Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Neither; They pay what the house is worth. And I mean that; when we were shopping (this is 4+ years ago now) the two offers I recall putting in were within $1K of what the house closed for. The net benefit to the original seller isn't financial as much as it is psychological and time.
Interesting. Most of my experience indicates an owner occupant will pay more than an investor. Flippers don't make money by overpaying. Of course there are a few hedgefunds and what not that pay close to market value, but those are for rentals and I still don't see many offers where investors will pay as much or more than owner occupants. What offers have you seen indicating that it's investors paying market value? How do you know the 2 anectdotes from 4+ years ago were lost to flippers?
I have been watching a lot of house flipping shows lately, and researched online. People say its taking out affordable starter homes for families, and with flipped houses selling for more, it makes real estate more expensive for all the neighborhoods it was sold at. Many homes that I watched were liveable, and doesn't need the kitchens and bathrooms to be torn down. Some family out there don't mind living in a house built in the 80s.
But on the other hand, what I noticed is that when a house flipper does his work, buying and selling will make RE agents get jobs, contractors, cleaners get work, home depot sells materials so their workers are getting work, and the material that's being made from whichever factory, gets work, on top of truckers transporting the materials. It's a system that employs alot of people when a flip goes on. In the end the flipper gets a profit, and many people get jobs. The person paying for all of this is the home buyer, usually 120-150K more in price compared to the house that was untouched (at least from what I saw on TV, average profit was 50K, spending 60K average for expenses, and the rest is agent fees)
So the big question is, is flipping good or bad once everything is factored in?
It's supply and demand in action. It works
If you want a home, save enough money for a down payment.
If you want a home, save enough money for a down payment.
Except that:
1. When REITs with huge amounts of capital are involved, they can buy a lot more inventory, and take it off the market...though they are not always flippers. They can run them as rentals, too. But in general, they can game the market, because they can buy houses at reasonable prices and then buy one or two in a neighborhood for a much higher price and bump up the comps for the area, manipulate the market, and then when they sell the ones they hold, they have jacked the price up. Even if they didn't do much (or any) real work to improve them. This was the trick that Zillow was trying to pull, using algorithms and automation to do all of this. Particularly where these entities have access to search data, they can see what they COULD raise the prices to in a given area, based on what people put into real estate searches.
2. Also due to the above activity, rents are increasingly pushed into the stratosphere to the point where renters can barely afford their housing costs. Oh, sure they could move to a cheaper region...where there are no jobs. They stay and the rent goes up, up, up and between that and rising costs in other areas of life, every penny they work for, every raise they get, gets sucked up and out of their hands. No amount of skipping your Starbucks is gonna allow you to save up for a down payment in that environment, which is just fine for Big Capital because they can keep on jacking up those rents.
Good ol' free market supply and demand is peachy when it's regular Joe Average Americans, even landlords, who rent out or flip a house here and a house there to keep building their own nest eggs and such. It's when the big sharks get in the water that the system starts to get broken for regular people. Entities big enough to game the whole market to their advantage. But it doesn't always work the way they expect...I was amused to see Zillow's strategy backfire on them recently, or so said the news at one point anyhow.
Interesting. Most of my experience indicates an owner occupant will pay more than an investor. Flippers don't make money by overpaying. Of course there are a few hedgefunds and what not that pay close to market value, but those are for rentals and I still don't see many offers where investors will pay as much or more than owner occupants. What offers have you seen indicating that it's investors paying market value? How do you know the 2 anectdotes from 4+ years ago were lost to flippers?
Market Value is what a willing buyer pays a willing seller. I don't mean that to be snarky but a lot of these homes were postwar ranches in neighborhoods that were turning over, so it wasn't hard to find what the value was. I know because they were on the market within a couple months after they sold initially.
As someone who was regularly pushed aside by sellers for favor of flippers with suitcases of cash for SEVEN YEARS, my opinion of flippers isn't that great. Does flipping provide jobs to some extent? Sure, I'll concede to that. But does it axe out buyers who are struggling to get into homes that they can afford at the time and then fix up along the way? You betcha. My husband and I made the decision long ago, even before we bought our house, to NEVER sell any home we own to a flipper, regardless if we would make more money. We believe it's more important to give a couple or family looking for a good home a chance to come into their own. The flippers can suck it.
If you and your husband are fixing up your home over the years, it is likely that your home will sell for more than flippers are willing to pay.
But on the outside chance that a flipper offers say $75K more than the the couples and families looking for a good homes offer, would you still say no?
Interesting. Most of my experience indicates an owner occupant will pay more than an investor. Flippers don't make money by overpaying. Of course there are a few hedgefunds and what not that pay close to market value, but those are for rentals and I still don't see many offers where investors will pay as much or more than owner occupants. What offers have you seen indicating that it's investors paying market value? How do you know the 2 anectdotes from 4+ years ago were lost to flippers?
That's what it looks like to me.
Every flipping show starts out with a discussion of the neighborhood comps, and how they can't offer the seller what she/he is asking because they could lose money.
The 3 homes that were flipped in our area last year were all homes that sat empty for months, while workers in hazmat suits hauled out moldy carpet, years of debris, etc.
Even if they could find financing for such homes, what trying-to-get-their-foot-in-the-door buyers are up for or able to do that?
The realtors on this forum could likely answer this better than I can, but it looks to me like the "perfectly serviceable" homes are being bought by couples and families.
Though some sellers may go for the low-ball cash offers, most look at the bottom line to decide which offer to take. Even if it means waiting another 5 weeks or so.
I think if it takes a derelict house and makes it into a safe home, and that in turn turns around an entire neighborhood, or even a whole town, it’s a very good thing.
There are a few shows that do this. “Good Bones” in Indianapolis is one, “Home Town” in MS is another, and also “Fixer Upper” in Waco.
I can’t even watch the shows from CA. The poor young couples spend $700k on a total dump, and strip all the character out.
Bargain Block is my favorite.
Two men buy abandoned Detroit homes. They used to live in them as they fixed them up, moving from one partially renovated place to another in a grocery cart. But I think they have a home of their own now.
They are providing affordable, safe, comfortable homes for entry level buyers.
And they are so fun to watch.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
