Stuck with a House for sale since November

[Boffill Yosleys]

Hello guys my name is Yosleys Boffill. I have been flipping houses for a year or so in the Midwest specially in Lousiville,KY. I was doing fine until I decided to go for a more expensive neighborhood and price range. We are selling this house in the Highlands ( good neighborhood) and we have been stuck with it since November. We have dropped the price a lot, we even have an appraisal for 20k over listing price, we have had 22 showings since the last decrease in price.....and nothing. Everyone finds the rooms too small or something that does not fit their family,etc.

I am at the point of breaking even but in a month I will be losing money because of the Hard Money lender payments. The agent has done everything for the marketing and open houses and social media....again people are coming every week. I will appreciate any idea from the most experienced investors on how to proceed on these cases to get out of this hole. I got 3 other flips going on but I will love to get out of this one. Thanks in advance.

[Spencer Tillman]

@Boffill Yosleys

This sounds rough. I can see why people might be passing though: rehab looks unfinished, small(ish) rooms, etc.

Another thing is price. The homes around you are A LOT cheaper (according to Zillow).

You might have to bite the bullet and reduce it further if no extra cash to finish rehab, especially if the buyer thinks they're going to have added cost after close.

@Robert Payne I do like this idea.

If you have a local REIA, maybe have some of them come by and take a look and offer suggestions? They know your market better than we do and may have a bit more customized strategy to help.

Best of luck!!

Spencer

[Chris Seveney]

@Spencer Tillman

I agree price is way too high.

1858 Rutherford is 2x size and pending for $422k and pictures show better

1935 alfresco much larger and contingent $469k

2126 speed is smaller but $130k lower

I know nothing of this area but my guess would be this ends up selling for around $350-$375k. It’s great to have an appraisal that shows higher value but markets are changing rapidly in some areas and unfortunately value is based on what people will buy it for

Quick question to the OP: have you physically visited this property ?

[Andy Sabisch]

Looking at the listing again especially the pricing, buyers see the multiple price drops and the listing starts by saying it is $20K under appraisal all of which beg the question WHY? Having buyers show up with that question on their mind is never a good thing.  Want them to come looking to get a great deal and have the house get them to put in an offer is the best option.  Other homes in the area seem to sell quickly and without discounts.  You did a great job on most of the details but it looks like the floor plan you started with is now the issue and is not really correctable.

Looking at the Zillow map of the area, I see very few houses over $400K and most around you are about $100K+ under yours.  Not sure about the appraisal you paid for but it may have come in high.  Even recent sales with updated interiors are in the $200 - $235 / ft2 and yours is at $256.  At the high end of $235, it would drop your house to $405K rather than the current $440K.  My thoughts are you will sell it in the end for under $400K

This one might be an expensive lesson but if your lower priced flips have been working, focusing on that market might be preferable.  Higher priced homes do not always mean more profit . . .

[Account Closed]

Hi there, 

The property is beautiful, definitely not the issue. Having spent a decade as a buyer's agent in the past, I can tell you right away it is the bedroom sizes. The price per square foot may also be an issue compared to others in the area. At this point it's too late to do anything about the layout.

  I would suggest maybe consider buyers that are having a hard time winning bids elsewhere (not sure if there are bidding wars going on out there), or don't have the most ideal terms on their offer (contingencies, etc.) that can still work for your bottom line.

[Shilpa Shankar Bhatia]

@Boffill Yosleys I'm facing a similiar situation in Louisville but my flip is in the west, it's done up real nice and has been on the market since early December.

First, i would like to say you are not alone and many flippers are facing similar scenarios.

Next, it don't hurt to try some magic dust. Apparently lot of seller put a statue of St Joseph and say a prayer, you can google this. I've seen some top investors do this too.

Another thing i've noticed in Louisville, Remax listings in St mathews, Highlands, Clifton areas sitting for awhile. I bet your agent is doing their best but maybe take the listing off and try FSBO or meet a few more agents and see if they can suggest a different approach.

I'm gonna probably do that, I will leave my listing active until end of the month or mid April and then either, remove and relist as FSBO or find another agent to give fresh approach.

next, i would consider MTR in the interim, it might be better to have it cashflow and cover some of your expenses like HML and holding costs. while keeping the listing active. I know this means investing in furniture and listing price, but i feel your location should get rented fairly quickly.
Just some of my suggestions, Good luck for the open house!!

Please put the St Joseph statue if you can 

[Daniel Dobbs]

Honestly, you need to sit down with your real estate agent and talk about what will get the home sold. For one is that a room in the basement half finished? My buyers have said the same thing about places, and what it has come down to is price. They would have to spend more to make it what they want, and it wasn't worth it to them in the end. From the pictures the house doesn't look finished. There are a lot of things buyers would nick and pick on from what I've seen. 1 the flooring, especially one of the bathrooms, what is that board on the wall behind the door?, then the room downstairs isn't finished and that wire hanging down I'd get the question was the wiring redone and does the house have a leak because of the ceiling. Outside back of the house, the top and bottom of the house doesn't flow like the front. Then we'd go look at the house priced the same with a garage and they'd buy that one... or we'd look at the one for 25k more with a finished basement, garage and sauna. 

I hope it sells for that but the competition in that area is quite high.

[Brett Tvenge]

Quote from @Anil Dham:

@Boffill Yosleys

Rehab looks on quality to be ok. A few suggestions

1. The pic w the back of the front door showing 5 or 6 locks doesn't convey a good look of safe neighborhood or any attempt to make a door attractive.

