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My guess is that they don't. The kind of buyer who cares about price history and wants to maximize value for money generally isn't going to buy a flipped house. That's you. The kind of buyer who wants something that is turnkey and is willing to pay more for it either doesn't look at price history or isn't bothered by the sort of price history you mention. Flippers will only operate for very long in markets where there are enough buyers of the second kind.
Homes are not worth what only one buyer would pay.
Homes, like any commodity, are only worth what someone will pay for it. My opinion isn't the be all, end all, but if no one else will pay asking price for it either, then it's not worth that today. A seller thinking his product "should" be worth a certain amount, or "would" be in a different market is irrelevant. Also, the longer a house sits on the market, the more value it loses.
OP, I do the same thing when I look at places. I want to see price history, but rely on what my agent can find as Redfin, Zillow, et al have inconsistent information. I might pause at a house as you describe and ask to find out more info-- what was replaced in the ten days of ownership? Maybe some bathroom vanities, paint, light fixtures? They could have updated some minor electrical in that time but permitting usually takes longer than that so I would want to know if the work they did do was permitted. But I agree that a price strategy where the house increased that much in value in that short a time is suspect unless they got the place for a song.
I usually try to walk away from flips. I have purchased a few of decently done ones but seen many more which are just awful.
"Price history" has nothing to do with the current value of a house.
That's your opinion. As a qualified buyer, I can tell you it does matter to me. I am highly skeptical that enough work was done in less than 2 weeks to justify such an increase in price. I am checking comps and as PP pointed out, with such a short turn around, the lower selling price from just a few weeks ago acts as its own comp, ironically. I'm not against flipping, nor am I against buying a flipped house. If it was off the market for 6 months, completely gutted and redone, then put back on the market with all the bells and whistles completed, this wouldn't have been made into a post. However, this house was bought real low and then re-listed very fast at an extremely high new price. It still has one below average full bath and no second even half bath. Far from ideal. I'm just surprised they thought it would be that quick and easy to turn a profit. So far, while other houses have sold in one day in today's market, this house still sits. My guess is they pull it off the market, put more work into it and relist it in a few months. But it does make the house lose value for many prospective buyers.
I have seen many homes successfully flipped for more money, and the value added was obvious. The home was substantially updated and presented as a better property.
I have also seen homes sit on the market for the reasons you describe in the OP. One where a seller had a life change after buying a home, but then wanted to sell it for his purchase price + new commissions and closing costs. Unfortunately, when buyers can see you just bought it two months ago, and the carpet hasn't even been vacuumed, let alone replaced, even a small increase is a tough sell.
There is also another property currently on the market here, where they did a few projects on the house, added a front porch, but inexplicably raised the purchase price over $180K. And that is not a small percentage of the total price... they bought it for 290K and now have it listed for $475K. I don't know what Zillow reports, but the MLS certainly shows this sales and price history, and there just isn't anything that would justify an increase like that. I've shown it before and now and said so in the feedback remarks to the listing agent. The agent replied "if you think it's over priced, make an offer!" (I thought maybe he wanted some help convincing his clients they are dreaming!) I said the offer would be at least $150K less than he's asking, and that's being pretty generous about the changes that have been made to the place since they bought it a year ago. I didn't hear back.
"Price history" has nothing to do with the current value of a house.
If it's recent history, ie within the last few months, it is as relevant as any other comp in the neighborhood. Now, if sufficient updates were done, the price fluctuation might be warranted, but as a buyer I'd look into it pretty carefully.
I didn't see the OP's name until I got way into the thread. The whole time I'm thinking it's only 1 house and why does it matter if profit will be made? It's worth what the market will bear given location & condition. If you're not willing to pay it, then that's your prerogative... move on. If it's not worth what they're asking, price will eventually come down if there are no other takers - very basic concept. Then I realized who was posting, now notorious on our local city forums because of everything having to be perfect from a buyer's perspective and then *maybe* you'll pull the trigger, in 3-6 months. All the while, criticisms against everyone who has bought, calling them idiots. This is a VERY hot market regardless of its shortcomings and people will settle for less than ideal conditions because they want to be here. That's all there is to it. You will never be 100% happy and with every post you seem you need to be before pulling the trigger. Good luck with that and wasting people's time.
Originally Posted by Wmsn4Life Homes are not worth what only one buyer would pay.
Quote:
Originally Posted by Abby Schmitters
That's your opinion. As a qualified buyer, I can tell you it does matter to me. I am highly skeptical that enough work was done in less than 2 weeks to justify such an increase in price. I am checking comps and as PP pointed out, with such a short turn around, the lower selling price from just a few weeks ago acts as its own comp, ironically. I'm not against flipping, nor am I against buying a flipped house. If it was off the market for 6 months, completely gutted and redone, then put back on the market with all the bells and whistles completed, this wouldn't have been made into a post. However, this house was bought real low and then re-listed very fast at an extremely high new price. It still has one below average full bath and no second even half bath. Far from ideal. I'm just surprised they thought it would be that quick and easy to turn a profit. So far, while other houses have sold in one day in today's market, this house still sits. My guess is they pull it off the market, put more work into it and relist it in a few months. But it does make the house lose value for many prospective buyers.
Wmsn4Life is correct. There are outlier buyers in either direction, but market value is based on what most buyers would pay, not what one buyer thinks. That's why you look at comparable properties, NOT at price history, when determining market value (and that's what the seller is, or should be - there are outliers in sellers, too - looking at when pricing the house, flipper or not). You may decide that just because the seller paid X for a house that it is not worth the asking price, and that's fine, but the fact is, there will be other buyers who look at the overall market, look at comparable houses that sold (sold price, NOT list price which is meaningless for these purposes), drop off the highest and lowest as outliers not indicative of the market, and get a good idea of the value of the house. Note that NONE of this involves what the seller paid for the house - that's just static that loses you houses (or buyers, if the seller paid too much and thinks that the market "owes" them a price that pays them what they think they "deserve").
What was the market when the house was purchased? What were comparable properties to it AS IT WAS THEN selling for? Was it purchased at the far low end of the market? Was it a foreclosure or a short sale or a distressed seller under pressure to sell cheap? (These are the kinds of houses that flippers generally look for - houses that are priced below market for any of a number of reasons, which is what allows them to make a profit.) All of these are factors that you don't appear to be taking into account, just what it sold for, not why.
You would do much better to stop looking backwards to the past and look at the present market for the same kind of house to determine how much it is worth, not how much the seller might be making.
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