patrick.net

#1.) I actually like the older stuff in some of the houses(like you said, granite may not be a fit in some places). Seriously I love SOME retro designs. While its rarer nowdays to find something still in acceptable shape, it does happen.

#2.) A close relative owns a large property management company. He hires the same contractors on a frequent basis, and they've already offered up their services. Not looking for a discount(or much of one), just don't wanna get hosed. I'm not going in to this blind and I'm def not paying some flipper rape sans lube prices for something I can have done to my own tastes by people I can trust 100%.

Totally agree with you.

I just find it discouraging competing with investors who are going to fix up the house at a price point and style I would not want anyway.

Hope you find the right house. :)

i won't buy a flip.
i won't buy a house from an owner that has hundreds of thousands of dollars of equity in it.
i won't directly transfer my wealth to the the seller.

i'd rather buy a short sale , or low ball the bank on an REO.

We have window shopped some of the houses in the historic areas in town, and the worst was a '20s Tudor cottage that had basically all of the period detail stripped and redone in contemporary "Crate and Barrell" decor. Yuck.

The sales clerk running the open house was ranting about how the old bathroom had green-and-white tile with matching green tub/toilet/sink, and I'm just thinking, wow that sounds so much cooler than this granite 12" tile and poorly-installed white plastic tub. They had replaced all the paned windows with ucky aluminum storm-window looking things. Very sad.

I mean, if you want to live in a cookie cutter box, don't buy a 100 year old house. I'm sure some schmuck with money and no taste snapped it up.

VanillaSky says

i won’t buy a house from an owner that has hundreds of thousands of dollars of equity in it.

Why the heck not?

VanillaSky says

i won’t directly transfer my wealth to the the seller.

That doesn't even make any sense. If you're paying cash, you're converting asset classes at par value, and so is the seller. You do it every day. If you're not paying cash, then there's nothing "yours" about the wealth in the first place (nor is it the bank's or anyone else's -- in fact it doesn't really exist in any meaningful way).

VanillaSky says

i’d rather buy a short sale , or low ball the bank on an REO.

Just because you think it would be priced lower? I don't quite get it.

In a short sale, you've probably saved a poorly-financed buyer some future pain. That's fine, assuming you don't subscribe to the "greater fools should suffer" school of thought. In an REO, you've shifted some numbers to the other side of the bank's balance sheet. The fools have already suffered (at least the ones not bailed out with your income taxes).

So, who cares? There's no reason to believe that a short sale or REO are priced closer to some illusory "natural value" of the property.

You're hostile to the system...OK, fine. You're hostile to the banks and greater fool buyers and realtors and investors and flippers and tax collectors and legislators etc...but how does your internal code of non-participation help you or hinder them?

"I love sink areas that overlook a family room, dining room etc. Here is a beautiful look over sink overlooking. . .a door? Because of where the sink counter is, there is no room to work in the kitchen. This kitchen would’ve made much more sense laid out around the walls and avoided that congested, “galley+plus view to nowhere feeling.” It is obviously designed by somebody that doesn’t use a kitchen very much."

So where did the kitchen sink get relocated from? There's a possibility that though the flipper did do some remodelling, the relocation of the sink might not be one of them. If anything, that looks like it was the original location.

Aside from that, the cabinets for that island were not meant to be used as the end. All you see is bare wood. Nothing to try to make it look pretty.

I'd buy if flippers took care of any possible issues at foundation, plumbing, structure etc and then made things look slick. But then, that's not flipping. Isn't it?

I just cruised by an open house this weekend and the realtor was very proud of telling one of the prospective buyers "my husband is buying all these foreclosures fixes them and sells them for profit, I have a list of them if you are interested".

I'll have to take your word for it, redfin makes you register now to see the pretty pictures.

"It's been completely remodeled" "the kitchen has been updated..."
Would make me walk away quicker than "it needs some updating".

I bought by house, mainly because the guy didn't stink the place up with Home Depot Crap from the front door to the back door.

You would think we live in circa Russia 1980 with the limited choices we have in this country.
It's like three or four choice for anything imaginable, and every store sells the same crap. So as a result, there's this aurora of cheap shit, that afflicts every house that has been updated in the last ten years. It looks like the same Jack Ass remodeled every home, materials sourced from the same Lumber yard.