2. Kitchen island has minimal dining space as it lacks any overhang and most of it is taken up by the cook top

3. Basement elec panel needs trim around it and ceiling looks like it was patched and is hiding a leak. Basement also has some dusty looking floors and drywall not done.

I don't think someone is not making an offer because of these minor items. I flip 25-30 homes a year and these are just easy things to point the finger when things don't go as planned. 

The biggest thing I'm noticing with this listing is the desirability of the neighborhood is extremely low. I'm only seeing 3 sales in the last 100 days in a 1.5 mile radius and 2 of them are condo/apartments. 

In my market if there is such low action like this, I'm accounting for that in my true ARV and holding cost because it's a waiting game at this point for you. I would have aggressive priced this from the beginning much lower. 

[Boffill Yosleys]

Quote from @Brett Tvenge:

Quote from @Anil Dham:

@Boffill Yosleys

Rehab looks on quality to be ok. A few suggestions

1. The pic w the back of the front door showing 5 or 6 locks doesn't convey a good look of safe neighborhood or any attempt to make a door attractive.

2. Kitchen island has minimal dining space as it lacks any overhang and most of it is taken up by the cook top

3. Basement elec panel needs trim around it and ceiling looks like it was patched and is hiding a leak. Basement also has some dusty looking floors and drywall not done.

I don't think someone is not making an offer because of these minor items. I flip 25-30 homes a year and these are just easy things to point the finger when things don't go as planned. 

The biggest thing I'm noticing with this listing is the desirability of the neighborhood is extremely low. I'm only seeing 3 sales in the last 100 days in a 1.5 mile radius and 2 of them are condo/apartments. 

In my market if there is such low action like this, I'm accounting for that in my true ARV and holding cost because it's a waiting game at this point for you. I would have aggressive priced this from the beginning much lower. 

 Thanks.  I share your opinion.  The pricing wasn't the best since the beginning and that was my fault.

I m just hoping for the minimum loss possible at this point and use it for tax purposes....

[Bill J Fay]

Sounds like you have received some great feedback already. Many investors wait to put their flips on the market until after the holidays in Colorado. I would chat with your Agent to see what they recommend next year. It is super important to put your best foot forward the day the property hits the market. Overall, it looks like a beautiful property but the listing is stagnant and raises red flags no matter how great it looks. I would explore renting it out for a year or drop the price heavily to cut ties and sell tomorrow. 

[Glenn Levy]

Tough spot, sorry. The overall rehab looks great on the downstairs rooms and it's staged well. I do agree with other comments that the upstairs bedrooms and office should be staged to show how the smaller rooms can be used. Unfortunately, most people cannot envision how to make a room work, they need to be shown and staging solves that.

Also, and it's too late now, but all the price decreases you did (I counted 8) with many happening weekly show desperation to sell. This is really easy to see on Zillow under Price History. Desperation can scare most buyers away because it raises red-flags. In my opinion, your best bet at this point is to remove the listing for a few weeks and re-list it as a new listing with updated photos, new write-up, upstairs staging and minor repairs as others suggested. The cash-back incentive to a buyer towards their loan costs is a good idea as well.  Good luck.

[Boffill Yosleys]

Quote from @Bill J Fay:

Sounds like you have received some great feedback already. Many investors wait to put their flips on the market until after the holidays in Colorado. I would chat with your Agent to see what they recommend next year. It is super important to put your best foot forward the day the property hits the market. Overall, it looks like a beautiful property but the listing is stagnant and raises red flags no matter how great it looks. I would explore renting it out for a year or drop the price heavily to cut ties and sell tomorrow. 

 Great comment! That's what I tried at first , refinance it , and keep it. But the rent will not cover my mortgage in this so I ll be negative every month for a year. So I came back to the market. 

[Jacob Sherman]

I would rent and refinance and sell it sometime later down the road 

[Andy Sabisch]

How did the open house work out?  Did you get any interest or feedback from local buyers to help you determine a path forward?

[Brandon Stiles]

Aside from what others mentioned above (the door locks, drywall in basement etc.) I would suggest repairing and staining the fence, pressure washing patio and walkway, fixing the blinds that look crooked in almost every picture, and removing the desk lamps in that room. The room is already small, those lamps protruding out make it seem even smaller. The little details can make or break a first impression.

[Boffill Yosleys]

Quote from @Andy Sabisch:

How did the open house work out?  Did you get any interest or feedback from local buyers to help you determine a path forward?

Nothing yet . We added the incentive for rate buy down and also decreased the price more. I had a proposal that I could refinance if I put 50k down and rent it out for a year or so before coming back to the market. More like a long term play. But I don't I will be leaving a lot of cash in this deal for a while

[Andy Sabisch]

The problem with sites like Zillow and Realtor is that even if you take it off the market for 30 days and it shows as a new listing, buyers can see the price history from when you bought it to when you listed it and dropped the prices . . . that "trick" worked before the history was public so not sure that is the solution. 

If you have had as many showings as you did, your agent should have followed up with each one and seen what the feedback was to help you make adjustments rather than dropping the price and still see no offers.  If this has not been provided, I would be looking at a different agent (or even going flat fee and saving yourself the 3% listing agent fee which you could apply to the sale and still not be any further behind).

[Jacob Sherman]

Rent and Refinance it . Pick it back up in a few years 

[Shilpa Shankar Bhatia]

@Boffill Yosleys what did you land up doing, curios to know.

I rented mine that was listed from Dec 23 and now waiting to refi to longterm.