Finished Flip, No Traffic - Now What?

[Andrew Taylor]

My wife and I just finished our first flip. We put the house on the market about a month ago and have had almost zero traffic (two showings). Empirically, I know this means it's overpriced, despite an initial listing price that I *thought* was under the market, and two price drops since then.

We've also listed the house for lease but aren't getting any bites there either. Again, I think I've got it listed at or below market rent rates but so far, crickets. The house is in a good area, has been tastefully updated, never flooded, has a pool and sits on a corner lot.

I thought the house was probably worth $515k, but we initially listed at $499k to capture the "below $500k" searchers. Dropped the price to $489k after about two weeks, then stopped again to $479k after two more weeks. I can drop it as low as about $460k before I'm in danger of losing any money on the deal (I've got somewhere between $120k-$170k of equity, depending on actual selling price).

My question is, what now? Should I try to refinance into long-term and lease it out until the market improves? Drop the price again? Wait it out while I continue to make $3k/mo in interest payments? Some other option I'm not seeing? Obviously I'd rather not lose any of my cash investment, because losing sucks and also I don't want the wife to rescind her blessing with respect to my investing - but I also don't want to cut off my nose to spite my face. I'd rather lose a few thousand dollars and chalk it up to a learning experience than lose all of my investment and not be able to try again.

[Steve K.]

A few thoughts (hopefully helpful but no guarantee): 

Photos: not bad at all but I would rearrange and use a photo of the kitchen as the first or second photo. Also it might help to do some staging and reshoot photos as some of the spaces are large and empty looking (especially the giant open entrance/living area in photo #2, not a good photo to start off with, to me it looks odd without furniture and decor). Aerial/drone photos are hot these days too, you might splurge for one of those. 

Timing: Not sure if it's as critical in Houston, TX as here in CO but one thing to consider is flips of SFH's should be timed so they are listed in the spring (June ideally). Not helpful now I know but something to consider for your next flip, and again this may be different in Houston.

No fridge or W/D? Probably a negative for most home buyers. 

No cabinet hardware? Again probably a negative, looks unfinished IMO. Some buyers may like being able to choose their own, and I assume that is your thought process but even then they can replace whatever is there if they want. Some simple drawer pulls and cabinet door knobs would make it look finished and move-in ready IMO. Or maybe they're the "invisible" kind of slides where you push it in and it springs open on its own?

Flooring on the bar: Looks odd to me, I would take that off and replace with some vertical weathered barn wood, painted wood as an accent, wainscoting or anything different than the flooring material. Also staging with bar stools would make it look more inviting. 

Pricing: can't comment on the pricepoint as I don't know your market but your lack of interest answers that question unfortunately. Also multiple $10k price drops are not as effective as a single, larger price drop. You may consider taking it off the market, renting it for the winter on a 6 month lease, then listing it in the spring for just a little under $500k to begin with and if it doesn't get attention after 30 days, do one big price drop of at least $25k instead of multiple smaller price drops. Asking your agent to host an open house just for agents in order to get feedback from other local professionals may be a good idea as well (if you haven't already of course). You may try a new agent in the spring just to try a different approach, sounds like the working relationship with current agent is less than perfect and she had her chance to sell it already. 

Overall very tastefully done, nice work all around and I especially like the bathrooms. The pool looks very clean and inviting but your agent is correct that not everyone wants to maintain a pool so that will limit your buyer's pool (forgive the pun). Unfortunately you may have made this place too nice for the market, that might be the underlying problem, or it could just be timing and you may sell it quickly in the spring. I've only done one flip before so I'm far from an expert, also don't know your market just FYI. Good job on the classy-looking remodel and good luck selling!