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Here are the downloads we mentioned that you could get on the show notes page:
What are some of the things you do before putting the finished product on the market?
- Re-run comps
- Final walk through
- Staging – where get staging stuff from
How to work with our Realtor Laura to get the property on the market?
- Docusign docs
- Take pics and upload – what kind of camera and lens?
- Agent sets up showing and feedback notifications
With the real estate market still going strong here, how fast have the houses been selling?
- The fastest closing was up on the market on Thursday night, by Sunday it had 42 showings and 13 offers.
- Not every property is like this. The sweet spot is between $140k – $165k for San Antonio properties that fly off the market.
How do you handle when we get multiple offers?
- Use spreadsheets with all of the details of the properties, locations, contracts, and people offering.
- Separate each thing that’s a negotiation point for when you come to the contract phase.
I know we’ve accepted offers before in the past only to find out the buyers couldn’t qualify. How do we now avoid this problem?
- Look for how someone is paying for the house. Melissa prefers cash for the house. Conventional financing is ok, and FHA would be the last one to look for only because FHA tends to have more hoops to jump through.
- Ask for a proof of funds if the buyer is paying cash.
- Who’s the lender? Melissa has a “black list” of lenders that are a no-go for the final sale.
- Look for a lender letter attached to the contract.
So a common situation is where a buyer will get an inspection and ask for tons of repairs. What is our procedure for handling which repairs we’ll agree to do and which we won’t?
- Anything electrical (especially in the attic) should be taken care of before buyers even get an inspection.
- Having a good agent will help the buyers not to be worried if you have an inspector that’s freaking them out by nit picking.
- Always double check your punch list!
On FlippingJunkie we get the question all the time about the FHA 90 day rule. What is that and how do we deal with it?
- “Payment terms need to be conventional or cash”.
- Between 90 – 180 days you will need 2 appraisals, or if the resale price is over %100 of the purchase price.
What do you do after acceptance of an offer to make sure all is on track to close?
- Start doing property updates with your title company twice a week.
- Set up a schedule for the updates so that everyone is on the same track and staying focused.
- Property updates every Monday from our realtor to the lenders to make sure everything is still on track to close.
What’s your top tip for being more efficient in this part of the house flip process?
- Add a special touch when you’re selling a home to a buyer. Melissa puts little gift baskets for the new buyers to have.
- Always work with your realtor and title companies to make sure things are moving smoothly.
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Danny Johnson: This is Flipping Junkie podcast episode 77. [music] Welcome to the Flipping Junkie podcast, the podcast for flip pilots everywhere. Flip pilots are the house flippers that work more on our business instead of in our business by keeping a 30,000-foot view. You’re now part of a small group of house flippers that considers themselves “flip pilots” that strive to build the life of financial freedom and time freedom so that we can spend more time doing what we love, with who we love. In this podcast, I give you a glimpse of the daily life of a flip pilot. So let’s get started.
Hey, guys. Welcome back to the Flipping Junkie podcast. Today, I’ve got my beautiful wife, Melissa, back on the show. I know everybody was begging to have her back on because she shared so much awesome information in episode 76. And if you watched that one, you know that she’s been running basically our flipping business this year and been doing a heck of a job doing it. And we’re talking today about selling your finished rehab. So this is basically after you finished that rehab, what you’re doing to get it sold, get it on the market and get it sold. And Melissa is handling all of that for our business and is the expert on it. We’ve been doing it for 14 years and she knows what she’s doing.
First, real quick though, I wanted to mention if you’re not on the flip pilot Facebook group, you’re missing out and you should definitely be on it. So if you are not on the flip pilot Facebook group, go to FlipPilot.com, you can request an invite. It is a closed group but we’ll let you in if you request the invite through FlipPilot.com. And basically, flip pilot, if you haven’t heard the other episodes where I’ve mentioned is basically where we’re talking about scaling your business and being a true business owner and working on your business instead of working so much in your business, and so we’re trying to get everybody that’s flipping houses and like-minded that is focused on building a true business and working more on their business so that they do have true freedom with flipping houses. And check that out. So go to FlipPilot.com, request an invite and get invited into that closed Facebook group. It’s awesome. I think we’ve got about 600 people now in the group and it’s growing super fast because we just opened it up just over a month ago, I think. So, 600 people and everybody’s communicating and it’s been a real great thing, so check it out.
So, how are you doing?
Melissa Johnson: Doing good. I was actually just working on a house that we’re closing on today, trying to get all that wrapped up.
Danny Johnson: Awesome. I like to hear that. I don’t even know some of these houses anymore. I haven’t seen them. That’s because Melissa is working on all of it and it’s been…
Melissa Johnson: Did you hear that?
Danny Johnson: Is that like a bird or something?
Melissa Johnson: No. My printer just started printing something.
Danny Johnson: I can hear that for sure.
Melissa Johnson: Sorry. Somebody’s printing on my printer, I don’t know why.
Danny Johnson: Okay.
Melissa Johnson: I don’t even know what that is. Sorry.
Danny Johnson: No, no. It’s cool. Hey, so she’s actually down the hall in her office and just to be able to get the video because we do have these now on video too. So if you go to YouTube.com/flippingjunkie, you could see the video of it. So let’s just get right into this. So we’re going to talk about selling the finished rehab. So last episode we talked about the process of after you close the property, what we do to rehab it, to get everything done; special things that we do to make the house stand out and sell quicker. And this one is more about…
Melissa Johnson: Honestly, I don’t know what’s happening. I’m so sorry. I don’t know. Nobody ever prints to my printer. I don’t know why it’s doing that.
