James:
National housing data can tell us where listings, price cuts, and sales are moving, but it can’t tell us what a market is actually feeling like street by street. Right now, the national picture is giving investors mixed signals. Inventory is growing in some metros, buyers have more negotiating powers, and price cuts are common, but other markets remain tight and competitive. Today, we’re going past the averages with three brokers and investors working in very different parts of the country. Micah Mortag is covering Georgia, Florida, and the Southeast. Justin Hroch is out of Austin, and he’s going to be covering Texas and the South. Will O’Donnell joins us from Long Island with a Northeast perspective. We’ll compare supply, buyer demand, pricing, concessions, rehab and exit risk, and where each one of them sees opportunity. I’m James Dainard. This is On the Market. Let’s get into it.
I think one of the biggest things for real estate investors is making sure that we know what’s happening outside of the stats. And the best way to do that is boots on the ground, what is going on in the daily grind of everyone’s market. Per realtors.com, August housing report, active listings were up 3.6% and 20.4% of listings had price reductions. And what we’re seeing is certain markets are moving faster, certain things are getting absorbed, and some are getting worse and worse by the month. So we’re going to dig into all these regions and find out what’s going on. I’m going to kind of kick this off with the West Coast and the Northwest, because I can tell you right now, if you’re a seller, it’s not that enjoyable. We’re seeing a lot more inventory. I personally have now 14 homes that just hit market, and typically I sell out about 60% at a time I’ll keep pending.
And right now I have about 15% pending. We’re not seeing a lot of bodies come through where the bodies were coming through for the last six months, but it has slowly, slowly been dropping. And the numbers are kind of speaking for themselves right now. Seattle’s inventory is up 27.3% and price cuts are averaging around 4.6%. So we’re seeing a big shift in what’s going on, especially if you’re a flipper because what that’s saying is we’re coming about 5% off what we though our performing numbers were working and it’s taking a lot longer to sell with all this active inventory coming in. And so part of this whole game is there’s seasons and different timing going on, but we’re definitely seeing inventory increase as houses are coming on and buying demand has dropped. And so I want to dig in really quickly to what’s going on in your market and then what you guys are doing to pivot around this because I know in Seattle we have to stay in front of it because if you sit there and you wait for the price, you’re going to wait for way too long, the debt’s going to eat up your deal and you have to shift down and just cut price and move it on.
On the upside though, we’re buying deals at least 15% cheaper than we were buying them nine months ago. And so if I was paying $500,000 for a house, we’re finding these in the low 400s now and there’s been a big shift in what we can buy. And so even though we have the most homes for sale, the most money out right now, we’re buying more homes than we were even four to five months ago because I think the name of the game is you got to get rid of your bad inventory and load up with good inventory and get things moving. But it’s not that easy because price cuts aren’t solving the problem here. We’ll do a price cut and we don’t see any more bodies come through. And so it’s really about getting to the right price point and getting things moving to get the activity and then really working the sales on the phone.
I have gone from really focusing on investing to I’m a broker on the phone, working phones, dragging in offers, working deals, and that seems to get it pending. And so we want to know what’s going on in each region. They’re all a little bit different. Seattle, Portland, Spokane County, all getting toast on the Northwest. But then we see little pockets like San Francisco, we’ve seen the highest sale to list ratio and it’s had a massive rebound over the last 12 months. It is at 108% of lists. So the homes are selling for 8% over list price right now. So I want to know how it’s going on each one of your markets, what you’re seeing, what you’re feeling and what you’re buying. And as brokers, what’s your advice to get things sold? And Justin, I kind of want to jump in with you first because Austin, Seattle, they’re very similar.
We go through the same struggles right now, and I know Austin’s been putting along the last two years.