Tenouncetrout says

bought by house, mainly because the guy didn’t stink the place up with Home Depot Crap from the front door to the back door

I saw that a lot in newly renovated places. All new stuff that was the cheapest possible choice of everything. And of course they painted over all the switches and outlets.

"i won’t buy a flip.
i won’t buy a house from an owner that has hundreds of thousands of dollars of equity in it.
i won’t directly transfer my wealth to the the seller.

i’d rather buy a short sale , or low ball the bank on an REO."

So you would rather transfer your wealth to a bank. Ok, I got it. Go ahead and lowball. Ask some of the posters on patrick.net how that strategy has been working out for them. You will be competing with all cash investors and realtors looking to buy and flip.

if i buy from a flipper he directly makes profit from the sale.
if i buy from a seller that paid $100k and i buy it for $800k. he directly makes $700k from the sale (minus costs).
in both cases i am directly enriching the seller. i do not want this.

if i buy a short sale, then the seller is losing money on the sale (losing at least the deposit).
if i buy an reo, the seller has lost his home.
i want to buy in this situation because i want the seller to lose.

why is it so hard for people to understand such a simple concept?

p.s. i don't care about the bank. they always make money on the origination of the loan- only way to circumvent that is to pay all cash.

VanillaSky says

if i buy from a flipper he directly makes profit from the sale.
if i buy from a seller that paid $100k and i buy it for $800k. he directly makes $700k from the sale (minus costs).
in both cases i am directly enriching the seller. i do not want this.
if i buy a short sale, then the seller is losing money on the sale (losing at least the deposit).
if i buy an reo, the seller has lost his home.
i want to buy in this situation because i want the seller to lose.
why is it so hard for people to understand such a simple concept?
p.s. i don’t care about the bank. they always make money on the origination of the loan- only way to circumvent that is to pay all cash.

Because it's so ridiculous. Why do you care whether the owner makes money or not? Are you jealous of them or something?

VanillaSky, why do you hate sellers so much? You aren't competing against the seller...if you like something and like the price, then you buy it.

Your logic makes no sense VanillaSky. Your arguing based on a personal hatered for sellers rather than on common sense. If you buy a short sale, NEWSFLASH: the seller can still win big. The seller could have cashed out their equity during boom times and used their house as an ATM to buy a Mercedes or travel to Europe. Trust me, I know several short sale sellers who are not losing a dime. One of them made out like a bandit.

Usual local flips out here is somebody buying a house, putting in home depot cabinets in the kitchen and a new coat of paint and trying to flip it for 100k more. It's just dumb.

In my area, flippers usually do a total gut renovation. One flip near me just sold late last year. Bought it for $475,000 in 2005 and just sold for $910,000. Some flippers do care about their work and will put every effort into making sure everything is just right.

tatupu70 says

VanillaSky says

if i buy from a flipper he directly makes profit from the sale.

if i buy from a seller that paid $100k and i buy it for $800k. he directly makes $700k from the sale (minus costs).

in both cases i am directly enriching the seller. i do not want this.

if i buy a short sale, then the seller is losing money on the sale (losing at least the deposit).

if i buy an reo, the seller has lost his home.

i want to buy in this situation because i want the seller to lose.

why is it so hard for people to understand such a simple concept?

p.s. i don’t care about the bank. they always make money on the origination of the loan- only way to circumvent that is to pay all cash.

Because it’s so ridiculous. Why do you care whether the owner makes money or not? Are you jealous of them or something?

a seller doesn't deserve, in MY opinion, to make $700k on a sale just because he got lucky and bought before the boom.
you obviously have a different opinion which is great; you and others that think similarly will buy my home if i'm selling with $700k equity in it. awesome.

is my position economically ir-rational? you bet it is.
the rational choice would be to ignore how much the flipper/seller is making.

but i refuse to make a seller happy by cashing out their equity using my own money (which it will be because i plan to pay off the loan). they can find another sucker to do that dirty task.

i'm completely against transferring my wealth to another person because they got lucky with their dumb-luck timing and buying before the bubble.

make no mistake about it, it absolutely is a transfer of wealth.

p.s. if they cashed out a heloc it's recourse so it's not free money as you imply; hopefully the collection agencies will hound them forever. it's not a way i would want to live.

