Here’s Why You Need a Real Estate Agent if You’re Flipping Houses

2. An agent helps find the right as-is house to buy for your budget

House flipping can be a risky, speculative endeavor, especially when it comes to finding the ideal as-is property that aligns with your budget and vision. You’re essentially gambling that a rundown, outdated house will sell for a projected higher value if you spend an estimated amount of money on repairs and upgrades.

According to Bryan Lebo, a top real estate agent in Las Vegas who has over a decade of flipping experience, “The most important part of flipping is the acquisition. The money is made in the buy. If you get the buy-in wrong, then you’re really in a tight spot.”

The more you pay for the as-is property, the less cash you’ll have for the remodel. And as your expenses on the house purchase and remodel rise, your margins for turning a profit shrink.

Finding the right house to flip is the most important decision you’ll make throughout the entire process.

This is where the expertise of a real estate agent becomes invaluable. An experienced agent will have a deep understanding of your local market, including nuances like neighborhoods on the rise, future development plans, and areas with high buyer demand. They’ll tap into this knowledge to pinpoint properties that not only fit within your price range but also offer the best potential for return on investment.

An agent will assess the value of a property, factoring in repair costs and unexpected expenses that typically come up during a remodel, as well as possible market appreciation. They’ll be able to negotiate with the homeowner to get you the best deal on your as-is home purchase — that will allow for plenty of breathing room in your budget.

Beyond the major numbers — the home’s purchase price, the remodel budget and your margins for potential profit — you’ll need to factor in other hidden costs like taxes (property and capital gains), utilities for the months you own the home, building permits and other fees, such as HOA dues.

By guiding you away from money pits and directing you toward homes that hold genuine profit potential, an agent is instrumental in ensuring your flipping venture is both financially sound and successful.

Once you’ve picked and purchased your fixer-upper, the agent’s role then shifts from financial advisor to interior design and construction consultant.

3. An agent gives market-driven tips on spending remodeling dollars

House flipping is a high cost business. Just upgrading or remodeling the kitchen alone can cost anywhere from $45,000 to $80,000 — if you make renovation decisions as if you’re going to live in the house yourself.

“When you’re flipping, it’s always about dollars and cents,” Lebo says. “Every decision you make as a flipper is dictated by, ‘Is this going to make me money? Or am I just throwing money out the window that’s not going to yield me a return on that investment?’”

If you’re upgrading a primary bath for yourself, you might want to spend the big bucks on a brand-name faucet. But when you’re flipping, a less-expensive off-brand will do just as well — and those dollars you save will add up.

Savvy house flippers know how to get the most bang out of their remodel bucks, and an experienced agent can share those money-saving tips with you along the way.

For example, instead of paying retail for carpet or laminate at a home improvement store, your flip-experienced agent will have insider info on where to find discount flooring outlets.

Agents who have represented multiple house flippers, or flip themselves, have also been known to strike bulk rate deals that you can get in on. Some have arrangements directly with manufacturers to buy out last year’s inventory at a discount, or with contractors sitting on leftover materials from a completed housing development.

“It can be vital to work with the right, experienced agent,” Lebo advises, because an agent can help you find contractors that are going to be able to work on razor-thin margins and overstock on products with better prices.

Once the home is completely refurbished and ready to list, your agent changes gears again and becomes a master at marketing and sales to get your flip sold fast and for the most amount of money.

4. An agent determines the right list price and best time to sell

A flip-experienced agent keeps an eye on market trends during the remodeling process to help their seller set the right list price when the time comes. Along with pulling the most recent comps and assessing the value added with the remodel, your agent will factor in your expenses to ensure that you recoup your investment and make a healthy profit, too.

Sometimes your agent might advise you to hang on to the property for a few months, or maybe even rent it out for a year or so, to give you a better shot at a bigger profit — or to keep you from losing money on the deal.

Remember those conditions that keep the real estate market in constant flux? Well those can change even within the few weeks or months it takes you to complete the remodel. And if home values take a nosedive before you can sell your flip, it might be better to wait to sell until market conditions improve.

When dips happen, home flippers without an experienced agent advising them to wait before listing, may wind up selling at a reduced price — which can shrink or completely wipe out any return on their investment.

If you’ve budgeted wisely from the get-go — and didn’t spend too much on the house purchase or the remodel — you should have enough working capital left to ride out any market fluctuations.

The power of partnering with a flip-experienced agent

First-timers often underestimate the amount of time, money and expertise it takes to flip a house — and how much risk is involved in the venture. By collaborating with an agent well-versed in flipping, you’re not just increasing your chances of turning a profit; you’re investing in a smoother, more informed flipping experience. An agent well-versed in flipping will contribute their local market knowledge and invaluable insights into renovation costs, resale value, and buyer trends to increase your chances of success.

Header Image Source: (Milivoj Kuhar/ Unsplash)