Justin:
Yeah. I mean, Austin has had a whirlwind of the real estate market in the last five years. COVID era, we got hot, hot. I mean, just insane numbers, low inventory, and it felt like every house was moving before it even hit the market. And so it’s been quite a shock, I think, to most people who are looking to sell their home now because overall our market is relatively flat and prices have just compressed. I think I was reading the other day on Realtor that prices have compressed over 27% in the Austin market and sellers just have crazy misplaced expectations from what was to what is now. And that’s probably the biggest challenge that we’re facing as a brokerage is just really helping people reset expectations to one, what is a healthy real estate market and two, what is their home actually worth? And Texas in general, I think is filling a lot of that.
There’s some great policies that make our state great because there’s a lot of builders who can build here. There’s a lot of ways that we can create inventory within cities like Dallas and Austin. And so where we are now, really strong buyer’s market. In some sense as a broker, it’s been good to be able to slow down just in the sense of you’re not rushing to take your clients to go see a home. You’re actually giving them time to look through, make sure it’s the right fit for them and make a reasonable competitive offer with the sellers.

James:
So what are you seeing as far as when you take things to market, what’s the inventory that’s trading? Even though Seattle’s market’s not doing well throughout the whole Northwest and the West Coast, there’s the affordability bubble, things at the top end aren’t selling, but people are opting for more dated homes that are cheaper that they can put their sweat equity in. Those numbers are a lot different than the stats I just read off at 27% more inventory. It’s fast, less inventory is moving. What’s moving in that Texas South market right now?

Justin:
I would say that it is the homes that are affordable, but they’re not necessarily the ones that are dated. Expectations that we set with our clients when they’re going to list a home is that the things that are done well, the things that are done nice, those are the ones that tend to move. Because right now, I think in Austin, we have 116% of sellers to buyers. And so literally every buyer who’s looking for a home can have at least two to three options versus a seller who’s looking for a buyer. And so the buyers have time to go and look and peruse and find the homes that they want. And what we’re seeing is they’re selecting the ones that are not dated, either slightly remodeled and/or just don’t have a lot of deferred maintenance to them because they have the option to choose of the different homes and so they’re going to go for what’s better.

James:
So because you flipped a lot, good story about Justin is we met at BP Con in San Diego. I think you bought me for a weekend.

Justin:
I did. Well, I bought you for an hour session on Zoom and I was like, nah man, I paid too much for that. I need to come visit you.

James:
Yeah, they flew up and hung out.

Justin:
Yeah.

James:
But I know you’re doing a lot of flips. So as an investor, you’re a broker so you can kind of feel what’s happening in your market. What does that tell you as an investor that you’re focused on, on your strategy and what you want to buy?

Justin:
Yeah, so I mean right now I’m not doing a lot. So in the past we did a lot of ground up construction, newer homes, tried to hit the top end of the market, really expensive neighborhoods trying to sell for a million and a half, two million. Right now we’ve pivoted to trying to pick up in some of the tertiary areas outside of Austin, like Round Rock, Georgetown, Leander, where these homes, their prices have compressed quite a bit, but if they need to be cosmetically updated, we can go in there and spend 25, $30,000 and usually make probably a 40 to $60,000 spread. And so where we were kind of trying to play on the top end of the market when things were moving and interest rates were low and we’d see spreads of 100 to 200,000 a pop, we’re kind of trying to stay in that lane right now where we’re hitting singles and making 40 to $50,000 of every flip that we do.

James:
Well, it’s quicker and faster and gets you in and out of the deal.

Justin:
Yeah. And that’s the thing, the cost of capital right now with rates where they are, it can really eat into a

James:
Deal.Because when you sit there and you start drowning and you’re on market and you’re just racking days on market, especially if you’re in that price point that you were in, million to $2 million, it’s a four to $500 a day bill and that will erode the profit so quickly. And when you’re in a slow market, you got to make sure that you can have velocity and move.

Justin:
Yeah. And that’s the target of what we’re aiming for is when we buy a home, we’ll sometimes go in there. We picked up one yesterday. We went in there and it was a beater. We ripped out all the carpet, got it cleaned up, did some light drywall patch and put a new HVAC in. And we’re turning around putting it on the market as is, hoping to make 30K on it just because we bought it at such a good price. And so we’ll sell it, hotel it to someone who will pay us slightly more, but because we only have it for maybe six weeks, it’s worth it to us rather than spending four months trying to do a full rehab on it to make an extra 20K.

