Flipped vs. Rehabbed -- Is There a Difference? I say: YES

By
Industry Observer with RETIRED / State License is Inactive Inactive License Oregon

Flipped vs Rehabbed

With more and more homes being sold to investors, there are a lot of houses being flipped in today's real estate market.  Not to say there's anything wrong with that . . .

I've seen "flipped" houses, and "rehabbed" houses.  And while a rehabbed property might also be flipped, a flipped house doesn't necessarily have to be rehabbed.

There's nothing wrong with earning a living, or making money.  But, what I've noticed recently are the "fix and flips."  Perhaps a property is swooped up for a good price in a distressed sale situation.  The owner has no intention of living there, and does  put in some sweat equity/elbow grease.  Then places the property back on the market.

If done correctly, the home will look great.  If done incorrectly, the home will look like a rental property.

Some of fix and flip homes I've toured with clients are TERRIBLE.  The quality of work is just not there, and it's noticeable. 

The homes are dated with maybe '70's cabinetry (or earlier), counter-tops have gold leaf veining running through the Formica, dark wood floor board and door frame modeling, aluminum cased windows, fluorescent light fixture dangling in the kitchen.  Oh sure, the carpet is new -- covering hardwoods -- there is fresh paint on the walls, and the property is clean as a whistle.  But the work looks . . . well, like someone painted, cleaned, and recarpeted . . . nothing more.

A quality rehab house shines.  The flooring is refurbished to bring out the hardwood's natural look, the cabinetry has been updated, counter-tops are no longer veined with weird color and patterns, the dark trim has been replaced or repainted, closet doors have been updated to six-panel, appliances have been updated, systems have been updated as needed (perhaps eletrical, plumbing), roof, windows -- all have been done.

The market is very competitive at the moment.  Homes that have had a nice rehab can fare much better.  They show much nicer, and the updates (rehab) for the busy buyer is complete! 

Posted by

 

 

Carla Muss-Jacobs has RETIRED effective May 1, 2018

Representing Buyers in the Portland Metro Real Estate Market | Clackamas Multnomah and Washington Counties | Since 1999

Carla Muss-Jacobs, REALTOR®, ABR, CEBA, ePro
Principal Broker/Owner ~~ INACTIVE

Carla Muss-Jacobs' retirement became effective May 1, 2018

Direct: 503-810-7192 

 

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Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Jason Watton 09/10/2010 06:15 PM
  2. Karen Kruschka 09/11/2010 05:31 AM
  3. Ryan Case 09/11/2010 08:39 AM
  4. Ritu Desai 09/12/2010 03:57 AM
  5. Jane Nicastro-Disch 09/12/2010 04:04 AM
Topic:
Home Buying
Location:
Oregon
Groups:
Posts to Localism
Portland Metro Real Estate
REALTOR LIFE
Diary of a Realtor
Tags:
rehabbed properties flipped properties

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Rainer
417,111
Keith Lawrence
Christie's International - Mahwah, NJ
ABR, SFR

There are more flippers out there right now. The fade for flippers is just to re-list the property without any improvements since they are picking up the properties at a great price.  The flippers do consider improvements but the net profit usually comes out the similar so they just put them up on the market for sale

The rehab and new construction spec builders are on hold since in my area since we are still in a downward trend. 

Sep 11, 2010 01:05 AM #35
Ambassador
1,156,070
Bryan Robertson
Los Altos, CA

I see these two terms as interchangable.  I've done flips and seen others that were called flips but should have been called "cleaned up".  To me a flip is truly adding value, not just cleaning up.  There has to be some new construction beyond just a few light figures and new sockets.  Unfortuntately, a lot of flippers believe that all that needs to be done is a touch-up to make the property worthy of resale.

Sep 11, 2010 01:09 AM #36
Rainer
47,522
Peggy Noel
RE/MAX Commonwealth - Chesterfield, VA
Bouchard, ABR, CDPE, SFR

Carla - you are so right.  I recently went thru a property that had been "rehabbed".  The contractor had done homeowner grade work and it showed - everything was freshly pained and carpeted as you said, but everything was almost right.  There is a world of difference between professional grade and amateur grade rehabbing.

Sep 11, 2010 01:19 AM #37
Rainer
332,782
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ

Carla,

Did you hit the nail on the head! What really gets me is when someone has painted walls that are in terrible shape, so they still look bad...

Sep 11, 2010 02:01 AM #38
Rainmaker
1,411,727
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Carla, you make a very good point. There is a definite distinction between the two. Buyers will take notice.

Sep 11, 2010 02:17 AM #39
Rainer
264,227
Bill Travis
Captain Bill Realty, LLC - Gilbert, AZ
Broker/Owner

I rehab houses. This year I've only done one because they're harder to buy. But I do a quality job and bring everything up to the 2010 ameities; and I also fill out the disclosure form and sell with the standard contract warranties.

