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My complaint is that in my market there's a lot of livable housing that get bought by flippers. Dated places that are still very servicable; some of them were nicer than the apartments I rented before buying.
"Livable" as defined by the market. Many buyers want all the updates from the get-go, even if they pay a premium for them. And first-time homebuyers generally have neither the resources nor the knowledge to take on the upgrades themselves.
My complaint is that in my market there's a lot of livable housing that get bought by flippers. Dated places that are still very servicable; some of them were nicer than the apartments I rented before buying.
So why are the owners selling to the flippers instead of an owner occupant?
So why are the owners selling to the flippers instead of an owner occupant?
My guess would be the flippers pay with cash. That's what they do around here. I would prefer a cash offer to someone with something like an FHA loan when I sell.
Is there a way to tell if someone is buying your house to live in vs. flip vs. rent out? I am just curious. I am selling my house soon and I really don't care who buys it, I will take the best deal for me/whatever nets the most in my pocket with the least amount of of risk.
My guess would be the flippers pay with cash. That's what they do around here. I would prefer a cash offer to someone with something like an FHA loan when I sell.
Is there a way to tell if someone is buying your house to live in vs. flip vs. rent out? I am just curious. I am selling my house soon and I really don't care who buys it, I will take the best deal for me/whatever nets the most in my pocket with the least amount of of risk.
It's mostly the same here in the Pittsburgh metro re: flippers paying with cash.
My own house, had it been on the market this past year instead of seven years ago, would have likely been sold to a flipper as the typical FHA buyer wouldn't have had deep enough pockets to take on all of the deferred maintenance, replacements of things that were near the end of their service life, and necessary repairs. The homeowner was financially unable to do much in terms of the repairs/replacements that were listed on the inspection report, so there's also the high probability that the house wouldn't have passed an FHA inspection. At the time, though, flippers weren't paying the prices that they are now for houses, so my house was priced far too high to catch their eye(s).
Around here, most of the flippers and folks who are buying properties to rehab, then rent out are pretty open about what their plans are with sellers. Because they tend to buy quickly, with limited inspections, and pay cash, selling to them is especially appealing to those who are wrapping up estates--particularly those estates which are in areas that are being/have been gentrified and in the inner ring suburbs. Those houses move really quickly once they're put back on the market unless they are what I like to call "excessively aspirationally priced" for the neighborhood.
So why are the owners selling to the flippers instead of an owner occupant?
Because in some cases they need a cash buyer because a non-cash buyer can’t get insurance if the house is not up to par. Existing owner may not have the finds or desire to make their house insurable and a cash buyer alleviates their problem.
Plenty of cash buyers plan to occupy as well.
I am not a flipper, just a rental property owner. I’ve bought many sub par houses without a loan. It makes things very easy in the seller because I don’t care about getting insurance in the short term. Those with cash can fill this void. Most buyers simply can’t buy a house with an actively leaking roof because they can’t get insurance and you can’t get a loan if you can’t get insurance. And the current owner doesn’t have the funds to fix the roof, so a cash buyer is a win-win.
Last house I bought with an actively leaking roof I rented back to the current owner and her rent payment was significantly less than her mortgage payment was. She was thrilled and rid herself of a huge debt through the short sale. She stayed five years and moved and I sold the house and made a nice profit because then it was a sellers market and not a buyers market.
Because in some cases they need a cash buyer because a non-cash buyer can’t get insurance if the house is not up to par. Existing owner may not have the finds or desire to make their house insurable and a cash buyer alleviates their problem.
Plenty of cash buyers plan to occupy as well.
I am not a flipper, just a rental property owner. I’ve bought many sub par houses without a loan. It makes things very easy in the seller because I don’t care about getting insurance in the short term. Those with cash can fill this void. Most buyers simply can’t buy a house with an actively leaking roof because they can’t get insurance and you can’t get a loan if you can’t get insurance. And the current owner doesn’t have the funds to fix the roof, so a cash buyer is a win-win.
Last house I bought with an actively leaking roof I rented back to the current owner and her rent payment was significantly less than her mortgage payment was. She was thrilled and rid herself of a huge debt through the short sale. She stayed five years and moved and I sold the house and made a nice profit because then it was a sellers market and not a buyers market.
In my area, we have two types of homes.
Type 1 is the serviceable home that is bought by a flipper. These homes don’t have ideal finishes, but need fairly minor updates to be desirable. Flippers are able to pay cash. I have a few friends who were looking for smaller hopes and said that they ran into this problem while looking because they were not able to pay cash and close in a couple of weeks.
Type 2 is the type with serious problems. These are typically tear downs in my area. Some are bought by people looking to build their own homes, but others are spec homes or are just torn down and then sold again for the land once it is cleared.
FWIW, there were two basic houses sold in my neighborhood in the past year or two. One might not have even been serviceable, but it was cheap and the owner has slowly been remodeling it himself. The second one looked much nicer and the owner there is also doing slow remodels.
Close in 36 hours you say. And Cash! Alright then.
So are these flippers paying a premium also or do they get a discount for being cash and closing in 36 hours?
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.
It’s good for me personally as I now have a flipper as a client again as of a month ago. In the past other flippers were my best clients to have. Through this flipper’s network I’ve already gotten more new business for myself, and for a contractor friend if he wants it.
On a side note, I was at a house yesterday that the flipping was starting today. The deck on the back of the house at ground level was missing 2-3 boards out from the house. So getting into the house from back means stepping a 2 foot gap…it looks terrible.
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