Selling a flip BEFORE COMPLETION ???

Question

Should I sell an Unfinished flip ??? OR Should I hold it until finished and sell it on the Open Market? I am about 75% finished and have been approached by a buyer who wants me to stop work and sell to her "as is". She said she would have to confirm with her financial advisor but could close in 20 days or less. Her reason for buying it unfinished is that she wants to be able to take the time to make selections and changes to her design and goals for the space. It is a Massive house and we are starting drywall in 2 days (Tuesday Feb 26) The house has about 3500 Sq ft of finishes space, and a 2000 sq ft deck, 4 bedrooms and 3.5 baths, 2 car garage, walk about basement, 2 fire places, and sits on top of a hill that allows you to see for about 10 or 12 miles to the hills on the horizon facing the sunset... The work that remains is as Follows:

Drywall, Paint, Rehang doors with new Knobs and hinges, Master Shower tile, 2000 Sq feet of hardwood installed, 600 Fq ft of carpet installed, Install Kitchen cabinets and tops, Install vanities, plumbing finishes, electrical finishes, prose wash and re stain the deck and newly built railings.

Any insights, wisdom, horror stories, or Victory story are welcome !! Thanks!!

Drywall, Paint, Rehang doors with new Knobs and hinges, Master Shower tile, 2000 Sq feet of hardwood installed, 600 Fq ft of carpet installed, Install Kitchen cabinets and tops, Install vanities, plumbing finishes, electrical finishes, prose wash and re stain the deck and newly built railings.

Any insights, wisdom, horror stories, or Victory story are welcome !! Thanks!!

Tchaka Owen · Answer

@Drew Hickok - the most important information is what you've left out. To be blunt, it doesn't matter what you've completed or haven't....all that matters is $$$.
If you sell to her right now, will you make enough profit to be happy? If so, sell. Now.

Eric Teran · Answer

@Drew Hickok I agree with @Craig Jeppesen. If she meets your price that you were expecting when you made your analysis then sell it. Don’t be greedy thinking you will make more. Stick to your numbers.

Two quick stories.

I had the pleasure of meeting a self made billionaire in 2008 when my firm was designing a house for him. I asked how does he know when to sell? He said, that no matter when during the process of development if someone comes in and offers to purchase the property for the amount he calculated before taking the job then he sells it. No thoughts or regrets about it. He moves onto the next one.

I also knew a multi-millionaire who inherited the majority of his money. Around the same time as the billionaire story he had someone offer him over a million dollars for what he was hoping to sell the property for. He was about 50% complete. He said, no way. Imagine how much more I can make when I am completely done. When he was finally done the crash happened and the closest asking price he got was still about 2 million short of what he hoped he would sell it for. He was pissed with himself.

If they meet your price then sell it and move on.

Craig Jeppesen · Answer

What is your expected earnings with the job complete? If she can give you a price that at least meets what you would walk away with the house completed then take the deal, if she is looking for a deal then move on. When flipping a house a quick sell is awesome as you have less carry costs. An example would be you are expected to earn $30,000 with the completed deal . Let’s say your costs are currently 100,000. If she paid you $130,000 plus closing costs then you make the same as you would have you completed the flip plus you get your money sooner and get hundreds of hours of your time back, and with less risk as the market can change in the coming months. It will probably have to be a cash purchase as the home probably won’t qualify for a traditional mortgage in its current state. Make sense?

Marisa R. · Answer

We sold a flip prior to completion. At the end of the day all that matters to me is the numbers, if it stacks up its sold.

It was a -

Cash offer...what we were planning to list at completion.

Why would we say no.

Jairo Ortega · Answer

@Drew Hickok

Sell sell sell. If the price is right and move on to the next one.

The risk I see here is that this person puts in an offer and for whatever reason, the sale falls through. You end up wasting your time and money.

Anthony H. · Answer

As many have mentioned. It is all about $$$ at the end of the day! If she gives you full asking for 75% of the job completed why not! Buyers showing interest before a flip is complete can give you some hints on how they would like some areas to be finished but still want you to do the job. Your case is surprisingly interesting. Keep us posted!

Anthony Solis · Answer

If she's going to a) save you time and b) buy at price you feel confident with why not? Sounds like a great problem to have! @Drew Hickok

Jeremy Z. · Answer

I agree with the others who say if she can match your expected profits based on your current all-in project costs, sell and move on to the next. I would just add that perhaps your agreed upon price could be based upon some additional completed work (the drywall??) so that you aren't the full 20 days behind if for some reason she can't close. Just make sure the price reflects your additional costs. Could be a sweet opportunity!

Shawn Ward · Answer

@Drew Hickok if you can make a profit that meets your goals, sell it and move on. The market can change at any time. We've done it before, but it was at the profit we wanted. If it was less, we wouldnt.

All the best

Adam Scheetz · Answer

@Drew Hickok It's called 'Value Add'. You're doing the work and therefore reaping the benefits of the value put in. Shoot, I'd love to buy it from you with only 25% of the work remaining and 100% of the benefits. That's a great DEAL! But in the interest of transparency and ethics, I feel you're better off seeing your job through to completion and getting the fruits of your labor.

Don't sell it. Finish the Job. Take the profit. Gain the experience. Don't let someone swoop in and buy it for pennies on the dollar. If she wants it, make her pay for it appropriately. Tack on 85% worth of the completed value and sell it if you insist. But don't undo your invested equity.

My $0.02

Selling a flip BEFORE COMPLETION ???

Most Popular Reply