Adventures in Real Estate - Flipping Houses

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Real Estate Agent

Have you ever thought about flipping houses?

I had my first experience with a handyman special fairly early on in my career.  I had met a gentleman at the West Seneca home I had for sale who was interested in buying properties in Buffalo, NY and flipping them.  He verbally agreed to use me as the listing agent on any home he bought with me once it was ready to re-sell.  I thought, "This is going to be easy money!  Even if it is only a few hundred bucks at a time."
 
It started innocently enough, viewing a handful of homes for sale in Cheektowaga.  Hometown neighborhood, close enough and no one else wanted to see houses.  Might as well.  The first one we viewed had been through some extensive fire and water damage and was listed at $22k.  Floors were warped and buckling, the ceiling was hanging in the kitchen... I didn't even attempt going downstairs in the basement.  Too much work needed to be done, well beyond what my flipper was willing to do and pay.  On to the next.  Armed with a list of inexpensively priced homes, we slowly made our way around Cheektowaga and West Seneca.  Mold, bad roofs, rodents, homes with just the framing inside; we saw it all.  And then we started making offers...
 
They were low.  Ridiculously low.  So low I stopped having my flipper sign a contract or letter of intent; did everything verbally.  And got a whole lot of NO's.  Which I completely understood.  My flipper's aim was to get about $30k off the resale after he improved the home.  In the neighborhoods we were looking, a fully upgraded home at about 1200 sq ft could get around $80k at the time.  Some of his proposed updates were needed.  Yes, there should be a kitchen.  No, we don't need to knock this wall out to make the living room bigger.  Sorry, I don't think Cape Code style homes were meant to have 2 sprawling bathrooms...  So the $50k homes that he felt needed $30k of work were getting offers of $20k so he could make his ROI.  

Did not go over so well... 

Some agents started canceling my appointments at their listings.  Another was so upset at our offer on an estate; exasperated that the offer barely covered the past owners funeral costs.  For that, I am embarrassed and extremely sorry. That's why I switched to verbal offers...
 
Long story short: Buffalo is NOT a good flipping market unless you're willing to accept small returns on investment for each flip.  I wouldn't say it was a bad experience, a definite learning one though.  I'd do it again.  My advice to anyone looking to flip homes in the WNY area: know the area's market and what is typical in the style of homes you're looking to purchase.  If you don't, let your agent educate you.  I will certainly educate myself on the flippers expectations next time.
 
See you next week for another real estate adventure =)
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flipping houses

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Rainmaker
851,078
David Popoff
DMK Real Estate - Darien, CT
Realtor®,SRS, Green ~ Fairfield County, Ct

For flipper to be profitable they need to buy 50 cents on the dollar, yet homes mostly do not sell that low.

Nov 12, 2013 10:41 PM #1
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Fred Griffin Tallahassee Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

     I represented a Buyer who made 50 or 60 cents on the Dollar Offers on fixer-upper houses.  I told every Listing Agent and every Seller that it was strictly business; the Offer was Cash "As Is" subject only to Clear Title.  Sure, most Offers were rejected immediately - but some of the offers were Accepted; we closed on those houses. 

Nov 12, 2013 10:54 PM #2
Rainer
194,402
Sarah Lynn Jaskowski
Williamsville, NY
House. Home. Today.

That's good knowledge to have 50/60 cents on the dollar.  And congrats Fred on the closed transactions!  

I had one offer accepted, a short sale.  House didn't really need anything but cosmetics.  Bank needed further proof of funds, I asked buyer to provide and he thought that meant the deal was dead so he cancelled.  He has since disappeared. Oh well. =)

Nov 13, 2013 12:37 AM #3
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Rainer
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Sarah Lynn Jaskowski

House. Home. Today.
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