Danny Johnson: Is that a spam fax?
Melissa Johnson: I don’t know.
Danny Johnson: Okay. So what are some of the things that you’re doing before putting the finished product on the market? What are the sort of a checklist of items that you do?
Melissa Johnson: So I think we had talked before about punch list kind of stuff. So I always go through and, you know, we’ve already done the punch list at that point and the contractor has already done all the items, but I like to go back one more time and just make absolutely sure that everything is done because that’s pretty important, you don’t want a bunch of stuff coming back later that you could have handled ahead of time. So, I do that.
And then another big thing that we’ve been doing lately just because there’s been so many changes from the time that we buy the property to the time that we sell it. So I like to re-run the comps one more time just to… because there’s been cases where we had an area reset and the value has gone up so much that we’ve actually been able to get quite a bit more for some of the properties that we’ve been selling.
Danny Johnson: Which is awesome.
Melissa Johnson: Yeah, which is really awesome and unexpected. So that’s been a good thing. But I do like to double-check everything just to make sure that our pricing is good and everything. Typically, when we’re pricing the homes to sell, I don’t want to have the most expensive house for sale in the area. So I try to make sure that we’re at a competitive price, it’s going to move fast, but we’re still making plenty of money, so that’s kind of my criteria.
Danny Johnson: Where do you put it then? If it’s cheaper, like obviously, we do a great rehab and make it stand out, do the special things that we talked about in episode 76. But where do you look at putting the price? So if other houses are selling at the top in that area, that neighborhood like 175, where do you try to price the property that you’re going to put on the market?
Melissa Johnson: I try to go just a little bit below. I mean, there’s so many factors too. It’s like double-checking like does this house has granite in it, how long do they take to sell, that sort of thing. But I try to go just a few thousand below because we can always come up on a price. People are asking for closing cost concessions and stuff which we’ll talk about in a little bit.
Danny Johnson: So that’s what you mean by that, it’s like it builds in a little bit of room for negotiating some of the other items and so they’ll still appraise for the higher price.
Melissa Johnson: Right. And you really got to watch that too, you know. You don’t want to price something that’s priced so high and then you’re going to have issues with appraisals because that just becomes a nightmare.
Danny Johnson: Right. And we’ve had it happen.
Melissa Johnson: Yes. Lesson learned.
Danny Johnson: So what about staging? I know that you’ve been staging the houses for, what, has it been 2 or 3 years now?
Melissa Johnson: Yeah. Full staging at least that long. You remember when we first started out, I mean, we just rehabbed the houses and slapped them on the market. You know, sometimes they would take forever to sell. And there was one particular house where I really learned my lesson so I guess it’s been more than two or three years because it’s been a while.
Danny Johnson: Which one was it?
Melissa Johnson: Oh, gosh. That one over in Stone Oak.
Danny Johnson: Okay, yeah.
Melissa Johnson: Park something. So anyway, we had this property that the rehab looked fantastic, it was in a great neighborhood, big trees, just really nice area. But the house would not sell so I was getting really frustrated, you know, just like, “What’s wrong here? Everything looks great! What’s happening?” And so, instead of lowering the price a whole lot which I mean, I think it was priced well, it just wasn’t getting a lot of showings, just no action really on it. And so, I went and bought a bunch of cheap furniture just like I think from Big Lots or something and just did like a quick staging. Because I actually like doing that sort of thing. I like decorating and stuff like that.
Danny Johnson: You can see the difference in her office, has the curtains and all that kind of stuff. If you come into my office, it’s just a couple pictures on the walls and that’s pretty much it.
Melissa Johnson: Or on the floor.
Danny Johnson: Yeah, there’s a lot of stuff on the floor and we’ve got like a studio thing back there, but anyway.
Melissa Johnson: Actually, my office is the only one that’s decorated out of all our offices. But, anyway. So that’s something I enjoy. So that was actually kind of fun, so I thought, “Well, maybe if I throw some furniture in here, it will help.” So I went and I didn’t spend a lot of money. I spent probably less than a thousand dollars. I bought a living room set, I bought a bunch of pictures for the walls. I bought some shower curtains and some towels and some rugs and stuff like that. And just like trying to add some color and some life into the place so that people could really get a feel for what it can be. And after I did that, we had a huge increase in showings and so ever since that has happened, I made it a point to stage every single house. So I’ve got a few rotations of furniture and now at this point I got a storage unit and I just move the stuff from house to house to house as we buy them and sell them.
Danny Johnson: Right. And I’m just constantly blown away by how cheap you’re able to stage these houses for. I mean, obviously this isn’t furniture that we wouldn’t want to have in our home because it’s not… I mean, it looks good but it’s not built real well. You know, that stuff looks great though and when you put it together, I mean, we even had the one house that you had staged, somebody actually robbed all of the staging furniture.
Melissa Johnson: Yes. They did. They took everything. They even took the pictures off the walls.
Danny Johnson: Right. Did they take like the hand towels and that kind of stuff too?
Melissa Johnson: Yeah, they took everything. They took my Goodwill furniture, which was funny because I actually found a really nice set of furniture at Goodwill or Salvation Army.
Danny Johnson: You were mad. You were pretty ticked about it.
Melissa Johnson: I was mad! That was my favorite. It was like a $300 bedroom set. Everything. The bed, the dresser, the mirror, like all kinds of stuff. You don’t have to spend a lot of money to do this.