James:
Yeah, just pivoting that plan because if you look at the Southwest in general, like Utah, Colorado, Arizona, they have some of the worst performance going on. The Northwest and the Southwest is just not doing well. Denver has the highest price cuts in America at 31.4% and Salt Lake City is third at 30.3%. And so this rush South that we saw during the pandemic has slowed down. For

Justin:
Sure.

James:
And it’s causing a lot more price cuts and people just aren’t pricing right out the gate. And so if you’re in that South market, you want to just be careful about where you’re going through. We’re taking a quick break. When we return, more from our panel of expert brokers. Welcome back to On the Market. Let’s get back into the broker panel. But that only really tells one part of the story of the South because then there’s the Southeast where Micah is, and that’s a little bit different out there. There’s goods and bads going on. I mean, what are you seeing in the Southeast right now?

Micah:
So we’re definitely experiencing the same economic conditions. Obviously we have higher inventory, definitely lower demand, but we’re still transacting. We’re having closings every week. It’s very hyper local, especially in Atlanta. It’s a big city, so it’s really by neighborhood by neighborhood. I analyze every single month 120 zip codes and I pull data from RPR and I use this data when we’re working with investors because we’re very, very, very intentional now on where we buy what strategies, especially with flipping. So we’re looking at price trends because we don’t want to buy a flip in an area where the prices are potentially going to go down or inventory is going up. But overall, when I look at these 122 zip codes, it still says that Atlanta is technically a seller’s market, which means our inventory is less than six months in every single zip code except one on RPR right now.
There’s one zip code that’s at 6.5 in Atlanta in our sub area. So inventory is going up. We definitely have a lot more leverage when you’re a buyer. It’s actually amazing. There’s a lot more opportunities, but we’re still transacting. So from a seller’s standpoint, they still always want to try, right? So we’re listing properties, they’re taking a little bit longer to sell. We are inevitably going to be doing one or two price drops. We’re never just going to get to the point and put it on the market for what it’s worth. They’re like, “Well, let’s try.” But eventually once we get it into the right price, they are selling and we are closing. It’s just taking a little while.

Justin:
Well, yeah, I’m finding that a lot too. A lot of our sellers have overpaid for their home two or three years ago and life changed, something happened, divorce or whatever. They’re coming to us and they’re trying to recoup. And what we’re finding is they’re just having to take a loss on these houses. It’s like either, hey, you can rent it out or you’re going to have to take a haircut of 50, 60 grand just to get your house sold.

Micah:
That’s 100% what we’re experiencing in Florida. Florida’s hypersensitive to what’s going on in the world. So when it’s good, it’s good. When it’s bad, it’s bad. I feel like that’s kind of like your Austin market too, that the shifts are extremely dramatic. So the listings that we’re putting up in Florida, unlike Atlanta, I mean we’re putting up, they’re not getting showings, we’re doing price drops, we’re doing every bit of marketing, we’re doing open houses, we’re doing everything we can and they’re not selling. We have unlisted and re-listed several houses in my North Florida market, which is Santa Rosa Beach, 30A, Destin. Miramar Beach has more inventory than I’ve ever seen right now. If you go into RPR, Miramar Beach inventory is 17 months inventory. It’s flooded. It’s a small area and the demand is just not there, which also means that there’s a lot of opportunity there to scoop up some deals.
South Florida, same thing. They’re upside down and it’s sad. It hurts. I had a property listed in Sarasota, which isn’t necessarily my market, but it was one of my investors I sold a property to a couple years ago. He needed to sell it and he’s upside down. He’s going to lose a hundred grand. So we had to take it off the market and now he’s looking at STR options, he’s looking at rental options. And so that’s definitely what’s going on in Florida. Atlanta, again, we’re still moving them. We’re just doing price cuts. We’re still getting showings. It’s just slower. So Atlanta’s consistent. That’s one reason why I love to focus my investors into the Atlanta market. The numbers are better, the products are better. I think Atlanta is the number one flipping market in the country, isn’t it? Or Georgia?

