The hot real estate market has brought a lot of “flippers” to the industry – people who buy fixer-upper houses, do the fixing upping and then quickly resell them for a profit.
And while many flippers are pros who do good work polishing a poorly maintained gem back into the shining jewel it once was so it can be home to a new and grateful family, some are either unprepared, unethical or just plain “Out of their flipping minds.”
I’ve come to this conclusion after several months of perusing Realtor.com and other home sale websites with a casual eye toward moving, maybe, someday if I find the right house.
I’m not in a rush to move. I do love my little house. It’s just that sometimes little seems like a big issue.
So I browse, and I occasionally find a house within some semblance of my price range that sparks a fire under me.
Like anyone, I can be a sucker for a shiny new kitchen or a bathroom with a big soaking tub and steam shower. Throw in a nice wood-burning fireplace and an in-ground pool and I may just float to the open house.
But I am also a realist tempered by a bit of financial sense and enough knowledge of the real estate industry to keep me out of the “sucker” category.
My feet usually hit the ground when I check out the property, or do a little more research on the pricing.
There’s a difference between flipping and fleecing and you don’t want to choose the wrong one.
I offer no disrespect to “flippers” – those who do the work to rehab and resell residential properties.
In fact, when my husband and I wanted to sell his mother’s southern Pennsylvania ranch duplex, we admitted it was too much work for us to fix up and we sold it to flippers for a fair price. They did a fabulous job rehabbing the property, and they are now renting the two halves as luxury apartments.
I saw the work they did. They’re worth every penny.
However, I’ve come across a few too many “you gotta be kidding me” house listings online.
The first one angered me.
I saw a lovely house in a lovely neighborhood. It was a little more than I wanted to spend, but it had a brand new everything I dreamed of in a house.
Surely, this was the one. Turns out the house was only half flipped. The upstairs bedrooms (not shown on the web listing) weren’t updated at all and parts looked like they still needed a lot work.
Then I checked the home’s sale record. The “flipper” who bought it last year paid about half the price for the house they were now asking for it.
A second home also caught my eye. Plenty of upgrades with everything new and shiny. Again, I thought the price was high. But the market is hot, right? Of course the price is going to be high.
Again, I researched. The owner bought the home last year for less than a third of the current asking price.
I don’t care how much I like the property. There was nothing the owner could have done that would have tripled the price of the house in one year.
This sucker was out. Good luck making that kind of profit, buddy.
The problem is. They might just find a sucker.
I spoke with Gail Hoover, an Allentown Re/Max real estate agent.
“I deal with this day after day after day,” she said. “Especially for first-time homebuyers. It’s easy to be distracted by shiny, but the doors are crooked and the windows leak like a sieve.”
She said the key for homebuyers considering a flipped property is to keep a keen eye on what has been fixed up and what hasn’t.
“Sometimes they’ll put in bells and whistles to attract a less educated buyer,” she said.
To help, she recommends homebuyers educate themselves before they start shopping. If it’s someone’s first time on the market, a first-time homebuyer class can be a big help.
She also recommends taking a more seasoned home expert with you to kick the proverbial tires while you ooh and aah over the stainless steel appliances.
She said the main ways to make sure the home is a good deal are by hiring an experienced home inspector to point out any flaws and getting your own valuation of the property, which is something many mortgage companies require so they aren’t funding a loan for a property that isn’t worth its purchase price.
She has similar advice for people who may be thinking they can make a quick buck by flipping properties in the current seller’s market.
“There are a lot of ‘flippers’ out there who’ve watched too much HGTV,” she said. She recommends those considering becoming a flipper to conduct an honest assessment of their finances, skill set and risk tolerance before taking on a big rehab project.
“A good living can be made from honest, ethical flipping,” she said.
But a bad flip is just a big jip.