Flip This House....Good or Bad

By
Real Estate Agent with Century21 First Choice Realty
Ok... So not to step on any toes here or anything, but I'd like to have some opinions here.... I sell foreclosures for a living...not making a killing, but enough in my market that I have had a measure of success at it.  I have been doing it for about 7 years now and I see alot.  Being a REO broker, I am routinely going in and out of foreclosed properties either to list or to provide a second opinion on the properties.  I have notice an increasing trend in properties that have been purchased as a foreclosure, only to end up back on the market in sometimes less than a year as foreclosures again.  mOst of these have some remodeling started...to varying degrees of craftsmanship.  They appear to be "flips gone bad"... I admit, I am guilty of only watching one or two episodes of the show (seemed to cause an impending sense of doom) but it seems that perhaps they are misrepresenting the rest of the markets (outside of NY, CALI and FLA).... I mean, us smaller area folks, we just dont have the margins that bigger markets have and I feel like the amateurs are getting a false sense of our game.  ... I know its job security for my business, but it seems that with all the "end user" loans tanking, that perhaps this is just compounding the problem.  I educate as many clients as possible who are considering it...they always start with..."I was considering buying a house to flip...i saw this show..."  that is where the real estate 101 kicks in.  I guess the opinion I am trying to share is that I think that shows like this are setting the average folks up to fail.....  Any ideas?

Comments (14)

Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer
I love that show even though you and I know it isn't all that!  My dad is a successful flipper in the heartland.  I am so amazed by him.  You need to do your homework and have a business plan and systems.  Being a successful flipper is no different than being a successful real estate agent!
Mar 19, 2007 04:38 PM
Dan Allred
Allred Realty - Thousand Oaks, CA
DRE#01761967
Rudy- I would say in many cases it is sad to say you right. People must understand that if you just watched a show you most likely do not have the ability nor the understanding of construction to "flip that house". We, as professionals must educate people on what they are doing. Most likely they wont heed our advice but I think we should give it.
Mar 19, 2007 06:42 PM
Rudy Baker
Century21 First Choice Realty - Burlington, NC
I am just amazed by the sheer number of these folks that think it'll be nothing to undertake.  Real Estate seems to be becoming the next Get Rich Quick Scheme.... Thanks for your comments Renee and Dan
Mar 20, 2007 10:13 AM
Mike Jaquish
Realty Arts - Cary, NC
919-880-2769 Cary, NC, Real Estate

Rudy,

You are right.  And with competition in the Triangle, we see margins down to negative.

Buyers who can't recognize costs of renovation, holding costs, selling costs, and arrive at a net margin are sheep to the slaughter, led by TV. 

I educated a ton of them last year with my signature line, "Foreclosures are for Rich People."  I resolved in 2007 to run like a scalded dog from "Foreclosure Idol" wannnabes.

Mar 20, 2007 10:58 PM
Beth Bastian
Rosemont Financial Inc - Simi Valley, CA
Simi Valley Real Estate

Hey Rudy,

You are so right, people do think it is easy, with out knowledge of the market, and good contractors.  It is way to risky. 

Mar 23, 2007 02:07 PM
Melissa Schnieders
Melissa Schnieders Photography - Wichita, KS
In our area, with foreclosures becoming so rampant, we are seeing boomerangs - houses that sold as a foreclousure, coming back on the market over and over again.  Oddly enough, I've listed the same house twice - both times as a foreclosure!!  What we are seeing is so many of these weekend warriors who saw Carlton on late night tv or any number of HGTV shows and think, golly, I can flip this house and make $50k.  No, you can't!  I think that's my new catch phrase - No! You Can't!  I am seriously considering having an Investors Seminar and having real life flippers help to bring reality to these wanna be's.
Mar 28, 2007 08:00 PM
Rudy Baker
Century21 First Choice Realty - Burlington, NC
Amen to that.  Today I got a call from a new agent wanting foreclosures for a new flipper.  I felt a little obligated to walk them thru what to expect.  Both the agent and their client had grand ideas, but in reality they were really unprepared.  It it scary that those in our industry just jump in as well without educating themselves on how it really works.  After all, if they are going to work with an agent, the agent should be educated in the process as well....
Apr 01, 2007 01:24 PM
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

One thing that I've learned is that you first need to establish a team which consists of a real estate agent(s),real estate accountant,appraiser,inspector and a contractor.