James:
Atlanta’s doing, I mean the Southeast, it’s one of the strongest ones. It’s one of the rare markets that had a rising list price at 1.2%. Instead of people cutting, the listing prices are going up and new listings are down 10%. So there’s less inventory and pricing still staying stable. Whereas in Florida, it’s struggling. Tampa’s down 6%, price per square foot’s down 5.6%, price cuts at 25.5. But then other parts of Florida, like Jacksonville, are doing really well. Inventory’s down 16.9% and days on market are down 10. And so there’s all these little pockets inside of each state that are moving or then there’s pockets that you want to stay away from. Michael, what do you see on the buy side? Because you do a lot of acquisitions because I just saw your face glow and you’re like, “Oh, the buy side is the deal.” What are you buying and where’s the opportunity?
Because when the market gets tough, there’s a lot more opportunities to buy.

Micah:
Yeah, no, it’s super exciting for me. I love the market we’re in and I’m weird. I’m always opposite of everybody else’s like, “We’re struggling. We hate it.” And I am beyond excited because there are a lot of investors in the Atlanta market and they’re still interested, but we just have to be extremely, extremely intentional with where we’re buying what. So if somebody says, “Hey, my strategy is flipping or my strategy is bur or rentals,” we first look at the data. I don’t even ask them where they want to buy. We look at the data and the numbers and then we go look for inventory options in those areas. And this is something that I learned from James. You can’t wait for the perfect deal and dig for the perfect deal. You have to create the perfect deal. So a lot of these homes are sitting on there.
The price doesn’t make sense for what we’re trying to do, but what we do is we find the areas that we want to buy in and we run our numbers and we write offers on all of them. And where we used to do that and we’d get declined or ignored, now we’re getting people. I did five offers two days ago and two of the initial offers that we low balled got accepted and I’m like, “Oh no.” Now I’m like, “Okay, we’re actually under contract for two.” We didn’t ask for enough.
Yeah. I was like, “We’re expecting counter offers.” I’m like, “Well, I guess we should go look at them now because we’re not even running around Atlanta at a hundred degrees looking at all these properties.” So yeah, there’s a lot of hidden opportunity. Again, something I learned from James, you got to look for different opportunities as far as where you can subdivide a lot, and we’re seeing a lot of that too. So if you look deeper, there’s a lot of opportunity in Atlanta, which makes me super excited. I’m closing on one next week where it was a rehab and the numbers worked for this house to be a rehab on this lot. And then we realized that it actually was sold with the lot next door. So we’re getting two lots and one house for the price that made the numbers work for just one house.
So the reason that they’re selling the lot next door is because there was an encroachment when they started to renovate this house, they stopped and it encroached on the other one. And instead of fixing it and demoing it, they just said, “Oh, we’re just going to sell both.” So we’re closing on this one next week and we ran all of our different plays. We’re going to demo the encroachment. I’m going to make this house look less scary. We’re going to go in there, clean it out because there’s water, fire, everything’s living in there. It looks like one of James’s scary projects. Zombie. We’re going to clean it out and sell the project for exactly the same amount that she’s buying both lots for. So basically she’s going to have this other lot over here that we’re going to build a house on for free. The new construction in that area is going for like 500,000.
So definitely really cool place. You would think initially that we would just renovate that house, but I’m like, no, the renovation on that house is going to be 150,000. Her margins are going to be better to just sell that and stay into the lot, which isn’t normally what we do, but it makes sense. So yeah, a lot of different opportunities.

Justin:
Oh, well, it’s also her risk, right? It’s like you invest 150K into that project, substantially higher risk than just trading the property, taking the win. And I think that’s what we’re trying to do as an investment group right now is just how do we stack small wins instead of trying to hit these home runs that we were able to hit a couple years ago because the market was so active and money was so cheap. And you could hold a project for three or four months longer two or three years ago, and it would still perform because the market was just going up and up and up. And so even though you were having more carrying costs, I mean, it was just appreciating every month that you let it ride.

Micah:
Exactly.

Justin:
Right now that’s gone. It’s almost like it’s compressing every month that you hold a project. And so these smaller wins that we can trade just real quickly have been a real sweet spot for us to where we can pop off 30 to $50,000 every flip that we’re doing.

