Using the 70% ARV (After Repair Value) rule for investing and assuming some reasonable repairs, realtor fees can wind up costing %30 to 50% of the profit.
If you’ve flipped a few properties, you may be thinking about being your own realtor or putting the property up for sale by owner, in order to maximize profit. That’s why many investors become their own real estate agent, but what can seem like a good idea at first can sometimes become more than what you were bargaining for.
There is an immense amount of effort and overall work that goes in to selling property. Countless hours of making and taking calls, evening and weekend meetings, and endless tire kickers, not to mention the classes, yearly licensing fees and costs. Add it all up and there are thousands of dollars and hundreds of hours involved.
If you read “When do you make money on the property flip” (read it here!), you know that there are 3 steps in every flip; 1) buy, 2) fix, and 3) sell, and that you make your money by predicting and controlling the fix, and developing a ‘partnership’ with an agent or broker in exchange for a lower commission to increase the margin on the sale.
No one can do it all, and do it well. If you try, the market often steams past you and you lose your edge. You’re much better off building good teams with people who you work well with. Cutting out an agent who’s spent years cultivating a market, networks and market knowledge is not the answer, learning how to estimate property repairs before buying and using a construction system that helps save time and money, is.
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