Ever flip a house?

[LuvOrlando]

Well most of these folks will sit around and point fingers at everyone but themselves, which is a huge problem with society today as no one wants to own up to their mistakes anymore it seems. But of all people I think agents are probably the least to blame because their job is finding buyers and sellers for homes not loaning the money to make that happen. The banks sure they knew they were making risky loans and it came back to bit them in the butt. But lets not forget about the individuals themselves taking these loans out. I mean for instance suppose a car dealer is willing to finance a car for you and give you a $600 payment and you know you only make $1200 a month does that mean you should take the loan because they said you qualified for it. Of course not!!! I think people just didn't use some common sense and bit off more than they could chew. So lets spread the blame all around.

I took the classes in 2005 or so and this is when I realized what was going on, the most successful agents know how to steer buyers to the right brokers. I was told this flat out. part of selling is being able to get your buyer into the biggest home possible which maximizes your commission. They had an entire session on financing and it was stunning. I only ever did 30 fixed with 20 down so I was completely unaware this stuff even existed, that is until I took this class.

Again, I don't think the agents had even a remote understanding of what was going on, I did because of my background education, but most of the agents had zero idea. that doesn't mean they weren't participants, just that they weren't aware and if they were they didn't care. I was so upset by what I saw that I walked away, never finished my license and never sold a house and just
ate the cost of the class. Anyone with an education could have, should have seen the writing on the wall. I did what I could to warn people around me and refused to follow DH into a bigger house but what else could I do?

 

[LuvOrlando]

Double post

 

[PaulaSB12]

The only investment I would make on a house right now would involve paint and elbow grease. The forclosed properties haven't even been vacated yet or hit the markets yet and once they do kiss equity bye bye. Seriously, what do you think is going to happen when all the homes the banks own hit the market on a short sale? They will drive values down into the dirt and it can't be avoided, it can be put off but not avoided. No way would I sit on a home, credit is still ridiculously tight because of all the bad risk and no amount of infusion will help,why the gov't keeps at this is beyond me. The only people who are in a position to buy are healthy renters and why on earth would they? Why on earth would anyone absorb the risk and inevitable losses? If I could get away with it I'd liquidate and rent in a heartbeat.

A couple of years ago some banks actually started handing out 125% mortgages I mean imagine starting out with a 25% negative equity on your home I bet a lot of these houses have now been reposed, I brought my home just before the row about endowment mortgages (interest only mortgages) the estate agent tried to sell me one but I went with a repayment one instead then it turned out that many people with them where not going to have enough to pay them back.

 

[hugscot]

I hope you mean that was a mortgage brokerage class you took and not a real estate licensing class?
I have been a real estate agent since 1998 and we have to take continuing ed classes every year to keep our license and I have never ever been in any class where that is taught as it would be unethical to even teach that. As a matter of fact the main goal of the real estate commission in our state and I would imagine every state is to protect the public and part that is approving all education classes we take. We as agents are simply there to help the buyer find the right property that THEY WANT and help them close the transaction not put as much money in our pocket as possible at the expense of our clients. We work for the client not the other way around. Outside of a client instructing us to do something illegal we have to legally follow their directions and decisions when it comes to real estate. We are there to provide them all the facts and make sure they have everything possible to make a decision. And we do take tons of finance classes also.

This may sound hard to believe but becoming a mortgage broker doesn't even require a license at least in our state!!! So any Joe Blow can be mortgage broker and work relatively unregulated!!! Mortgage brokers don't get paid unless the sell the loan and close a deal. They are basically car salesmans for home loans and people were lining up in droves to buy them.

I took the classes in 2005 or so and this is when I realized what was going on, the most successful agents know how to steer buyers to the right brokers. I was told this flat out. part of selling is being able to get your buyer into the biggest home possible which maximizes your commission. They had an entire session on financing and it was stunning. I only ever did 30 fixed with 20 down so I was completely unaware this stuff even existed, that is until I took this class.

Again, I don't think the agents had even a remote understanding of what was going on, I did because of my background education, but most of the agents had zero idea. that doesn't mean they weren't participants, just that they weren't aware and if they were they didn't care. I was so upset by what I saw that I walked away, never finished my license and never sold a house and just
ate the cost of the class. Anyone with an education could have, should have seen the writing on the wall. I did what I could to warn people around me and refused to follow DH into a bigger house but what else could I do?

 

[PaulaSB12]

Are fewer mortgage applications being approved? Its being reported that number of successful mortgages is half what it was a few years ago. Larger deposits are being required as well.

 

[hugscot]

Are fewer mortgage applications being approved? Its being reported that number of successful mortgages is half what it was a few years ago. Larger deposits are being required as well.

I dont know exact numbers but that does not surprise me to hear. The mortgage companies are leaving no stones unturned on applications and being really overbearing and outright ridiculous at times when it comes to closing conditions now. I mainly buy and sell for myself for investment purposes and just went though one of the worst closing I have ever had on a property I was selling just a few months ago. It was a real long draw out mess and I can't imagine any normal seller putting up with everything that went on with the mortgage company and the appraisers. It took six months to close and went through 4 appraisers and 3 different mortgage companies before we got it closed. In the end even though the other 3 appraisals came in contract price the last guy came in 10k less than the contract price and I ended having to take it or walk away, which wasn't much of an option at time as I owed a contractor several thousand dollars for repair work done so the property could clear inspections. Larger deposits always helps things close quicker as less risk is involved but I have had buyers walking away from closing with money so that is not always the case.