Micah:
You’re 100% right. So the play on that one, while it made sense, is if I put a reno project in Atlanta under 200, it’ll sell in a minute. And I just put one on the market. I didn’t flip it myself because I don’t like this area. It’s got a lot of inventory, a lot of days on market. It’s not a nice area. And so I didn’t want to sell it to one of my own investors. So I put it on the market at 195,000 in the first week. We have three offers, full price. I’m putting it under contract today. So that was the play with this double lot. I’m like, okay, she’s buying it for 165,000. If we renovate this, it’s $150,000 project. It’s going to take months and there’s going to be risk. There’s going to be hold costs. It’s not worth it. We can just sell this project for 165,000, make it look less scary after we demo and fix the encroachment, and she’s into this one for free.
So yeah, that’s the play. And she’s actually going to bur the other one. We’re not even going to flip it, so she’s just going to build it and keep it. But it’s exciting. It’s definitely good in the Atlanta world if you’re an investor or an REI broker.

James:
And that’s the important thing is you have to switch the strategy with whatever’s going on in your specific region, right? The Southeast, the South, the Northwest aren’t doing great, and especially in that expensive market. So how can you transact and switch up the strategy to work inside that? And that’s about where the velocity is, what is selling more affordable because it’s just too expensive for people. And it’s really important to talk to your broker about what is selling, what’s the absorption rate in certain price points and zip codes, target those zip codes because I hear Seattle’s bad, but there’s certain price points and zip codes that are moving like crazy. And you can still get multiple offers even though a big chunk of it is not doing well. And so you got to switch the strategy with whatever’s going on in your region and really dig in, not just on a nationwide, because Will, you’re up in the Northeast and the Northeast has been doing actually fairly well compared to the rest of the regions.
What are you seeing up there as far as inventory, what’s selling, what’s not selling? Because I know it’s definitely been one of the stronger markets last 12 months.

William:
It sure has. Fun fact, out of the top 10 markets in the US, eight of them in terms of appreciation are here in the Northeast. My particular MLS, one key MLS, we basically cover New York City, Suffolk County, Nassau County, and the Hudson Valley. Right now, days on market are actually dropping. We’re seeing appreciation. Our year-over-year appreciation is at about 8%. My days on market for my counties are 22 days and we’re still in a very strong market. I think a lot of it has to do with the fact that we have no land here. There’s no way to add supply and things are so restricted here in terms of politics and zoning that it is difficult to add supply. So that creates stable demand, therefore continuing to push prices up.

James:
Well, in those zip codes, what’s the median home price? Is it an affordable area? Are they more expensive? Because what we’re seeing, I know, I think the same for Seattle, these metro markets, we’re seeing the economy’s getting a little shaky, companies are hiring, the tech companies are kind of locking up a little bit, they’re laying off. And so we’re seeing the top end. I know for me, if you’re on the top end of the spectrum, the median home affordability is just going down and that’s where we’re seeing that big shift. I mean, what’s the price points that you’re talking?

William:
Yeah, so I do business in two counties, Nassau and Suffolk County. Nassau borders up with New York City, so Queens, Brooklyn. And then after Nassau, you have Suffolk County. So Nassau County average price is 881,000.

James:
That’s expensive.

William:
Yeah. Yeah. Which by the way, that’s kind of like your 750, 800 is your entry level home, a median price point. And then Suffolk County is 735, which also kind of buys you a starter home in a decent area that needs work. So that technically is affordable housing here. I am aware that I am in a more expensive market. If I’m not mistaken, I believe the US national medium price point is around 450, 440-ish. We’re about double that here. So for you to have a $5,000 a month mortgage is pretty affordable here on Long Island.

James:
What’s going on in the upper price points? Medium home price around 800,000, what’s going on at the 1.5, 1.6 range? Is that slowing down or is everything just getting eaten up?

