What Real Estate Investors Can Learn From Black Friday

A couple of years ago Black Friday moved into Thursday evening, this year some stores started their big sales on Thanksgiving morning.  Thanksgiving morning?  I say Yuck!  However, I like so many others, went to at least one of the sales, but not until Thanksgiving was almost over, 6 pm.  After all who doesn’t love a bargain?

So what does Black Friday have to teach real estate investors (REIs)?

Two key Black Friday observations I’ve made are: 

  1. Even in tough times people will brave the cold and stand in lines for hours to get a bargain.
  2. This is can turn into a buying frenzy if the desired product is perceived to be in short supply.

Purchase your investment property at a low enough price so that once it is fixed up you can sell it at an aggressive price.  A rule of thumb we generally use is to set the price about 10% lower than similar properties in the same neighborhood.  This will speed up your sale.

You may be asking, aren’t you leaving a lot of money on the table? 

Potentially you are leaving some money on the table but there is a saying in real estate, pigs get fed but hogs get slaughtered.  Don’t be a hog, price it to sell quick.  Quick sales avoid extensive holding costs and free up your investment dollars to gets you into the next project quicker.  Quick sales also build your confidence!

If you want to price it for a quick sale AND get a potentially higher price then learn from observation number 2 above. 

Advertise the heck out of the property and then limit the time frames people can come see it.  The object is to get numerous potential buyers looking at the property at the same time.  This practice can create the feeling of scarcity and you increase your chances for a quick sale with multiple offers.  With a little luck you will get a bidding war and receive a premium on the house that is higher than the asking price for similar properties in the same neighborhood.  So you get a quick sale and a premium price!

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