Flipping a House, How Do You Determine How Much to Charge?

Flipping houses can be lucrative if done correctly. The process begins with acquiring a house that, for whatever reason, can be bought at a relative discount and sold relatively quickly. The house may be a recent foreclosure in move-in condition, or it may be a fixer-upper in need of complete rehabilitation. Whatever the situation, determining a price that will produce a sale that yields a reasonable profit is essential to the entire transaction. Different investors have different profit requirements, so there is no one-size-fits-all markup. Researching market conditions and accurately estimating cost and setting a price that both you and your buyer can live with is solid advice for any aspiring rehabber or flipper.

 

1

Get material and labor estimates from contractors for any repairs or renovations you plan to make to the house. Calculate your own material cost estimates if you will be doing the work yourself.

2

Complete the repairs and renovations. Add your acquisition, carrying (interest on any rehab loans) and rehabilitation costs to determine your total investment in the property. Include commissions if you use a real estate agent to market your home.

3

Research the local market for homes similar to yours. Consider the square footage, amenities and location of homes that have sold recently. Hire a real estate appraiser if you want your home's exact value, or consult a real estate agent familiar with your neighborhood to get a ballpark figure.

4

Set a sales price comparable to recent sales.

 

Tip

• Setting a price above what you are willing to accept will give you room to lower your price to close a deal.
• Investors are typically a tougher sell than buyers looking for a house to live in; know your buyer and negotiate accordingly.