Jump to content

Any of you have any experience with home flippers?


Guest

Recommended Posts

I keep hearing ads on the radio for these dudes who will buy houses quickly with no commission, need to clean, repair, and stage houses, etc. Obviously, one will get a higher selling price selling a house the traditional way, but I wonder if what one ends up in pocket turns out to be similar with these home flippers. I don't suppose there's any harm in just asking these guys what they'll pay, but do any of you have any idea what kind of a discount in price one would be facing?

 

https://www.johnbuysbayareahouses.com/?gclid=Cj0KCQjw2or8BRCNARIsAC_ppyZ2RbTv6zhzOb1dXPDAvnpgJLPCFN9F04yBSVafdmU4VYwB9xKVMkIaAj6MEALw_wcB

Link to comment
Share on other sites

Flippers are looking for houses that are not worth anywhere near as much in their current condition as they would be with some renovation, and I suspect that your house is not like that. They are usually looking for unoccupied houses in decent neighborhoods that the owners want to get rid of quickly. In our last house in Palm Springs, our nextdoor neighbor had turned his house into a "safe house" for recovering gay alcoholics in an AA program that he ran, and he moved into another house he owned in the neighborhood. When he died, the heirs wanted to get the house cleared out and sold as quickly as possible, so they sold it to a flipper for much less than the Zillow estimate, which is based primarily on what other houses in the neighborhood have sold for, regardless of its condition. The flipper did a major clean-up and cosmetic renovation, and sold it for more than the Zillow estimate.

Link to comment
Share on other sites

No experience with flippers, but I think it depends on the real estate market at the time, and the housing stock available.

 

In a rapidly appreciating market, with low inventory, get in quick, throw some lipstick on the pig, and turn a quick profit. Let the buyer deal with the issues that crop up later. There’s one born every minute. My friend’s old roommate and new bride were the buyer of such a home.

 

Some flippers, I believe, look for rare gems. An anecdotal example, this was years ago. A co-worker inherited his grandmother’s modest house in an older, upper middle class suburb and lived there for a few years. The market got hot, and that “destination” suburb was going through a period of tear downs, replaced by larger homes, or extensive additions.

 

The co-worker decided to test the market. He put an ad in the paper, no realtor. A few days later, a knock on the door, a guy wanted to buy. Gave him a generous offer. Co-worker agreeed, and then asked the guy if he wanted to see the house. Buyer said no, didn’t need to. The co-worker never said if he ever went by to see if it was still standing.

 

Perhaps contact a few realtors to get some idea of the property’s value If sold as-is. Neighborhood, location, lot size, schools, noise, etc. all are factors besides the house itself. A house can be changed, but location can’t.

Link to comment
Share on other sites

“Cash for Houses” in my town means “I want to tear your tired house down and build a new one”. Flipping is something completely different. Most flippers are too small to buy outside ordinary channels.

 

oh yeah, and most reality shows on the topic are far from “real”

Link to comment
Share on other sites

I used a flipper (aka developer) once. It was a large and historic house in a rapidly improving area that was well-connected for transport, restaurants etc. To answer the question from @Unicorn, IIRC the discount for the rapid sale was 10%.

 

I’d already found my “perfect” house (a centrally located, larger historic house which, along with only 11 other houses, owned a communal garden of 3 acres) which I bought for cash. So I found selling the old house this way advantageous as I was very busy at work; there was no hassle and the sale went through in a week.

Link to comment
Share on other sites

If the discount is just 10%, it sounds like it's worth it to avoid the hassle. If these guys are handy and can do minor repairs and staging, I avoid all that hassle and paying the agents' commissions. I did have one man respond to me on Seeking Arrangements who implied that he'd put out for me if I let him list my house. He is extraordinarily handsome, and I took him out for lunch. He came impeccably dressed, driving in a new Mercedes. He acted as if he were very interested in me, and had clearly done his homework about my house and comparables/recent sales. He did have some pretty crazy stories about himself, though, like how he started university at 15 and a half, had Ph.D. in Psychobiology from Stanford, and spoke multiple foreign languages (I could at least attest to his Russian and German). He left pretty quickly, though, with only a fairly dry kiss goodbye. He seems like just a fast talker, though. I don't suppose I'd ever really let him sell my house for an intimate moment, though. Or would I? Well, if I can snag "Lindoro," I would never need anyone else....

