Home : Blogs : Stacey Murphy : Stacey's Blog

Okay, can someone give me advice on "flipping houses"

Here goes, I have signed on as a seller's agent for a company that comes into our area and buys cheap homes to redo and flip for a profit. Well, after 5 days of being on the market, one of their flip got an offer on it. It's listed at $80,900. The buyer came in and offered $75,000, but wanted to seller to do the follow:

Put on 2 storm windows that were missing.
Install the dishwasher correctly, as they didn't mount it, nor drill holes in the cabinet side to install the drain for the dishwasher.
Have the propane fireplace hooked up to make sure it worked.
Install an electrical outlet for a cook stove, as there is propane now (buyer's preference I think)
Install GFI plugs around the kitchen sink, they already installed them in the bathrooms.

Okay with those 5 items, I presented the offer to the seller's, they come back with they are not doing any additional work to the home, but if the buyer would be $82,000 they would complete the list. This ticked the buyer off and he rejected the counter from the seller.

Is this normal? If you are flipping a home, wouldn't you normally do these kind of things? Okay, some help or advice on this would be greatly appreciated.

Thanks so much for taking the time to read my blog! God Bless!

Posted by Stacey Murphy on 07/01/2007 12:20 PM

Comments (9)

This post has been included in Missouri Information

9 Comments on Okay, can someone give me advice on "flipping houses"

JUL

2007

I think that I would do it if I was flipping the home, but you never know what there finances will allow. They might have a low margin on this one.

In our area, the property condition paragraph of the boiler plate contract would require the seller to do everything but put on the missing storm windows. That is, unless the contract was for an "As Is" deal. Also, I think a lot of buyers are leery of flips. Around here, many of the people renovating and reselling are doing a wonderful job on the renovations. Others are pretty scarey. And if your buyers are watching "Flip This House" - I think it's on The Discovery Channel - they are going to be very careful about buying a flip.

I'd tell your seller to suck it up and fix the stuff on the list before you get another set of buyers.

IT DEPENDS ON THE CONTRACT IF THE SELLER AGREES TO DO ANY CHANGES OR IF THE BUYERS BUYS IT AS IS.

OR SOMETIMES THE BUYERS ASK FOR CERTAIN AMOUNT OF DOLLARS FOR HOME REPAIRS

With the exception of #4, I'm not sure why the Seller would not have already completed these items. The whole concept behind flipping is to give a Buyer a home that is move-in ready..... If the Buyer wanted to do necessary repairs/upgrades he would buy a home that needs rehabed at a lower price just like the Flipper did. As the Realtor that represents him you should keep in mind that his reputation reflects on yours. If he's already cutting corners you may want to rethink the relationship.

Beyond that, I think a really important fact is whether or not the home is priced accordingly. Is it above, at, or below market value? Regardless, I can't imagine those few (simple) things would raise the home value by the $1,100 that the Seller countered above list. I think he could probably do all 5 items for around $350 plus labor......

Stacey: The only thing I see on that list that is unreasonable for the buyer to demand is the installation of an electrical outlet so they can install and electric stove. That is a preference issue, not a health, safety or servicibility issue. The home seller should repair the other items, IMHO, as any buyer coming in will use them as bargaining chips to lower the price.

However, the buyer's offer was very low and the seller has every right to refuse to do any additional work at that price. I thought the seller offered a good compromise by offering to do the additional work, but for more money than the offer. I think the buyer was the unreasonable one here.

It all comes down to if the listing is posted as is. It is also going to depend what kind of financial state the seller is in for some of the requests. The seller has the right to refuse and the buyers have a right to reject a counter offer.

I flip a couple of houses a year and have done so far a while now. It's part of my business, but not the main part. That said, I wouldn't consider the project done until I had at least most of those things done. I've left things undone on purpose before to allow the buyer some flexibility such as to how big a deck they would want, etc. Each person's different though and I would run with what they want from you and just communicate effectively with all parties if at all possible!

Bob Mitchell

ValueList Real Estate Services, Inc.

JUL

2007

The sellers may be experienced enough in flipping that they know how to "read" a buyer who is just NOT going to pay asking price EVER.

JAN

So, how did this turn out? How is it working in the market over a year later?

You can only deliver sincere offers and let the parties involved decide if it fits their needs and wants. I've delivered some ridiculous offers, but I knew the buyer was making his best shot. I warned them about a high counter and advised a high counter. The sellers would decide they needed cash today and would take the offer!

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?