it became evident that she was the real driver of buyers to the property, I suggested she get her real estate license and take over selling our properties. It was a move that has paid massive dividends.

She’s actually branched out with an equity partner she knew from childhood to create a successful home renovation and flipping business in the Tampa Bay market. The partner was one of her real estate sales clients that wanted to become an investor. After three years of doing this, they now have $10 million in lines to flip or rent homes.

It has been my experience that most realtors bring little value to the table. What Christine was able to do was to work with the investor on the buy side to not only identify properties for purchase, but review properties that were presented by wholesalers in order to ensure that the investor’s minimum return was likely. She worked with the General Contractors to help choose finishes and control costs. When she listed the properties, she brought in a professional photographer and had the properties staged in a way that attracted buyers. She was also very accessible to her good clients and took calls on a Sunday night at 10pm. She is very rare and she has been integral to the success of Castle Rock as well as those other clients she has cultivated.

You might not find an agent with a background like Christine's, but you need to make sure that the agent is bringing something of value to the table other than slapping it up on the MLS. That's what most agents do and that's why most agents fail within the first couple of years.

Real estate listing presentations can be filled with flashy promises of some new way to market a property. In reality, all agents market properties in pretty much the same way. It’s really what the agent brings to the table throughout the entire process that makes them valuable. Good luck with your investment business. I wish you well.