Another crazy story this man had was that he said he traveled with a rare "purple UN Passport" which he said gave him visa-free access to most countries. I tried looking for a purple passport on google and couldn't find any such thing.

Link to comment
Share on other sites

I used a flipper (aka developer) once. It was a large and historic house in a rapidly improving area that was well-connected for transport, restaurants etc. To answer the question from @Unicorn, IIRC the discount for the rapid sale was 10%.

 

I’d already found my “perfect” house (a centrally located, larger historic house which, along with only 11 other houses, owned a communal garden of 3 acres) which I bought for cash. So I found selling the old house this way advantageous as I was very busy at work; there was no hassle and the sale went through in a week.

When you figure saving a regular real estate agent commission and the time value of money, 10% is reasonable.

Link to comment
Share on other sites

 

Another crazy story this man had was that he said he traveled with a rare "purple UN Passport" which he said gave him visa-free access to most countries. I tried looking for a purple passport on google and couldn't find any such thing.

 

-

https://www.themuse.com/author/the-purple-passport#:~:text=The Purple Passport is a,the world's cities in style.&text=The Purple Passport team personally,a venue on the site.

 

Likely not the same.

 

Likely the guy made it up.

 

 

-

Link to comment
Share on other sites

  • 3 weeks later...
  • 1 year later...

It's not in your interests to buy from a flipper either. There was a series on Discovery about house flippers that I used to watch. To be honest, I don't know what people buying or selling to them were thinking about. The flipper would buy a house for an inflated lowered price, then do some siding repair and sell it. It's similar to buying and selling second-hand cars. They do their best to make the house look attractive; unfortunately, you just buy the wrap of the candy most of the time.

Edited by sprinterca
Link to comment
Share on other sites

The term is usually associated with buyers who get in low, do the minimum of structural, adding lots of “pizzazz” and “wow factor” while paying the mortgage for the shortest time it takes to do that before selling. 
 

I know mostly people who buy the least glamorous property in a solid neighborhood, upgrade structure, floor plan, plumbing, power, and HVAC and landscaping, all while residing. Thus making a serious well-earned profit from sacrificed comforts, DIY, and increases in comp values. 

Link to comment
Share on other sites

  • 2 weeks later...

GENERALLY in terms of buyers...  the flippers and brokers are the worst in terms of what you could make for selling a property.  

  • Real estate brokers/wholesaler/house flipper -- Can close much faster and typically a cash transaction.  Have seen numbers around 10-20% less than normal market.  
  • iBuyers (OpenDoor, Redfin Now, etc)  -- These guys will charge a 4-7% transaction fee, which is more than the equivalent of a real estate agent and typically the initial offer sounds great, but once they inspect the house, they'll lower the price even more for repairs and other things they feel is "wrong".  
  • Selling on open market FSBO
  • Selling on open market with an agent

If you know what you're doing with regards to pricing a house, have a real estate lawyer who can draft contracts, and know how to handle negotiations on other aspects such as appraisals/contingency, prep, and know your local market conditions...  you might not need an agent and can do fine with FSBO.  The biggest challenge is that people in many cases think they know more than they actually do.  

Link to comment
Share on other sites

22 hours ago, RadioRob said:

 you might not need an agent and can do fine with FSBO.  The biggest challenge is that people in many cases think they know more than they actually do.  

My best real estate purchases have been overconfident for sale by owner transactions. I still don’t understand why anyone thinks they can sell their biggest asset better than a broker who makes his living navigating real estate. 

Link to comment
Share on other sites

12 minutes ago, Coolwave35 said:

My best real estate purchases have been overconfident for sale by owner transactions. I still don’t understand why anyone thinks they can sell their biggest asset better than a broker who makes his living navigating real estate. 