When I walk into a house I can tell immediately if it's a quick/cheap/bad rehab job, and it bothers me to see a terrible job.

Sep 11, 2010 02:18 AM #40
Rainmaker
120,333
Patsy Overton
Patsy Overton Interiors, Atlanta, Georgia - Duluth, GA

Carla - staging ALWAYS helps!  :)

Sep 11, 2010 03:13 AM #41
Rainmaker
134,281
Marcia Kramarz
Re/Max Executive Realty - Medway, MA
CDPE,LMC,CBR

Hadn't really thought about it but the first thing that came to mind was Flipped = $$$ Rehabbed = loving care ... Guess you're right!

Sep 11, 2010 03:15 AM #42
Rainmaker
4,387,665
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Carla, so many are trying to make so much, that it really shows in the work they do!    I have seen some really nice rehabbed homes, and some really bad flipped homes!   Congrats on the Feature!

Sep 11, 2010 04:29 AM #43
Rainmaker
227,826
Debi Braulik
www.roundrealestate.com - Maple Valley, WA
Selling Maple Valley to Fife WA Homes For Sale

I absolutely agree.

Sep 11, 2010 04:36 AM #44
Rainer
248,050
Gerard Gilbers
Higher Authority Markeing - Asheboro, NC
Your Marketing Master

There is so much of a difference that in Maryland a true Flip is illegal! Flipping being defined as buying the house and making no repairs or an insignificant amount of repairs and the reselling for a higher price.

Sep 11, 2010 05:03 AM #45
Rainmaker
1,561,813
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Hey Aaron -- Now that was timely.  BTW, you're right too!!

Hi Lenn . . . I think that's the palette used, beige, and then more beige, tossed in with a little off-white.  The FHA carpet-baggers!  HA HA HA

Hey Pat -- White paint. AGH!!  (I have heard that a few time.  But only from that photo.  In person, I've never heard that -- but I'll take it!  I happen to like Bette Midler.  THANKS!!)

Hi Cameron . . . We have some wonderful local companies too.  They've been "renovating" (as Paula say #5), and have a good reputation.  It's those FHA carpet-baggers.

Hey Chris -- "cobb jobs" that's a new one on me.  What does it mean??

Hi Dawn . . . Care and quality.  Sometimes I'd wish they didn't even try . . . HA HA HA

Hey Jeff -- "vision of grandeur" LOL Delusions

Hi Christianne . . . Oh, good point!! Sometimes I'll have see the same house on the market not that far back, so I'll look up history, too!  Amazing what they didn't do, but priced the property as if they did!!

Hey Richie -- We've got some very good local companies here too.  BTW very nice photo!!  Almost didn't recognize you.

Hi Charita . . . Your vision is not too far off, I'm afraid.  Thanks for adding this.  Too funny!

Hey Lyn -- I've had buyers pay more too.  They were even fine with it, because they knew it was a better job, and they could very easily justifiy the difference in price points.

Hi Kathy . . . funny!!  Good on #2, and perhaps #1 was the learning curve.  Now you know ho to do it, and maybe you can keep us up-to-date if you do another project.  That would be a great topic to follow!

Hey Charles -- Yeah, I can see that from your perspective too!  Documenting it all . . .

Hi Janet . . . Absolutely.  Point of this post was to compare and contrast two very different methods that investors have when getting an investment home ready for the market.

Hey Dan -- What a great point:  You make your money when you buy!!  I guess the semantics are local too.  I've always heard "flipped" houses were investor to re-sale, at least that's the common understanding here.   

Hi Jason . . . Thanks! Kathy's comment was funny, and true!!   THANKS FOR THE RE-BLOG!!

Hey Donne -- The cheesy house (with the "holes")

Hi Scott . . . I don't have a problem with it either.  But when the buyers look past it, or compare it to another property, it'll just sit and sit in this market.  It will still remain vacant.  Perhaps go into the rental pool.

Hey David -- You know exactly what I mean!!  It can be done the right way, and sometimes it does require some upfront investment.  I bet your properties sell fairly well for your efforts.

Hi Liz . . . "Object" is such a strong word, don't you think. It sounds as if you're in a courtroom.  Terms can be local, and for the many years I've been working the Metro Portland market, a "flip" is an investor owned property, purchased for the express purpose of re-selling.  I rest my case.

Hey Ann -- Not sure I get the comment, other than your points seem to be about properties and who buys them, and in what condition.  A little off topic, but okay.  My point is that a home, in my local market, that is done without the quality and the updates looks cheesy and doesn't fare as well. 

 Hi Jason . . . Yes, when executed correctly, there is some good ROI in some markets.

Hey Tony -- You points are a little off topic, and the discussion isn't about the "disclosure" -- but you just gave me a good idea for a blog post.  THANkS!!

