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Flippers Gone Crazy!

January 20th, 2012 at 06:14 pm

WOW!

The flippers are back with a vengeance.

Um, remember the house 2 doors down that sold for $250k and let me squeak by with a $250k appraisal?

I just saw it listed for sale. For $315k.

Seriously???

I've been proven wrong before. These people do find idiots to buy at hugely inflated prices. I just don't think the banks are going for it these days. So, will see. (Even if they find someone dumb enough, where would they get the appraisal for that high??)

I am looking up that last flip we just had behind us to refresh my memory. Paid $182k (much smaller house) and sold in a few days for $218k. The interesting thing about that one is they put in the listing that it was a flip. I commented on here that I have no idea why one would advertise that, but it seemed to work. It sold lightning fast. Guess that is preferable from buying from a bank. OF course, buyers probably don't know the house was in perfect condition before the flip. Maybe they assume a lot of work was done to it.

Sounds like a sweet profit? IT was much better than I expected them to get, but you figure with all the costs and everything that it seemed like a lot of hassle to probably make very little in the end. That said, these are homes that really shouldn't need ANY work. The one that is two doors down in GORGEOUS (marble throughout) but I don't think they just put that in. I am sure it was probably pretty move-in ready already. I admit I am guessing - but people went crazy with the upgrades here the past decade. & it's not like I have seen any construction crews over there - it just sold a couple of weeks ago (to the flipper).

Er, I saw a bigger home like ours on sale for $224k that was sitting for a couple of months. I don't remember which street and can't find it now. Maybe it is in escrow. Another sold for $240k recently. So this is why I think $315k is pushing it. The smaller homes here have been selling $210k-$220k pretty consistently in the last couple of months - lots of sales. Price difference is generally $20k-$50k for more square footage. These days, anyway. The spread was $200k+ at the peak!! (Land is expensive here, so split levels are a really good value - usually bigger yards since the home footprint is smaller and more square footage too, of course).

Um, a house sold for $305k, BUT it had almost TWICE the land. I think this flipper is REALLY pushing it! But, will see...

So yeah - this is the new normal. Bank forecloses, flipper buys, flipper sells. This is the second home in our immediate vicinity. The flippers are back! I think flipper #1 got a very good deal on his investment. I am not so sure on flipper #2. Maybe it is the same person. The listing looks totally different - so I don't think it is the same one. Unless they got advice to leave out the flipper part on the listing. Wink

ETA: This could be a good thing because seems banks are unloading homes faster to investors, through auction. The home behind us was vacant for a time, but the one that just listed was listed as sold before the owner even moved out. Wonder if eviction is part of the buyer's responsibility, these days? Not the banks? Either that, or public record date was wrong. But, hey, no house sitting empty for months. That's an improvement.

3 Responses to “Flippers Gone Crazy!”

  1. snafu Says:

    Buyers all ove the world have seen TV news showing how far home prices have fallen in parts of USA. Often a group of relatives, colleagues or businessmen will pool their funds to buy for cash [asking isn't necessarily sell price]. They generally have someone lined up to live-in until market conditions set up for the flip.

    In some cities, the Columbian cartel has bought $500,000. houses and set up a grow operation! If they can afford to buy and operate submarines to sell their narcotics, buying houses is paltry. I hope their neighbors are tracking their own electric bills because the drug lords need large amounts of unidentified electric power.

  2. MonkeyMama Says:

    Yes, foreign buyers with cash are the primary buyers around here. If not for that, home prices would really be in the toilet. They probably should be. Sacramento has always kind of been this way. IT's a town full of renters. I don't think it will necessarily be that way for the long run. With home prices more reasonable, more will be buying once they wait the token 7 years from foreclosure (or whatever is recommended). Many people are moving here from more expensive areas so can easily buy homes (don't tend to rent). So I don't see a great long-term rental market here. Likewise, just because home prices fell 50% from the peak doesn't mean home prices aren't sky high. & you could have bought a house here for significantly less as recently as 1999. There is just absolutely nothing "rock bottom" about prices here unless you conveniently forget every year before 2002. (All of which were years you could buy homes for MUCH less).

    But, maybe when all the foreclosed flood the market it will drive up prices, too. It's interesting dynamics. & if the investors can't find tenants, maybe they will be selling. So, maybe it all evens out in the end. I am just surprised home prices could be supported this high for so long with all the foreclosure activity - it's A LOT here.

  3. MonkeyMama Says:

    P.S. So thank you foreign investors who buy blindly because they heard that "home prices fell 50% and are rock bottom." For reference, when we bought in 2002, most our relatives locally thought we were insane and WAY overbought. Same prices as today. This is why I just roll my eyes when everyone tells me how "rock bottom" these prices are. I am frustrated by such short sighted perspective.

    Bay Area prices are worse than the *insane expensive* we left. Just *more insane expensive.* But to some that is *rock bottom.* ???

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