It's sometimes easy just looking at a transaction and literally seeing only a number.  "Hey.. I'm selling my house and I'm giving 5-6% of what I make to someone else!  That's a LOT of money!  I don't need no stupid agent.  I know what my house is worth...  I looked it up on Zillow/Redfin!  I do good negotiating at the car dealership as well, so I don't need any help with managing the sale.  That's "money" I can put back in my pocket.  I worked hard for it, so I should get to keep it!"

Instead the house could have sold for more than what the commission was, and you potentially have more issues such as closing delays, or legal risk, or end up giving more in concessions later than you might necessarily have to give in your market conditions.  

Personally I prefer to surround myself with experts.  I have a regular lawyer that I use, a CPA, dentist, doctor, and yes...  even a real estate agent.  In my day job, people come to me because I'm an expert in MY field.  If they come to me, but don't listen to my advice...  I'm not a happy camper and don't work with them long.  So I treat my experts like I want to be treated myself. 

Link to comment
Share on other sites

I believe that flipping is more complex than the TV shows make it appear. 

First, real estate transactions are complex.....therefore to be a flipper, someone needs to understand the ins-and-outs of real estate transactions, and related financial instruments (mortgages).   Ideally, if you are a licensed Real Estate broker, you can act as your own broker and save the broker fee.

Second, you need a crew or crews who are reliable and are going to deliver on time and on budget, without ripping you off.

Third, zoning and permitting are complicated and vary from town-to-town.

Fourth, the market is volatile and understanding timing and the nuances of each market is important when making investment (flip) decisions.

Fifth, you will need a good mortgage broker, lawyer, engineers, inspectors, and other professionals in your orbit to have successful flips.

The TV flip shows focus on the drama, that "project killing" problem that surfaces, and the interpersonal conflict with the flippers. 

I think there are a precious few ppl who actually make big money at flipping.  There is money to be made.   But proceed with caution, as there is as much downside and upside.

My husband thought he was going to flip houses in his semi-retirement.   I think I have talked him out of it..... 😨

Link to comment
Share on other sites

On 4/20/2022 at 11:23 AM, JEC said:

I believe that flipping is more complex than the TV shows make it appear. 

First, real estate transactions are complex.....therefore to be a flipper, someone needs to understand the ins-and-outs of real estate transactions, and related financial instruments (mortgages).   Ideally, if you are a licensed Real Estate broker, you can act as your own broker and save the broker fee.

Second, you need a crew or crews who are reliable and are going to deliver on time and on budget, without ripping you off.

Third, zoning and permitting are complicated and vary from town-to-town.

Fourth, the market is volatile and understanding timing and the nuances of each market is important when making investment (flip) decisions.

Fifth, you will need a good mortgage broker, lawyer, engineers, inspectors, and other professionals in your orbit to have successful flips.

The TV flip shows focus on the drama, that "project killing" problem that surfaces, and the interpersonal conflict with the flippers. 

I think there are a precious few ppl who actually make big money at flipping.  There is money to be made.   But proceed with caution, as there is as much downside and upside.

My husband thought he was going to flip houses in his semi-retirement.   I think I have talked him out of it..... 😨

A tennis buddy back in Boston was a house flipper and made a very good living at it.  Because he was well-known in the industry, aspiring flippers often asked him for advice on how to get started.  His response was always the same, "DON'T!!"

Link to comment
Share on other sites

  • 3 months later...

I've "flipped" a few properties myself but I would recommend to never buy from 99% of the people who flip properties.

There is no incentive to deal with important structural issues and the business model incentivizes lipstick-on-a-pig work. Pretty bathroom tile and flashy kitchens are often instealled over termite damage and dodgy plumbing .

In NYC there is a bit more room in budgets for covering your expenses on necessary updating of structure / plumbing and electrical but in the rest of the country there is a ceiling on how much anyone will pay for a house so avoiding out of sight issues is common and a huge problem later for the buyer when you have to rip out that pretty tile to deal with a mold problem that was covered up.

Edited by pubic_assistance
grammar
Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...