Apr 02, 2007 12:28 PM
Rudy Baker
Century21 First Choice Realty - Burlington, NC
Yes that is a good start.  Then you need to educate the client, and in some cases reeducate them.... You also need to know what their "formula" is...how they are going to base their numbers..... so you can feed them the slam dunks....I have a premarketing program that I send to my investors as well as other Realtor's who are working with investors.  I find that usually one of them will be ready to buy the house when it comes time to list, and it cuts down on advertising..... I love to enter them in MLS only to turn around the same week and mark them pending....It really lowers the overhead on a side of the business that the margins are dwindling on...
Apr 02, 2007 04:17 PM
Anonymous
Burlington "Newbie"

Hi me again,

Why would you be asking someone for advise on something when you are so stingy with it in your own field. Some one could say" I am tired of every one watching these TV shows thinking flipping is so easy, I have mastered flipping working hard for years and years and these people think they can just watch a TV show and boom they are a flipper." See how does it feel ? I just want a chance to do something new and make money, just like you and flipping. Good luck on your first flip.

 B-town Realtor

Sep 03, 2007 04:59 PM
#10
Rudy Baker
Century21 First Choice Realty - Burlington, NC

Hey B-Town, Thanks for you comment....

Not sure what you are getting at here.  I think that you stated the crux of the original blog post there.  This post was to discuss the lack of "real world" information provided in the shows or discussing the kinds of markets the properties are located in.  I think anyone would agree that what works in SoCal is probably not going to be the same situation as in a smaller market, and the margins are going to be drastically different as well.  The discussion was about how the shows set up average folks to fail.  I am happy for the successful flippers, especially in my market, where the margins are not as high as they are in other areas.

Sep 04, 2007 02:03 AM
Bill Nazur
First Lending Solutions - Riverside, CA

Ah to think that the Burlington newbie isn't quite established enough to say who he is.....so its easier to be anonymous. Like I said in my other response to one of your other blogs, people are looking for INSTANT gratification, NOT having to work for it. and if it doesn't work out the way it was promised, just file for bankruptcy and walk away. Its really pretty sad....

I enjoy Flip this house for its stupidity factor.....not because I believe an ounce of what they have to say. Its good mindless tv at times that shows me that most of the crap they talk about is just that....crap.....but it is nothing more than some of those horrible infomercials that tells you it is a GREAT way to make money!! Wew hoo!!! Yea right! what a crock of %$#@!

Sep 04, 2007 05:05 AM
John Thyne
Goodwin & Thyne Properties - Studio City, CA
Rudy, thanks for the post. Being out here in "Cali" I see that I really need to work my way into the REO business. I've been "dabbling" a bit...but finding it hard to find the actual person to talk with at a Bank who owns the property. Realtytrac and REOTrans bring me only so far and then I'm lost. I also understand that if you do BPO's it can lead to listings eventually and obviously it will take off from there (I am a hard worker and deliver what I say I will)...  do you have some advice for me as to how to get started into the BPO arena?   Thanks so much...  Good luck    John from Ventura CA
Sep 05, 2007 08:01 AM
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Rudy, while I agree with what you say in your post, I disagree the shows are setting people up to fail.  Individuals are responsible for their own actions and if they are so naiive as to think a 30 minute tv show is anything more than great entertainment, well, so be it.  I guess I am just tired of people making dumb mistakes and blaming it on someone or something else. 

"I saw it on tv so I thought I could do it."  Well, I watch HOUSE and BOSTON LEGAL but I don't presume to diagnose exotic diseases or practice law.

With that said, whenever I'm contacted about buying a REO property because someone is under the impression it's a bargain simply by virtue of the fact it is bank owned, I do educate them, show them  comps and make sure they haven't been watching too many tv shows.  But past a certain point, people are free to make their own decisions and either benefit from those decisions or suffer the consequences. 

Sep 05, 2007 02:33 PM