Can I Charge Full Market Value for my Flipped Property?

A Lot of people are really interested in this question: Can I take a distressed property, rehab it, and sell it in the market at full retail value?

There’s good news and bad news. The good news is yes, technicality you can actually realize full market value from a  distressed property that you have rehabbed. The catch 22- the bad news in other words; is it’s extremely risky.

Let’s look at it through a case study.

Average Joe is a Flip Investor, he hunts down distressed properties, and invests money to make them look good, and sells them, he’s been in the market for a long time, and has had a great run.

He’s always sold his properties at around 30% below market value and made a good income, since he usually bought his properties at around 40-50% of actual market value, and spent around 10 to 20% of his budget to make them look good.  Just enough to raise the market value enough to make a reasonable profit.

Now Average Joe wants to hit a Home Run, he wants to sell a rehab at or a bit higher than market value.

He tracks down an awesome deal in a nice neighborhood. He talks to the owners of the property, negotiates purchase for cash to get it done faster, and get the previous owners moved out quickly. He buy’s the property “as is” and later on does the inspection.

He finds out that the house is in reasonable condition and there are not a lot of major repairs or damages that need to be taken care of and the previous owners were also took care of the minor damages and fixes for him.

He gets his contractors on site and working on getting the other repairs done. Meanwhile he raids Home Goods and finds knickknacks for the property; a few small statues, cobblestones for the driveway, new curtains, fancy lights and stuff.

The repairs are all done smoothly so Joe gets to work on the interior decorations, and starts getting everything setup to show the house. He even goes to far as to set up a kiddy pool in the back. In other words, he pulls out all the stops and completely changes the whole look and feel of the place.

Once the work is all done he puts it up for sale, and starts catering to his buyers.

The house is in an amazing neighborhood with great schools nearby. The house itself is near a public transport route. The neighborhood’s safe; kids can still play on the streets, etc. An ideal family comes along and falls in love with the place. The husband just got a new job and wants to move in. The home is perfect for them. Joe spots a great opportunity and pitches the house at slightly above market rate, then tells them there’s room to negotiate. They thank him and tell him they’ll let him know soon.

A week later Joe receives a call from the family saying they’re interested , and what’s the final offer, Joe gives them market value, they snap up the offer, the paper’s are signed and everyone’s happy.

This is actually a fictional scenario, but these are the elements that you need to have in order to make a great sale, you need to be able to buy a distressed property in a great neighborhood at dirt cheap rates.

You need to be able to move the previous owners out without them destroying everything.

You need to be able to fix it up on a reasonable budget, and be able to spend a small amount on additional amenities and interior decoration to make to house look totally brand new.

Location combined with the elbow grease will always work in your favor. Once the work is all done you need to be able to present the property to serious buyers, possibly middle to upper middle income families who want to move into the neighborhood.

If all these situations are met yes it is possible to make a full market value sale on a flipped property.