Danny Johnson: Yeah. You can collect it over time. And then you’ve painted some of the pieces that you got so they look great. You can paint them white or whatever. And when we collect furniture too from the houses that we buy, when people leave furniture behind. We got that leather sofa. And do we still use that fluffy thing?
Melissa Johnson: No, I sold it actually. I got my use out of it and then I sold it on Craigslist.
Danny Johnson: Cool. So yeah, Craigslist.
Melissa Johnson: If you’re not staging your houses, I totally recommend doing it. Even if you don’t put a ton of furniture in, you know, hang some pictures up on the walls, buy some towels.
Danny Johnson: What are the main items, the staging items?
Melissa Johnson: The main items?
Danny Johnson: Yeah.
Melissa Johnson: Besides furniture?
Danny Johnson: Well, I mean, like what kind of pieces of furniture because we don’t fully furnish the whole. We don’t put beds in all the rooms and stuff.
Melissa Johnson: Yeah. What I usually do is I always do the living room because that’s the first place that people really see. And you really want them to feel comfortable in the house and kind of feel like how, I don’t know, like they can sit on the couch and they can talk about the property or whatever when they’re done.
Danny Johnson: And that’s the big thing, right? Like when you brought up the Stone Oak house, when you started doing this, I remember that conversation that we had. We were walking through and it was empty still and it’s like there’s nowhere to sit down and really feel the house.
Melissa Johnson: Right.
Danny Johnson: And when you’re looking at buying a house, you’re looking at everything whether you like it or not but you’re feeling it and if you don’t have a place to sit down on a coach and feel it and have that staging furniture to give you that feeling, the nice luxury feeling that staging furniture helps you do. And if you want to see what I’m talking about, Melissa is doing walk-through videos, posting them in the Flipping Junkie YouTube channel. So if you go to YouTube.com/flippingjunkie, that’s J-U-N-K-I-E, Flipping Junkie. YouTube.com/flippingjunkie – you can see these interviews. But then also her walk-through videos of these properties that before we fix them up, while we’re fixing up and then also the after product after she staged them. And it’s been pretty incredible. Some of the early ones, the audio is kind of hard to hear because we were trying to do it as she was walking around. Now, she narrates them after-the-fact so the audio is a lot better. But, great job on the videos.
Melissa Johnson: Way out of my comfort zone, but I’m trying.
Danny Johnson: Plus she’s easy to look at, so those are good videos to watch.
Melissa Johnson: Everyone just had to bear with my awkwardness for a while until I get used to it.
So yeah, so the staging is important. And another thing too that the staging helps is just, I don’t know like a good way to put this, but if there’s any kind of flaws in your house, you know, something’s not perfect, I mean we want it to be perfect, obviously, but having other things in a room doesn’t make people focus on all the little things. So if you have just a plain, blank, empty house, people are going to look at every single thing because there’s nothing else to look at.
Danny Johnson: Right.
Melissa Johnson: I mean, when it’s furnished and there’s things on the wall, there’s color and stuff like that, people are… they’re tending not to think about those sort of things. Like if there’s popcorn on the ceiling, maybe you didn’t remove it or something. They’re not thinking about that.
Danny Johnson: So I was thinking you were going to say like if you got a hole in the wall, you just put a picture over it, but that’s not what you’re talking. You’re talking about just distracting, like bringing the attention to other things instead of the thing that might not be like the popcorn ceiling, that might not be something you really want people focusing on.
Melissa Johnson: Right. I don’t recommend covering anything up by any means. I’m just saying if you’ve got like some, I don’t know.
Danny Johnson: Unless it’s temporary. You’re trying to get it on the market.
Melissa Johnson: Well, any major repairs are going to be dealt with later anyways. And hopefully you don’t have any of those by the time you’re listing anyways.
Danny Johnson: For sure. So, did you talk about the final walk-through?
Melissa Johnson: Yeah. So yeah, I mean, just double-check everything, make sure those punch list items are done and just give it a final eye before you start bringing in the furniture. Sometimes I do it a little backwards. Sometimes I actually do it with furniture on the house before I’m able to make it over there to finalize everything. But because the more you’re in the property, if you’re there all the time, you’re not going to notice things. You know what. But if you step away from it for a little bit and then you come back and you see all the furniture in there and you really just kind of look and everything…
Danny Johnson: And bring somebody else with you because he’ll see things that you don’t see. And you’ve seen it come from a place where you don’t want to be, you don’t want to eat lunch at before we fix it up. And so you see all this change and so you tend to miss some of the things that somebody hasn’t seen the property before my pick-up and see. It’s kind of amazing how that works.
Melissa Johnson: Yeah. So bring a friend or bring a realtor if you’re using one. My realtor used to come with me to all our punch lists and stuff like that. She would catch things that I wouldn’t catch and even the kids sometimes they come with me and they like to… yeah, the blue tape. The kids love the little tape. My kids, they’re worse than me with the nitpicking things.
Danny Johnson: Hey, but you can’t feel bad about it. You got to nitpick and make sure it’s perfect because you don’t want to go back over there after it’s on the market and say, “Well, I’m kind of embarrassed by some of this.”
Melissa Johnson: Yeah, we don’t want those embarrassing moments anymore.
Danny Johnson: Okay. So, we used to sell properties ourselves and that was a nightmare. It was a nightmare scheduling to show the properties and have people not show up, and we learned. Well, it took us a while. I wish we had learned it earlier but we started working with the realtor. And Laura is awesome. We’ve been working with her for years. So, do you want to talk about some of the things that you do with Laura to help make our business more efficient?