 

[Carly_Roach]

DH and I spent a LOT of time budgeting and running numbers. What the estate owes, what we will have to pay to keep the property, what we will spend on the remodel. We also won't be doing any major work like adding a bathroom or tearing down walls. So far (and knock wood) we're under budget.

This is very similar to what we are doing... except that we don't owe anything on the property. The estate does owe about $20K to medical bills and to me for paying lawyer fees and property taxes. I feel pretty strongly that we aren't going to lose money on this deal. I could put it on the market for 1/2 the going rate in that neighborhood and still make a nice sum for my brothers and I. And I do plan to underprice it slightly.

If you feel the house would sell for a minimum of $40K, then you'd break even on the deal and "flipping it" would be ideal for you. However, be sure to consider who else would be splitting the profits with you such as other family members who may lay claim to the sale of the house which is part of the estate no matter how much you personally invest in it.

I'd hate to wake up and find out that I'd not only lost my $20,000 investment (that no one contracted with me to do so they're not responsible for paying me back for that), but I now owed $50K or more to family members who are contesting the disbursement of the estate because the house sold for much more than anyone ever thought it would. Your profits may be eaten up by attorney's fees.

If you own the property free and clear then you have an ideal "flipping" situation. But I believe yours is a unique situation and the days of flipping for obscene amounts of profit are definitely over.

 

[Liberty Belle]

In 2007 just before the market went south my family flipped our one and only house.

It was a unique situation because we were able to buy my great-uncle's house after he died. My family (parents & siblings) bought the house from his estate (ie other family members).
We paid $90,000 for a 950 square foot 2 bedroom 1 bath 1920's bungalow that was in awful condition but in a fantastic location (historic district).

We replaced petty much everything:
New kitchen cabinets, granite countertops, new appliances.
New paint (inside and out).
Refinished floors but replaced baseboards.
New bathroom tile & bath vanity
Added central HVAC
New water heater
New windows & doors
Rebuilt garage
converted screen porch into sunroom
New landscaping
I'm sure I'm forgetting some things...

We did about 80% of the work ourselves. We hired a landscaper, plumber and HVAC tech. We spent about $40,000 on all of the upgrades and after about 2 months on the market we sold it for $235,000. After splitting the profits with my parents & brothers, DH & I walked away with just about $20,000.

It was hard work and looking back we were extremely fortunate that it sold so fast. I felt kinda bad for the woman who bought it bc the house is now back on the market bank owned for $180,000. Here's a link of the current listing.

http://www.harrynorman.com/PropertyDetail.aspx?tab=1&2020_max=1950&0041=1&radius_lon=-84.5504184&radius_lat=33.9527746&radiusZFldKey=0240&radiusYFldKey=0230&radiusXFldKey=0220&radius_miles=1&radius_state=GA&radius_city=marietta&radius_addr=4+depot+street&RecordType=320&SearchPageName=PropertySearchRadius.aspx&AgoraItems=5&AgoraPage=6&5020_order=descending&PropertyItem=0&PropertyIdx=26&PropertyDetail=104150440

My parents tried to flip another house. They bought my grandparent's home when they died. They renovated but couldn't sell it. It's currently being rented. IMO the market stinks now, the flipping days are over. There are good deals but that makes it that much harder to sell. My parents are happy to be renting their current property, they are going to sit on it for a couple of years. The advantage for them is that the house is paid off, they aren't making mortgage payments so the $1,100 a month is just extra income.

It's a very cute house and you did a great job fixing it up, but I feel so bad for the new owner. It's listed for $162.9 now.

 

[Carly_Roach]

It's a very cute house and you did a great job fixing it up, but I feel so bad for the new owner. It's listed for $162.9 now.

Yeah, I noticed that, too.

 

[mhsjax]

It's a very cute house and you did a great job fixing it up, but I feel so bad for the new owner. It's listed for $162.9 now.

It is a cute house, but I would never pay that for a house with only 2 bedrooms. That is crazy. And 950 square feet, and I reading that right, for $162.000.

 

[luvthatdisney]

I inherited my father's house in 2009 and we decided to flip it (needed a lot of work!!!). Well the bottom fell out of the market! We finished it and tried for 6 months to sell it - only 2 showings . So we are now landlords!

We plan on renting it until the market picks back up - we are prepared that it might be several years. If I had it to do again? I would have sold it as it was and be done with it, but cant turn back time.

I would just say to make sure you know your market and if things are actually selling. It is a buyers market in most areas and sellers are having to take big losses just to sell. Good luck!

 

[amyren]

It is a cute house, but I would never pay that for a house with only 2 bedrooms. That is crazy. And 950 square feet, and I reading that right, for $162.000.

Yep. 950 square feet. It really only works for a single person. You really pay for the location. It's in a historic district. You can walk to town square. Here are the listings within a one mile radius. Our friends who live in the area paid over $350,000 for a 3 bedroom!

http://www.harrynorman.com/PropertyResult.aspx?tab=1&0041=1&radius_lon=-84.5521288&radius_lat=33.9613859&radiusZFldKey=0240&radiusYFldKey=0230&radiusXFldKey=0220&radius_miles=1&radius_zip=30060%2C%20&radius_state=GA&radius_city=marietta&radius_addr=390%20campbell%20hill%20street&RecordType=320&SearchPageName=PropertySearchRadius.aspx&AgoraItems=5&AgoraPage=1&PropertyItem=&PropertyIdx=&5020_order=descending

 

[Disnydad]

I know a few people who did a bunch of flipping back in the early to late 2000's, but they've gotten out of the business due to the housing crash. The last ones they did took a long time to sell and they wound up losing money on those two.