Do You Buy The Del Monte?
You’re walking through the supermarket shopping for some fruit cocktail for a quick desert for you and the kids tonight. As you walk down the canned food isle you come up on your possible selections. There’s the black and white can with red stripes that simply reads “fruit cocktail” for 49 cents. Then there’s the store brand which has a picture of some fruit whose tag lie is “always fresh” for only 79 cents. Finally there’s the Del Monte can is full blazing color. Lush fields in the background with beautiful pineapples, a cherry tree, and a ripe peach are what you’re greeted with-for a whopping $1.19!
Surely you’ll agree that in the end the contents of all three of the cans do pretty much the same thing, fill your belly with some fruit. Some shoppers buy the “no brand” because they aren’t emotionally affected by the marketing ploy. Others opt for the 79 cent can because they don’t want the cheapest but they’re unwilling to pay the premium just for the pretty picture and “promise” of sweeter, plumper fruit. While another percentage of the shoppers go all out and pay almost 250% more for essentially the same fruit, but buying the Del Monte will make it taste better to them, in essence making them “feel” better about spending more for can.
What in the world does this have to do with houses?
Focusing on fully rehabbed properties that you’re planning to retail for maximum sales price. A recent conversation between a Michigan real estate investors was all about kitchens. They said they’d be willing to sleep on the floor and bathe in the laundry sink in the basement just to have a magnificent kitchen! That’s the kind of emotional hot button we have to be able to push as investors who are buy, fix & flipping in Michigan. The focus of this training article however won’t be the importance of kitchens and bathrooms. No instead we’re going to dive into what’s been proven to be the second most important part of a rehab after you’ve already made your purchase and planned the kitchen and baths…it’s the details.
Many prospective buyers reactions have been tested in both rehab projects and countless others. Always paying extra attention to one thing, if and how those buyers notice, react, and remember the little things. You know a dynamite kitchen looks like. You know what a jaw dropping bathroom looks like also. What I’m always studying and making changes to in my projects is the details.
What Do Buyers React To?
Here’s a list of obvious ones to pay attention to buyer’s reactions;
- fixture style and finish (matching your light, plumbing, and door fixtures and finish)
- new electrical outlets and light switches (how ugly are dirty old outlets on a freshly painted wall?
- professionally cleaned and pleasant smelling atmosphere (nothing impacts a buyer like a clean, warm, inviting house)
- bright light bulbs (you know how I love those)
- manicured lawn and landscaping (make them feel like their pulling up to a house on the cover of a magazine)
- clean and bright basement (dark, scary, stinky basement…need I say more)
- custom, but not crazy paint colors (you’re not selling a hospital so get some colors on those walls)
Finally…The 5 Sneaky Details
Now here’s our list of 5 sneaky details (plus prices) that my competition is not usually creative enough to use, too cheap to buy, or just plain too lazy map their contractors or themselves do.
1. Color matching switch plates in kitchen back splash. I pay around $4 a piece and buy 3 to 4 per rehab. Which makes it about a $10-$12 upgrade
2. Crown molding in rooms that looks natural to them. You can do most rooms in houses under $200,000 for $75 in materials plus labor. I figure a total of $150 per room on average. It makes an enormous impact in a master bedroom or small boring front room.
3. Dimmers on all overhead lighting in kitchens and main living rooms. Along with recessed lighting, do the math it’s not that much more than using a couple fixtures, I always add dimmer switches. $8-$12 on average per stitch, usually 3 per house. Hopefully the agent who’s showing your property will notice if your buyer doesn’t. People love this.
4. Modern cabinet pulls/handles. Use your Google-ability to see what’s being used in custom kitchens and try to get something close. Then use your Google-ability to find a good deal on them, shouldn’t be more than $3 maximum per piece. The ones I use are $8-$12 per piece at Home Depot or Lowes and my supplier sells them to me in packs of 100 for $3 a piece. But it looks like $12…get it?
5. Order a custom address bar. The design I prefer is silver writing on a black background with the street name spelled out below the number. I pay $40 to $60 per house and EVERYONE comments on it. What is that worth to the sale in the end? I don’t know. What I do know is when they don’t see it on my competitors houses, or homeowner short sales it makes my house more memorable.
The average cost for all of the sneaky details I outlined above is right around $500. A big factor is how many rooms you’re going to finish with crown molding. The impact to your buyers, their agents, their home inspectors, and possible the appraiser is impossible to project. However it’s those sneaky details that most Michigan real estate investors miss/skip/don’t know about that will set you apart from the other homes they’ve been touring. That will cause the buyers to “just like your house the best”. They can ‘t quite put a finger on it but they have to have your house. And a lot of times they’re willing to pay full ask, as long as you’ve listed it right, or even fight against other buyers and your house could go the the highest and best bidder.
real investors are doing real deals making real money
These are all of my own opinions that have been formed through first hand experience because we buy, rehab, and sell houses right now in Southeast Michigan. We are not reciting stories we’ve heard from a national speaker or internet webinar guru. We are the real investors who they spin their stories about. If you want to know what’s really going on in the front lines of Michigan real estate investing make your way to a REIA of Macomb event where real investors are doing real deals making real money.