Melissa Johnson: Yeah. I think that if you have an awesome realtor, and I know we talked about her last time because she’s just… I can’t say enough good things about her. She’s phenomenal. But if you don’t have a good realtor on your team, I highly recommend getting one on your team. And especially, either somebody that’s really seasoned and knows the business really well or if you know somebody that’s new in the business so you can almost train them to how you work. So Laura and I, we have been doing it for so long now. We have a very easy system that we use. Basically, so we do the listing packets together. So what she’ll do is she will email me all the docs and Docusign, and I will Docusign everything including… so she puts everything in a packet. She’s great. So it’s got all the listing agreements stuff. I just type in the price that I want to sell it for. So these are all parts of our listing packet. We have a listing agreement, we’ve got the brokerage agreement thing that you have to do. Then I would do the seller’s disclosure through Docusign which is great because I don’t have to print those out, I don’t do them anymore. And then, let’s see. So to get ahead of things sometimes, I try to provide as much like this is what I want ahead of time. So I created just a quick little Word document and it just says this is the seller of the property because people buy the properties and our company names or land trusts or whatever, so you want to make sure that when people are presenting offers to you, that the seller is correct on the offer because a lot of times they’ll just look on the county records and if you haven’t had the property for very long, it might not be updated so then I have like the old owner’s name on the property.
So anyway, in this document I always put who the seller is. We usually don’t have a survey so if we do or don’t, I state that we don’t or do. If we do have it, then I attach it to the listing pack. If we do not have a survey, I always ask for the buyer-to-pay survey. It’s just something that I do.
Danny Johnson: Also, like the title company, we want to use our title company.
Melissa Johnson: Right, and that’s also on there. So I say we prefer to use Trinity Title. This is our closer, this is our information. And then also earnest money requirements, I put that in there also. So anyway, that way those things are already kind of ahead of time, and you’ll see later when we talk about negotiating offer, like how important that is just to give them all the information ahead of time and make sure that everybody’s on the same page. Like you’re not asking for this or that, it’s already here.
Danny Johnson: Do you have a blank one that we can put up on the show notes page for people to get?
Melissa Johnson: Yeah, I can share that.
Danny Johnson: Okay. And I’ll put that up there and you can find that at FlippingJunkie.com/77. That’s episode #77. FlippingJunkie.com/77. I’ll have that there on the show notes page so you can download it.
Melissa Johnson: Yeah. So I always put that in my listing packets also. And then as far as depending on the age of the house, sometimes you can pull the old listing and the sheet can already have all the information about the property, I don’t have to provide that. But every once in a while, something hasn’t… if it’s an older house or whatever, we have a property information sheet. And so I just email her like the room dimensions and stuff. Sometimes she does it but with her and I, she’s actually working remote with me right now. So I don’t mind measuring rooms. I just walk them out and add that in there. But your realtor can do that also.
Let’s see. And then pictures.
Danny Johnson: This one’s important.
Melissa Johnson: Yeah. Pictures are huge.
Danny Johnson: Huge!
Melissa Johnson: Huge! So we have actually had and we still laugh about this, we have had people actually super angry because the picture… they go to the house and it doesn’t look like the pictures.
Danny Johnson: Because the pictures were so amazing.
Melissa Johnson: Yeah, because the pictures are really good.
Danny Johnson: But that’s what you want. You want more people to see that when they’re looking at all these pictures of all these other properties and say, “Man! I got to see that house.”
Melissa Johnson: Right. Because if you think about it, that’s your first impression. Like if somebody is looking for a property and you’ve got an amazing picture up there, like great pic… because I’m sure everybody has done it. You go on MLS and you’re looking at all these like comps or whatever and it’s like, “God, this picture sucked. They look terrible. It’s all dark and cutoff in places and just weird.”
Danny Johnson: It’s almost like somebody just said “Hey, I need pictures of that house,” and like a realtor that’s not a very good realtor tells somebody “I need pictures of the house, go and get them,” and they got no sense of what those pictures are for. They’re just getting pictures and then they put them up there.
Melissa Johnson: Right. They take them with their camera phone or something.
Danny Johnson: Going through the motions and it’s horrible. Yeah, I think it kind of hurts your listing. You might as well not even have pictures on there for heaven’s sake.
Melissa Johnson: Yeah. And there’s some people that go all out. They do the whole drone thing, like the 360 virtual tours and stuff. I don’t do any of that. I just take the time to take nice pictures. And I take them myself just because another one of my hobbies is photography.
Danny Johnson: And she’s very good at it.
Melissa Johnson: So if you’re going to take own your pictures though, get a wide-angle lens.
Danny Johnson: Which one are we using?
Melissa Johnson: I have a Tamron. I use a Tamron and I have a Nikon D3000 that I’ve had for a while. I know there’s newer models but that’s just the one I use. But it takes great pictures. The pictures just come out awesome. And so I really spend the time, it takes me probably about an hour maybe to go through and take the pictures. Maybe not that long. I’ve been doing it long enough now that I know what angles and stuff to take. But, spend the time. If you’re going to do the pictures yourself, spend the time. Use the wide-angle lens. Get different shots. Like I always go to every corner of the room especially in the living areas and the kitchens and, you know, get low, get high. Whatever different angles that you can get to try to take really nice pictures. And then I come back to the office, I upload them on a computer, edit them, just kind of brighten them if they need it.
Danny Johnson: What do you use for that?
Melissa Johnson: What do I use?
Danny Johnson: Is that Lightroom or just your computer’s photo editing?
