Not all house flips have happy endings. In fact, many intrepid newbie investors lose their shirts. And that's what appears to be on tap in the latest episode of "The Deed: Chicago"—that is, unless host Sean Conlon can work a miracle.
All started out OK for real estate agent Chantill Greer and her husband, Larry, who'd bought a four-bedroom fixer-upper in an up-and-coming Chicago neighborhood a year earlier. A potential buyer for the property was even lined up. What could go wrong? Well, everything.
The heart of the problem: A contractor that they'd hired for a few upgrades wasn't exactly performing miracles. The renovations had been dragging or were shoddily done. To cover the costs, the Greers had taken out a $150,000 hard money loan that was costing an arm and a leg in interest. Larry was working two extra jobs—delivering groceries and cleaning houses—to keep the project afloat.
By the time Conlon meets the Greers, they've poured $340,000 into the house and need an additional $50,000 to finish it. Conlon offers to front this sum if he can take half the profits once it sells. If it sells.
Will they succeed? Here's how Conlon gives it the good ol' college try, and the lessons these rookies rack up along the way.
Lesson No. 1: Trust but verify
This is one of Conlon's favorite sayings: "You have to be on the job constantly, trusting your contractors but verifying that they're doing their jobs right," he says.
While Chantill has overseen the kitchen and bathroom renovations, she wasn't around when the builders put up drywall over the gas meter, used the wrong-size pipes in the plumbing system, and amateurishly applied stucco to the exterior without properly finishing the surface first. Conlon insists that Chantill be there for every step from now on, so it doesn't have to be redone.
Lesson No. 2: Pay as you go—and get proof
Chantill has been giving money to the contractor to pay the tradespeople doing the renovations—but it turns out they haven't been getting paid, and now they're coming directly to Chantill. Conlon asks her if she's signed "lien waivers," which are legally binding proof agreeing that all the work has been properly done and paid for. Chantill says she hasn't done that yet, so Conlon insists she immediately get on those, since it would force the contractor to pay the tradespeople and get them off Chantill's back. Phew.
Lesson No. 3: Pick your battles
At one of the lien waiver signings, Chantill decides to tell the landscaper that she isn't happy with her work. The concrete path she's poured is not up to her standards, and she wants the landscaper to fix it. But time is of the essence, Conlon thinks the path is OK, and when you're in an office signing legal documents, that's really not the time to make demands of a renovation worker. Chantill reluctantly agrees to let it go.
Lesson No. 4: Make a 'hit list' for later
All this bad blood has Chantill so upset, she can barely see straight. Conlon advises her to put the names of all the people who have done her wrong on a "hit list," to be revisited once the project is complete and the deal has closed. Save up all that negative energy for later!
Unfortunately, Chantill just can't stick to this advice. When the agent who sold her the house shows up on the property for the appraisal, Chantill goes absolutely ballistic on him. It ain't pretty, and there are lots of bleeping bleeps. She's finally able to calm down, but everyone is left licking their wounds.
Lesson No. 5: Give your real estate agent an incentive to sell
It's no surprise that the original buyer slated for the property disappears after Chantill's outburst—but all is not lost, because Conlon has plenty of agents who can sell this property. By this point, however, Chantill hopes to cut a deal by offering the new buyer's agent a mere 1% commission on the sale.
"Trying to save a few dollars on commission can cost big in the long run," warns Conlon, adding that the agent needs some incentive to sell. When Chantill agrees to nudge the commission up (although the exact percentage remains undisclosed), a fabulous broker comes on the scene with a suggested listing price much higher than Chantill had expected, an expert marketing plan, and plenty of potentially interested buyers.
Lesson No. 6: Staging is worth the investment
Conlon explains that home staging will enable tantalizing photos to be taken, and help prospective buyers picture themselves in the home. Chantill agrees, and it doesn't take long for the home to sell—finally! Although the show doesn't say for how much exactly, all involved seem pleased, so we assume it's good news.
How'd it go?
So how do the Greers do once they cover their own investment, and pay off their loans, commission, and other fees? They end up with a profit of about $5,000. Which isn't much, but at least they're not hemorrhaging cash on a monthly basis, and they've learned some valuable lessons. Like? Now is the time to revisit the hit list. They ceremoniously burn it in front of the house as they walk away.
"Sometimes you just have to let things go," says Conlon.