Hi Claudette . . . It's one thing if the price points are different.  What frosts my shorts are the properties that are just FHA ready, priced to compete with the properties that have been painstakingly worked on.  A keen eye is essential!! 

Hey Kelly -- Your comments are great, and sum the post up nicely!  My sentiments exactly!  Thanks.

Hi Keith . . . There are a lot more now.  If the home needs work, they have to put something into it, otherwise it doesn't pass appraisal. 

Hey Bryan -- There are always going to be those "investors" who want to cut corners.  In our local market, they are in stiff competition for homes that are move-in ready, and have been done up right.  They'll learn.

Hi Peggy . . . And sometimes, in my area, the price points are too far off.  Even if the home that is done up right is $10,000 more, my clients will appreciate that, and realize the difference.

Hey Irene -- that's punny (hitting the nail on the head).  Oh, you mean like painting over wallpaper?!? HA HA HA

Hi Michael . . . buyers do pick up the differences when they've toured a few properties to contrast and compare.

Hey Bill -- Great point, to make the home "current year"  Thanks for your comments.

Hi Patsy . . . Always, it does!!  LOL

Hey Marcia -- I think you're right!!

Hi Joan . . . bad flips . . . no one likes those!!

Hey Debi -- Thanks.

Hi Gerard . . . Fascinating to learn about other markets.  We're all so varied when it comes to the standards of practice.

Hey Erica -- I agree.  It's a good part of our jobs to point things like this out. 

Sep 11, 2010 08:32 AM #47
Rainer
30,892
Ryan Case
Pacific Servicing - Temecula, CA

We rehab every project we do, and it is a night & day difference! Its the difference between finding a quality buyer in days vs. months!

Sep 11, 2010 08:37 AM #48
Rainmaker
159,341
Deborah "Dee Dee" Garvin
C2 Financial - San Diego, CA
C2 Financial

Carla,  Nice description and explanation........and. so accurate.  In either case, however, I would strongly recommend a home inspection.  Just because something looks "nice" does not mean it is quality.  Personally (having done many remodels and renovations) I would want to know there were inspections all along the way.  In other words, I want to know there was an inspection of the bare stud wall, if applicable....I just like knowing my houses from the inside out!

Sep 11, 2010 09:35 AM #49
Rainmaker
693,906
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

Spot on, Carla. I was in a rehab/flip the other day where a lot of the work was done REALLY well. The one thing they decided not to touch? The doors. All of them. Including the sliding closet mirrored doors that were missing their tracks. I couldn't believe it. Here it had nice granite, nice tile, nice carpeting, quality paint and colors ... and 1970's doors.

Sep 11, 2010 01:10 PM #50
Rainmaker
232,829
Ken Barker Realtor® GRI, E-Pro Certified
Dilbeck Real Estate - Burbank, CA

Carla - Most definitely is a difference here. We have a few groups here that rehab. True rehab.

On another note; I just wrote on offer on a flip. It was bought off the Trustee sale and then never lived in. It is in great shape and nothing was done and it is clean. What I don't understand is it is listed as 1031 exchange. How can someone flip a home on a 1031 exchange the sale was in May? I smell some issues around the corner.

Sep 11, 2010 03:50 PM #51
Anonymous
Pam Sitterly

The real estate investors I work with use the term flip to refer to the length of time between the purchase and the resale... typically less than a year. It's not related to whether or not the property was rehabbed. A property purchased and sold quickly is a flip, regardless of the quality of work.  The length of time is critical in the buyer's  obtaining financing.

 

Sep 11, 2010 05:24 PM #52
Rainmaker
1,561,813
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Hi Ryan . . . I'm sure you do a wonderful job!!

Hey Deborah -- HA HA HA, that's funny.  Because you're probably the only person doing that, it speaks volumes on your professionalism. 

Hi Cynthia . . . oh, those mirrored closets "to make the room look bigger" . . . ha ha ha.  Maybe that's why the left 'em in??

Hey Ken -- If your representing the buyer, it's not your issue.  It will be the seller's and they can explain that to the IRS.  If it doesn't met the "test" of a 1031 exchange, it's on them, not you or you clients.

Hi Pam . . . Well, that goes to show just how "local" terms are.  And for the most part, most of the comments seem to suggest a "flipped house" has some updating down.   Your area/market is a mystery.

Sep 11, 2010 05:32 PM #53
Rainer
42,886
Don Corson
Coldwell Banker King Thompson - Columbus, OH

Good post -- I have seen plenty of both types in our market, and the great, quality jobs, that are priced correctly seem to go pretty quickly.  I saw one right around the corner from my house that was a "flip":  looked to be slapped together, sloppy workmanship, etc., and it sat on the market for quite a while (on a busy street didn't help his case).

Sep 11, 2010 06:39 PM #54
Rainmaker
597,093
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

Your link in tonight's post  - about Home being where you live - takes me to this post instead.

Jan 02, 2011 09:02 PM #55
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