Melissa Johnson: I have used Lightroom but it takes a while, so right now I’ve just been using whatever’s on my Mac, just the regular…
Danny Johnson: And so the Preview, yeah, the Preview Edit.
Melissa Johnson: Yeah, yeah. But just make sure that those look really good.
Danny Johnson: Yeah. Try not to do the over filter that you see on some pictures where the sky’s blue is so ridiculously like neon blue, it’s crazy.
Melissa Johnson: Yeah.
Danny Johnson: Awesome. And then so how do we know when people go through the house, so we’ve got it listed, it’s for sale, it’s on the market. We’ve got people going over and checking it out. How do we know how people feel about the house?
Melissa Johnson: So part of the listing, once we get the listing packet done, she gets everything put in MLS and then she sets everything up with CSS which I’m sure probably most realtors do. But what I have her do and if your realtor is not doing this, you definitely need to ask them to do it, is to set you up with notifications, the showing notifications. That way, you can see when you have showings, what time, who’s in the house. But also, there is a setting where they could notify you about feedback that realtors are providing. And so, I have her… it notifies me directly. Some realtors might have it set up where it just notifies them and maybe they forward you the email. But you can have it set up where you will get that directly.
Danny Johnson: This is great because if there is a problem, you start to hear it in the responses.
Melissa Johnson: Right. And so that’s a huge thing. I always check the feedback just to make sure. If there’s something that someone’s saying consistently like I don’t like this or whatever, then I try to make it a point to go in there and maybe do something about it. Especially if it’s something small. People will leave strange feedback sometimes. Sometimes I wonder why they bother because some of it is just things you can’t change. Like “we didn’t like the location.” It’s like, didn’t you look at that before you made the appointment? I don’t know.
But there are things that can be changed. If everybody’s saying “The house is great, but the backyard, it just looks like too much work,” then you know you probably need to spend a little time and money, do something about that to move the property. You don’t have to drop the price.
Danny Johnson: Right. So you kind of have an idea of what’s happening, why it’s not selling quickly. But right now, San Antonio real estate market has been great. Right? So how fast have our properties been selling?
Melissa Johnson: So fast.
Danny Johnson: What is so fast? Well, recently we’ve had several, right? Where over a weekend we’ve had, what, we had a record of like 50-something showings and 20-something offers or something.
Melissa Johnson: I wish. No. The best one that I’ve had so far, we put it on the market on a Thursday night. By Sunday afternoon, we had 42 showings and I had 13 offers.
Danny Johnson: That’s crazy.
Melissa Johnson: When you get in those situations, if you do, and that’s not every property in San Antonio and probably most markets, we have a sweet spot, and those sweet spot properties just fly off the market, and that’s usually for us between like 135 to about 160.
Danny Johnson: That’s below median for San Antonio. So it’s somewhere below median price usually I think in most markets. It’s just where the majority of qualified buyers like the biggest pool of qualified buyers I think.
Melissa Johnson: Right. And the 135 might be a little low. It’s probably more like 140 to 165 now that I’m rethinking that. Yeah. It’s about that price range but those, they go so quickly and if they look nice and they look a little nicer than the average houses in there, not that you spent more money fixing it but that you just made it look nicer, not quite so rehab-by or, you know.
Danny Johnson: The yellow one and white, right?
Melissa Johnson: Yeah. Or the beige.
Danny Johnson: Yeah. Beige or white.
Melissa Johnson: People just don’t like that so much anymore.
Danny Johnson: It’s common. I mean, you see that in too many houses.
Melissa Johnson: Yeah. And so just add your wow factor like we talked about that in the rehabbing. And even if you just do one thing that looks amazing.
Danny Johnson: It’s like we’ve been adding the mural of unicorns with the rainbow in the living room. That’s really… I’m just kidding. Don’t do that.
Melissa Johnson: But actually, when we painted you on the unicorn, that was the best.
Danny Johnson: It worked. Yeah. Figures.
All right. So how do we handle multiple offers? So on that one, there was 13 offers. How do you deal with that? What do you do?
Melissa Johnson: Well, celebrate.
Danny Johnson: Of course.
Melissa Johnson: And then, so what we’ve had actually had to do a few times when we are in those situations is we had to cut off the showings. We just have to cut them off because there are so many and all the offers start to look the same after a certain amount of time. And I need time to review them because people in those situations, they know there’s multiple offers and they don’t want to… they get impatient. So it’s like I have to stop the showings to stop more offers coming in so I can look at even what I have because there’s just so many to go through and it takes a lot to go through these. So what I do is I kind of nerd out a little bit and I have a spreadsheet that I created that has all of the things. And if people want it, I can share that.
Danny Johnson: Right. So we’ll include that too on episode 77. FlippingJunkie.com/77.
Melissa Johnson: Yeah. And then just a quick way. If you’ve got several offers, for me it’s an easy way to see what all I have in one place instead of printing out. You know, these contracts are like 15 pages long and I don’t want to print all that out. And I don’t want to before I would sit down with a piece of paper and like write it all down and stuff. It’s just a lot to go through. Because there’s a lot of different things and so what I do is I separate each thing out because for me, those are all negotiation points.
Danny Johnson: Yeah, because it’s not just the offer price. It’s everything else.
Melissa Johnson: Right. There’s so many other things to be negotiated in a contract. A lot of people think it’s just the price but you can negotiate anything and there are particular things that I always negotiate on.
Danny Johnson: What are those?
Melissa Johnson: So, sales price. Hmm?
Danny Johnson: So what are things that you always negotiate on?
Melissa Johnson: Are we on the score yet? Yeah?
