Every property you rehab should be done with the thought of the end-buyer in mind. Accordingly, your property needs to appeal to a variety of potential buyers. The more people you can please, the better your chances are of selling the property. You may like a certain feature or style where you live, but that does not mean it will appeal to the masses. One of the most important things you should do on every flip or rehab is to put yourself in the mind of a buyer. Everything from the price of the property to the interior design should be looked at from a buyer’s perspective. That said; you will be much more efficient during your rehab if you are thinking like a buyer. Perhaps even more importantly, you will sell your property faster.
Overestimating the end sales price is more common than one may think. It is easy to look at comparable sales and lean towards the highest number. In reality, buyers are always looking for the best possible deal. Instead of comparing the property to the highest comp, they will look at the other side of the spectrum. Buyers and their realtors will look to pick your property apart at every turn. You may have higher quality work and amenities than other homes in the area, but you will be stuck with a property that is well below your projected sales number if buyers don’t share the same sentiment. Instead of looking at the highest comps, look at the lowest ones and see how your home will stack up. That is what buyers will look at. Remember, buyers always dictate the market.
Before you start any work, you need to know everything about the immediate market your property is in. Not every upgrade you make will give you the return you are looking for. Upon closer examination, a pool may not be a good idea or different fixtures don’t work like you may have thought. It is not enough to look at recent sales and focus solely on the numbers. You need to take the time and look at each listing. Read the comments and look at the photos whenever you can. This will give you an idea of what homes sat on the market and which sold quickly. Some of this could have been the product of a buyer looking for a specific feature, but if multiple homes sold quickly this could be a trend worth looking at. The work that you do will directly influence the sales price and the time on the market. Instead of doing work that you want to do, make sure you look at the market. Doing work that buyers want and will give you the greatest return.
Price and location are the two most important features that buyers look at. However, they are not the only ones. Before you start any work or even make an offer to buy a property, you should ask yourself one question: why would someone buy this property? If you are willing to list it below market value, you may have your answer. If the property is in a booming location, you know you have a winner. Sometimes the answer is not that simple. You need to create value with the work you do. If you can create demand, you will ultimately have value. That requires you to think like a buyer would think. In some houses, demand could come from the beautiful countertops in the kitchen or the upgrades in the bathroom. Other houses could have a fenced in yard that is unique for the area or energy efficient appliances throughout the house. Everything you do with your property should be for the purpose of attracting a buyer. If you have the answer to why someone would want your property, you are well under way to getting it sold quickly.
The work you do should appeal to as broad of an audience as possible. You may have a unique personal style and like bright living room colors, but most buyers will not feel the same way. Neutral colors may seem boring to you, but you need to remember that you are not living in the property. The odds of your rehab being photographed for a magazine are slim. You need to remember who your audience is. Buyers want a blank canvas. When they move in they can make whatever changes they deem fit. If the living room walls are red and the countertops quartz, you have narrowed your buying pool to a select few. Most buyers want to move in and make very few, if any, changes. The closer you can make the house feel like home, the closer you will be to landing a potential buyer.
Value can be a very subjective thing. What you see value in may mean nothing to someone else. When you are rehabbing a property and putting it back on the market, you need to think about who will be assessing the value. By getting in the mind of your market and your buyer pool, you will do everything in the process to cater to them. This seemingly small step can be the most important thing you do in your business. Buyers move the real estate market. If you can start thinking like them, you will be much more efficient and productive as a rehabber.