Ten days is a long wait when you are on a schedule and a budget. With the frustrations of working with buyers, title companies, lenders and realtors-I learned a few things I'll do differently next time.
I really have a lot of tips for women that are taking on a house flip project as an investment, but for today- I would like to share a few that help at the end of the game, when it is time to sell.
1.Never take less than $1000 earnest money. My home was under contract in the end of January and they gave me $500 earnest money. They took 6 weeks to close, meaning I still had to pay my carrying costs, utilities, insurance, etc. As the buyers struggled to get their loan together, I lost money every day. They were close to backing out and if they had, they would have left me with 6 weeks lost time, over $1000 in extra bills and only $500 to compensate.
2. Don't close on a Friday. Most of the time the buyer will close and then the money will actually show up in your account the next day. So if I closed on Friday (which was one of my scheduled closing days that they backed out of) I would still pay utilities, interest, etc. for the entire weekend until it funded on Monday.
3. Get it in writing. After extending the closing date for the second time, I told my buyer via my realtor that I wanted $500 more in order to keep them under contract. They agreed they would send me a check overnight (because they went out of town instead of closing when they said they would). It was not written as an addendum, therefore they never sent the money. Integrity doesn't really go far for some people.
4. Don't assume the deal is done until it is done. On March 3rd I went into the title company and signed all appropriate documents, was told the buyers were signing that afternoon, and went on my merry way. I then cancelled insurance and scheduled utilities shut off. To my surprise they did not sign and I still owned a home that was now uninsured and utilities were about to be turned off. I re-instated insurance and utilities but it all took more time and money.
5. Remember the cost of title insurance. Most real estate sales negotiate some sort of closing costs into their final deals. In my case I said I would pay $5000 toward the buyers closing costs. As I did my numbers over and over before I closed, I had in mind exactly what my profit would be. Unfortunately I was thrown for a $1600 loop when the title company informed me that I would also need to pay the buyers title insurance costs. In Utah, where I live, it is customary for the seller to pay this fee. So in the future, I will always remember the 2% extra fees from the title companies when I plan out my flip deals.
Hopefully these tips help any of you in the future. It's good to learn from mistakes-and move forward.
I'm closing on my next flip this Monday.