Danny Johnson: Well, whenever you look at multiple offers and there’s certain things that people are asking for, how do you choose which one to go with?
Melissa Johnson: So say I’ve got everything in my spreadsheet or whatever. First things I always look at is how are they paying for the house. Cash is always my first choice. Even if it’s slightly lower, if somebody is not paying cash for something and they’re not asking for closing cost and stuff like that, then that’s the offer I want to take. Cash followed by conventional financing and then FHA. And only because with FHA, I know there’s a lot of FHA buyers but there’s so many more hoops yet to jump through with FHA and requirements and things like that. That’s not saying all of them are like that because it really depends on the lender too which is another huge thing that I look at. So if it comes down to like a conventional or an FHA offer, the next thing I’m looking at is, well, who’s your lender. Laura and I have like a bad list of lenders.
Danny Johnson: A black list.
Melissa Johnson: Yeah. There are lenders that I have blacklisted. I just won’t work with them because we’ve have nightmare closings with them and I don’t want to deal with it. Going back to the cash thing, if you do get a cash offer, make sure you are asking for proof of funds because people can say “I’m paying cash” but you want to see that, so I require that. If somebody is paying cash, I want to see proof of funds always.
And same thing with the lenders. I want to see a lender letter attached to the contract, and I should have mentioned that before. When we do that, the document I was talking about with all the do we have a survey, here’s our title company, all that stuff, I always say attach a lender letter to your offer also. Most of them do but we get some that don’t.
Danny Johnson: Right. And then the blacklist. So if there’s a good offer, a strong offer, it’s maybe higher than the rest. They’re not asking for a bunch of closing costs but they’re using a lender that’s on our blacklist. What do you do at that point? Because you want to take the offer but you don’t want to use that lender. What do you do?
Melissa Johnson: Well, I always ask them to change lender. And I don’t know if enough people do that or think to do that, but I started doing it. I just figured, what the heck? Like I may as well ask, if can’t hurt. And honestly, we have had several people that wanted the property so bad that they’re willing to change lenders to get the house.
Danny Johnson: To one that we specific, which has been awesome because we’ve got people that we know are awesome and they can get it done. And so it’s nice to not have that worry at that point. So you’re not using a lender you’ve struggled with before. You’re using one that you’re familiar with that you even have a relationship with, and so it works out awesome.
Melissa Johnson: Right. And it’s not like we get anything out of that other than the fact that we know it’s going to close. And when I say that, it’s like we have people, you know, we have one lender that I love to use and they have rescued several of our deals just because… you know, they had a lender that seemed okay, things were going along okay and then they couldn’t make it happen and they would tell these people, you know, “We’re not going to be able to do this,” or, “You’re going to need to do this or that,” or whatever to get this thing to close. And of course, at that point, I’m super frustrated because closing is coming and things aren’t happening and so I’ve had my lender that I like to use step in, contact them. And, you know, I don’t have anything to do with it. I just kind of put them together as far as like through the realtor contact this lender, they might be able to help you if you want to get this closed. And 9 times out of 10 they’ll do it. And he has rescued probably maybe like 6 deals in the past year or two that we had that situation.
Danny Johnson: Right. And the way to find those people and the way we found out is whenever you have a closing, it goes so super smooth and, you know, and talk with your realtor. If you’re using a realtor, talk with them, find out how things have gone with the lender that the buyer was using and then make a note of that so that you have your bench full for when you need to recommend lenders to somebody else if somebody is using a lender that you don’t want to work with.
So, I was going to say something else. Okay. So a common situation is where a buyer gets an inspection and asks for tons of repairs, and this can happen a lot whenever you have multiple offer situations and they offer more than maybe they wanted to and then they try to beat you up on all this repair stuff wanting it to be perfect and a lot of these 30-, 40-year-old homes aren’t going to be perfect. But what’s our procedure for handling which repairs we agree to do and which ones we just won’t?
Melissa Johnson: The first thing that I always look at is, is it a health and a safety issue? Those, without a question, I will always do those repairs just because I don’t want to compromise anyone’s health or safety in a home. I just don’t forget about that.
Danny Johnson: Pretty much all electrical items.
Melissa Johnson: Yeah. So anything electrical (especially electrical things in the attic), anything that can start a fire or anything like that, you definitely want to take care of. And we try not to run into those. We try to make sure all that stuff is, you know. But you’re not going to catch everything. That’s what the inspection is for. So it’s actually pretty helpful. You do get some inspectors that nitpick every little thing and they scare the buyers and that’s where just having a good agent also is very helpful because they can kind of alleviate that, just like “hey, these items are not a big deal,” whatever, you know. If it’s a piece of leather stripping or something, then that’s obviously not like a huge thing.
Danny Johnson: Right.
Melissa Johnson: But for me it’s always health and safety. And then, you know, there are other things where something should have been done, you know, it was on the scope of work and maybe I missed it on the punch list. Like a sink is leaking or something where we changed out a faucet. I always check that stuff but I’ve had so many times where I’ve checked a faucet and it was fine and then they do an inspection, I don’t know what they do and then they’re like, “This has a leak in it. The faucet is dripping or whatever.”
So anything that was on the scope of work that should have been done that wasn’t done correctly or done at all, it should have been. So mostly if it wasn’t done correctly, I always have those items taken care of because I’ve already paid for that work to be done.
Danny Johnson: Right. But I think the key is like knowing that you don’t have to go and repair all of it. Now, lender-required repairs, you do, if you want the lender to lend on the property. But nitpicky stuff, I mean we negotiate it. We take care of the serious stuff and then don’t just agree to do everything and most of the times, buyers are pretty happy with it.