William:
Interestingly enough, those are the homes that are moving the fastest. So it’s like if you are in one million, 1.5, 1.6, not only do you have nicer product, but you’re in these areas that have more demand. They’re more affluent communities, more doctors, lawyers, bankers, salespeople, et cetera. These homes are getting eaten up. There’s one specific neighborhood that I could think of off the top of my head. We just had two properties in that neighborhood. One of them was listed at one million, the other one was listed at 1.2. They both went within one weekend and 200 grand over asking is not a surprise. Another home we just had, one six, flew off the market. It’s like location is everything here and it makes sense because in that price point, you’re making four, five, 600 grand a year, you have more stability, you have more assets, you have a stock portfolio, which by the way, the market’s been up.
So a lot of these people, they’re pulling lines of credit out of their portfolio. A lot of them are paying cash. That’s what we’re seeing here.

James:
Okay. So you’re seeing things are moving in that specific region now, because when I look at the Northeast in general, it is doing fairly strong, but then you do have certain cities you got to be a little careful in. The steepest regional decline, inventory is up 9.1% in Boston, 15% in Providence, and 16.1% Providence has some of the worst trajectory. So there’s little pockets.What do you see in upstate New York where it’s a little bit more rural? Is that still moving well?

William:
Yeah, I could only speak to Long Island, which is where I only do business on Long Island. I have no idea what’s going on upstate or outside of Long Island and the boroughs here, but what I can speak to is within my market, there are some areas that are more entry level, borderline ghetto. This is where you have the cookie cutter homes, you have properties that are five, 550. Those properties are sitting longer. And if you don’t have something unique, like if you’re not at the end of the block or you have a larger lot or you have an ADU or a basement apartment, something to offset that higher mortgage, you’re probably going to be sitting on the market a little longer.

James:
Okay. So the actual kind of below that medium price, that lower end is actually what’s sitting

William:
Because

James:
Interest rates are probably affecting that buyer a lot more.

William:
100%. We see the wealth gap increasing for sure where those who hold assets are just becoming wealthier and spending more. Those who don’t, which typically you’re buying a house for five, 600 grand here on the island, you’re, I don’t want to say broke, but you’re not in a position to do work to the property or spend the way those people at one million plus are spending because you don’t have assets. You don’t come from a wealthy family either.

James:
Yeah. When you’re looking at, like I was looking at Buffalo, Buffalo, it’s very affordable. You have your median home price is 273,700, which is actually down 4% year over year. Inventory’s up 30% and price cuts are at 11.1. So the price cuts aren’t as drastic. So what I’m hearing everyone say is every market’s got its own little sweet spot, right?

Micah:
That’s

James:
Right. And where Will’s at, he’s actually looking at the more expensive stuff where Justin, myself and Mike, we’re actually looking for the more affordable stuff because that’s where the velocity is. And so there’s no strategy that works across all regions. You got to look at each area, each zip code, and really talk to your real estate professionals about what is moving and run those reports. We’ll be right back after the break. More from our panel, stay with us. Welcome back to On the Market. Let’s get into our final thoughts from our panel. So for all three of you, you’re all brokers, what are the top three things that you run for a client? If someone comes to you and goes, “Hey, I want to flip a house this year,” what’s the three data points that you look at to help that client get into a good deal?

Justin:
The main thing that we are looking at with our investor type clients is first and foremost, how are they choosing to finance the deal? Are they bringing cash? Are they having to go through hard money? Some combination of the both? Because that is going to set the trajectory on how we underwrite the deal and what they can actually afford. So I’d say the biggest thing is I want to know how are you trying to finance this deal? So for us, we use hard money, we pay about 9%, 5% down, and then we usually will borrow some gap money from a private investor. And so our borrowing cost on some of these projects usually runs around 20 to 25K when it’s all said and done and we include title and closing fees in there. And so we already know that whatever our price point is, we have to get it 25K lower to make sure that we’re making the deal work and pencil for us.
And so that’s the biggest thing is how are you going to purchase this and what’s your financing plan? Because that’s going to just determine how we’re underwriting it and what kind of holding costs you’re going to have over the course of the project.

James:
Okay. So you’re looking at more debt, how long they’re going to keep it for, and the average days on market and the absorption rate’s going to be really important on that. Yeah. Micah, what are the things when you’re looking at with a client, if you had to go, “Hey, this is what you’re going to flip today in Atlanta, what price point are you looking for?”