Melissa Johnson: Yeah. They’re going to be happy if you’re taking care of major issues. They’re almost like… and realtors always tell them to ask for all of it, ask for, you know.
Danny Johnson: We’ve even had that one where they wanted us to sweep out the garage and it’s like, “What? I mean, this is like a repair request? You want us to sweep the garage out?” It’s crazy.
Melissa Johnson: All I do is I print the thing out and I look at it, it’s like, what do you want and then I just marking through the stuff I’m not going to do, and then I initial it and just send it back to them and let the realtors hash it out.
Danny Johnson: Nice. That’s the way to do it. All right. So, on Flipping Junkie we get this question all the time about the FHA 90-day rule. Curse you, FHA 90-day rule. What is that? What is the rule on how do we deal with it?
Melissa Johnson: Okay. So the rule right now is if it is less than 90 days, you cannot sell it with FHA. So that being said, if we do have a property that meets that criteria, it’s under FHA, when I list it, I just don’t offer FHA financing, which is totally fine. Just offer it up as cash or conventional only.
Danny Johnson: It’s a listing that says that payment terms needs to be conventional or cash.
Melissa Johnson: Yeah, it’ll specify in there and that’ll just weed out your FHA buyers right there. Now if it’s between 90 and 180 days, you’ll have to have two appraisals. So you’ll have to have two appraisals if it’s in that timeframe but also if the resale price is over 100% of the purchase price. You’ll also have to have two appraisals. So that’s where you’re going to do the whole thing where you get these lenders that start asking you for all your repairs that you made and how much they cost. And I’ve run into that several times just because they want to know, they want to see, well, it starts with they want to see a HUD. They want to see how much you paid for the property. So I always start with no just because, you know, “No, I’m not going to provide that.” And maybe like 60% of the time, they’ll back off. And you’ve got to remind them, “Hey, you’re getting two appraisals. So what does it matter what I paid for the property?” If they keep on with it, then I usually will… and usually, this doesn’t come directly to me. This is all coming through the realtor or the title company. I’ll tell the title company we’ll just send them over the warranty deed.
Danny Johnson: From when we bought it which –
Melissa Johnson: Which will show the loan amount.
Danny Johnson: Which usually includes the repair and money that we got for the rehab too, right?
Melissa Johnson: Right, right.
Danny Johnson: But we don’t explain that. It’s just like send them that, let them make whatever…
Melissa Johnson: Whatever assumptions they want to make. That’s fine. So sometimes that will work. If the “no” doesn’t work, then that’s my next step. If that still is not enough for them and they keep on and they’re not going to go any further with the process and it becomes an issue, eventually I will send them a list of repairs. I mean, it’s really not a problem. It’s more of a pain than anything because they want you to itemize everything and, you know, I’m not going to send them the entire scope of work because then I’d have to write down a price for every single little thing. I’m not going to do that. So I just type up a very general list like replace the roof, did the foundation, plumbing repairs, painting, you know. You don’t have to be super specific on it. And most of the time, that’s good enough. And I just tell them “That’s all you’re getting from me. You’d have to figure the rest of it out.”
Danny Johnson: Right. So the gist of it is, 90-day rule FHA, so if we bought the house and then within 90 days of us buying it, we’re trying to sell it, we can’t sell it FHA so we don’t even put that in the listing. If we’ve had it 90 days and we’re going to sell it, we go ahead and include that but if it’s before 180 days of buying it, then we know from the get-go we’re just going to have to get two appraisals.
Melissa Johnson: Right.
Danny Johnson: And then they may request information about how much we paid for and what repairs we did.
Melissa Johnson: Right. And that all depends on the lender too. Some of them have been real stringent about it. Some of them, I just say no and they just figure out whatever they have to do.
Danny Johnson: Right.
Melissa Johnson: I think there are a couple of exceptions to that rule, that 90-day rule, and one of them is if you inherit a property yourself and you’re selling it within 90 days, I think you’re exempt. And then REOs sometimes I think are exempt from that also.
Danny Johnson: I haven’t heard of that.
Melissa Johnson: Yeah.
Danny Johnson: Cool. So after acceptance of an offer, what do you do to make sure that everything stays on track and it gets closed?
Melissa Johnson: Communicate. It’s so important. This is where it’s so critical to have a good team when you’re doing your dispositions as far as like who’s handling your dispositions. So for now, that’s me. But then my realtor, my closer is amazing at Trinity Title – well they’re all amazing at Trinity Title, but her team, they are just great. And so what we actually started doing and it’s been really helpful for us, and we’ve been doing business with them for years, closed hundreds and hundreds of deals with them, so we kind of get a little special VIP treatment which is nice. They come to us with all the closing docs. I don’t go to closings anymore ever.
Danny Johnson: Yeah, and even if you’re not doing hundreds and hundreds of deals through a title company, if you’re doing multiple deals a year, I guarantee they’d send a runner or send a mobile notary to your office or your location to sign paperwork. I mean, it’s not crazy to ask for
Melissa Johnson: Yeah. Definitely ask for it especially, I mean, we’re all so busy in this business and anything you can do to save yourself a little bit of time, you know, if you’re spending hours driving to closings and meeting with the seller at closing. And so, I never do that. I don’t ever see anyone that buys any of our houses anymore. Never. But the communication with them is just so great because my realtor and my closer, all three of us having this email loop on everything. So anything that comes up, it’s not just in a phone call. It’s in an email so everything is documented and we know every step of the way what’s going on.