Micah:
Yeah, definitely certain stats that I look at when I’m looking for flip investors. Of course, we look at months inventory. I look at the trends to see if that particular area has a rise in inventory, which might indicate that prices are going to go down because it’s going to be harder to predict a future ARV if the price is going down. It’s not that we won’t buy in those areas, but we just are a lot more conservative with our numbers if we do, but Atlanta has more opportunities in other areas, so we’d rather just go into the safe areas instead. The other thing I look at is I look at average home sale in the area, and I compare that to my ARV. So if we’re buying a property with an ARV of 450, and I’m talking Atlanta, so I don’t want to buy in an area where the median home price is 300, because I’m not trying to way overshoot that neighborhood.
If the average price point is 300, you might not be able to sell right now somebody that could afford a $450,000 house in that neighborhood. So I really try to buy in areas where the median home price is at or a little higher than what our ARV projection is, so we can be in the middle or not trying to break the neighborhood record. And the other thing I do look at is list price to sold price and days on market. I’m a real estate broker. I’m promising to sell this. I want it to be profitable for my investors. So if I say we’re going to sell it for this amount, I want to be very confident in that. So days on market will affect our whole costs and list price to sold price. If they’re doing a lot of big price drops in that area, it’s definitely a red flag.
So yeah, those are the three main things that I look at when we’re looking for flip strategy specifically.

James:
Okay. Yeah. What’s the velocity? Where’s the affordability? I mean, that’s right up what we’re looking into, digging into every zip code. Well, out in the Hamptons, Long Island, what are you looking. If I’m coming to you to flip a project out there, I mean, what’s your advice for clients to get in and out of a deal? What would you be targeting?

William:
One of the first things I would make sure that I truly understand is what does the consumer want? What kind of product are they looking for? In what location? What does the average buyer look for in wherever you’re trying to flip? So for example, in my area, a lot of people want an accessory unit. They want to rent out a part of the house. We do a lot of basement apartments here or garage conversions. Maybe in a different market, it might be an open concept kitchen with a specific countertop and specific amenities. So truly understanding in your market what the buyer wants. Number two, I would say is nailing the price. A lot of sellers are stuck in 2021, 2022. I think pricing ahead of the market is very important. What I mean by that is if everybody’s asking for 650, list for 599. We just had a client that he wanted to list at 650.
That’s what the cops were saying. We advised 599 and because we listed at 650 based off of what the seller wanted, we ended up selling for 599. I guarantee you if we would’ve listed at 599, we would’ve sold for more. So understanding your pricing strategy is very, very important. Understanding what’s on the market around the property you’re trying to flip. I call the brokers, “Hey, what’s going on at this listing two blocks away from this property I’m trying to buy? Hey, I’m closing on this property. How have things been going at your listing over there? We have similar properties in similar locations. What feedback have you gotten from buyers? What offers have you seen come in at this particular price point?” And then I want to get ahead, take that feedback, use it to my advantage and position my property in a place that’s going to cause it to sell by pricing it more attractively and catering to the buyer depending on what the feedback given to those other surrounding brokers was.
So those are some of the things that I’m doing to position my inventory ahead to cause them to sell quicker and for more.

James:
We got to find that sweet spot as the brokerage. As we all hear, I mean the news is out, rates are high, inventory’s going up, there’s more sellers than buyers, month supplies is on the rise. And so as you get into the investment world, those are what we got to look at. It’s like, okay, this isn’t COVID anymore. Not everything’s going up, but there’s certain pockets, price points that have a lot of activity in it. And if you can target and work with the right brokers to find you those right deals, that’s where you want to be because especially the deals are getting better and we just have to find where the velocity is. So we’ll leave it there today. Micah, Justin, and Will, thanks for giving us your views from your markets. And for those listening, follow On the Market wherever you get your podcasts and subscribe to our YouTube channel for more real estate news analysis and investor strategy.
I’m James Dainard. Thanks for joining us and we’ll see you next time on On the Market.