And what we’ve actually started doing while I was in this phase with the title company because we’ve got so many properties being bought, being sold, things like that happening, we started doing property updates twice a week. And so on Tuesdays and Thursdays they will actually email me all the properties we have, where we’re at with everything, what’s the status. That’s been so helpful.
Danny Johnson: Nice. Yeah, that’s cool. And setting up a schedule so you expect it and everybody stays on top of everything. I’m always remembering my dad had that paper printed out in his office next to his desk that said “if nobody’s pushing, nothing’s happening.” And so, either you or somebody on your team needs to always be staying on top of stuff and staying on top of the other people that are staying on top of stuff just to make sure when we get comfortable and start assuming that people are keeping an eye on things and keeping up with things is when problems come up.
Melissa Johnson: Right. So we have the property updates Tuesday and Thursday with the title company, but then my realtor, every Monday, always contacts the buyer’s agents for any properties that we have on our contract that we’re selling. She will contact them every Monday just for an update. She’ll contact the realtor, she’ll contact the lender. You know, “Do we have any updates? Do you need anything? Are we on track to close?” And so we try to stay on top of everything. When we make repairs that we’ve negotiated, immediately when things are done, I get all the receipts together, send them over to her so she can forward them on so that they know the repairs are complete, here’s the documentation. So that nothing is help up on our end, at least. We make sure all of our stuff is done right at closing so that we’re not creating a problem.
Danny Johnson: Right. So at what point in this whole process do we finally remove the staging furniture? And do we do any kind of cleaning or anything like that so that they don’t show up to their brand-new house that they – well, not brand new to them though, I guess – and find a bunch of dead cockroaches and stuff everywhere.
Melissa Johnson: I’m trying to be better about that. Now, for us because we’re doing so many right now, it kind of just depends on what’s in the cue next. If we have a house that is ready to be staged and it needs to be staged immediately, I guess the rule of thumb is once we’re through inspections and we’re out of the option period with people, if I need to move that furniture out, then I’ll go ahead and move it out at that time. But if not, I always make sure to get it out at least 2 to 3 days before closing and move it on to the next house. If the next house isn’t ready, we’ll store it in the garage or something until it is. But we haven’t really had an issue with that, just moving it from house to house to house.
Danny Johnson: Right.
Melissa Johnson: And I do a little quick clean-up, just kind of wipe the countertops and stuff down.
Danny Johnson: You’re still doing the gift baskets?
Melissa Johnson: Yeah. And yeah, we do gift bags also. It’s nothing big but just we like to leave behind a small little gift for people that are buying our houses. And it’s nothing huge but we just put together a gift bag. It’s got like a candle and just other little household kind of things and maybe I spend maybe like $20 on each bag, and I just have a whole thing of them. I just grab one and take it with me.
Danny Johnson: And I thought that was an awesome idea because it’s a really special touch. And whenever you’re doing a bunch of houses like we’re doing, you know, a house becomes a commodity, it just becomes something that you’re buying and selling and you sort of forget the fact that this is a huge deal for a family that’s buying your property that you fixed up. And it means so much more to them than maybe it means to you. It means a lot to us but, I mean, you’re going from one to the next, but for them, this is a momentous occasion. And so having that special touch, showing that you understand, you know, like “hey, welcome,” welcome to them and congratulate them on their new home, so it’s a big thing.
Melissa Johnson: Yeah. And I like to leave them a thank you card also because, I mean, they bought a home from us, they liked our product and they trusted us through the process and it was, you know. It’s normally a really good thing and I am appreciative of people that buy the houses and I want them to be happy there. So I think leaving a little happy, a little thank you, it’s a nice thing to do.
Danny Johnson: Yeah. And I bet 99% of people don’t do that when they sell a house, so it sets you apart. And if you guys out there aren’t doing that, I suggest doing it. Like you said, it’s $20 but, I mean, it’s the thought that matters so much. And it’s actually pretty cool what you guys put together for 20 bucks.
Melissa Johnson: I’m a bargain hunter.
Danny Johnson: Yeah. All right, so I think that pretty much wraps it up. If you guys have any more questions about this, by all means, joing that closed Facebook group. Go to FlipPilot.com. F-L-I-P-P-I-L-O-T dot com and request an invite, get accepted into that closed Facebook group and ask away. You get answers from us, you get answers from other people in the group that are working more on their business than in it and headed that way, so it’s an awesome group to be a part of. And like I said, you can go to YouTube.com/flippingjunkie and see the staging and some of the walk-throughs that Melissa has done as well as these interviews that we’re doing, it’s also on video. So you can see all the fidgeting and stuff in and the googly eyes, right, that we have on there. So check it out, and subscribe. Subscribe to the YouTube channel, subscribe to the podcast. Really appreciate it. We’re going to keep them going. I haven’t been too consistent lately but I’ve updated my schedule, so I’m going to be real consistent to have the new episodes every Monday or Tuesday and we’ll have “a day in the life” episodes also in between. So, plenty of stuff coming up. We’re continuing the series. And be sure to subscribe.
So to get the documents that we talked about, the things that Melissa uses, that comparison spreadsheet for multiple offers and then the suggestions for the listings for the buyers to, you know, the title company and stuff that needs to be on the offer, go to FlippingJunkie.com/77. I feel like I’m telling people to go to like 20 places. But anyway, most of this can be found at FlippingJunkie.com. But, thank you so much for being on the interview with me. I guess after this we’ll hang up and I’ll go and talk to you in person.