So, in 20 years, when you sell your house, you are going to list it for what you paid? Since, after all, you don't deserve to make any money just because home values went up?

I definitely understand not wanting to buy a crappy flip...for me, though, that's mostly about the crappy part. I don't know what the number is, but I think it's totally reasonable that someone would profit after puting the cash (or credit) up to buy a house, paying the mortgage for several months while they invest in renovating it, taking a lot of the risk and time out of the equation for a retail buyer. If it's done to someone's liking, why shouldn't the investor profit from it?

OK since most flip work is done with no permits, how about this: Whenever we see an obvious flip attempt and can verify by a recent sale date, CALL THE CITY and report the illegal work. How fast do they get out there and issue a citation? Would this teach flippers a lesson? Or would the new owner get stuck with the fines?

swebb says

So, in 20 years, when you sell your house, you are going to list it for what you paid?

of course not. that would be stupid.

i'll take tatupu and housingwatcher's money every day of the week.
if they want to be a fool with their money i've got no problem with them transferring their wealth to me.

If it’s done to someone’s liking, why shouldn’t the investor profit from it?

i'm not telling anyone what to do with their money.
blow it all on hookers and coke. buy a $1M dump in east palo alto or oakland or a flip that you like.

people spend their money on different things ; i just happen to have zero interesting in supporting real estate investors or folks that have huge equity in their house. it's my inconsequential protest against the real estate system. i won't inflate seller's pockets if i can help it.

VanillaSky says

but i refuse to make a seller happy by cashing out their equity using my own money (which it will be because i plan to pay off the loan). they can find another sucker to do that dirty task.

I take it then that you don't ever buy stocks--there's no way to find out how much money the seller made there...

VanillaSky says

people spend their money on different things ; i just happen to have zero interesting in supporting real estate investors or folks that have huge equity in their house. it’s my inconsequential protest against the real estate system. i won’t inflate seller’s pockets if i can help it.

That's the thing. Your money gets spent whether the owner makes $700K or loses $250K. It's not a protest against the real estate system at all. You are just narrowing the number of houses you will consider buying.

The #1 reason I would never buy an obvious flip with major renovations would be the quality of the underlying work. Amateurs doing work with the sole purpose of maximizing margins is a scary thought when you consider the impact to structural, electrical and plumbing systems that you cannot see now that they are covered with dry wall, granite and tile. Who knows if they found mold or termite damage and just covered it up? Did they disturb asbestos containing materials throughout the old house without proper containment? Did they use Chinese drywall and/or cabinets to save some $? All things to think about.

I have been flipping houses for 30 years. You could not provide the service and quality for the kind of money we do them for. I have been using the same sub-contractors for most of these " flips" as everybody calls them and they work at a reduced cost because they get work over and over. A homeowner would pay more money to have the same amount of work done.
I am proud of the work our team performs and its always with the utmost of care and quality. We don't make that much money as you would assume. We are happy to get our labor and material back out of the home with hopefully a 5% profit.
I am also a contractor so we these houses once in a while for fill in work and are happy to have it.
Some of you don't really get the big picture.
Most people love the houses and want to buy them and glad they don't have to do all of this work!

If it's white people will complain, if it's green they will complain, yellow, blue, big, small etc.... Complainers complain about everything under the sun, because if your complain it gives you a sense of false intelligence,(You could do it better, but you never will)....Those who won't, complain! Maybe if you complained less, you'd actually have time to do something with your life and time. But you won't, because you'll be too scared of the complainers like yourself......So keep sitting on your butt complainers, some of you can even make a living complaining, the rest will continue reading about the complaints from the Complainers......

starbreaker says

with the sole purpose of maximizing margins is a scary thought when you consider the impact to structural, electrical and plumbing systems that you cannot see now that they are covered with dry wall, granite and tile. Who knows if they found mold or termite damage and just covered it up?

I've seen all these things on Holmes on Homes.

I saw an article on CNN money buying vs. renting buying wins. Sure. Good time to get wiped out buying a house in a negative equity market. Everyone is upset about the banks and the bailouts. The real thing here is the lenders are the only ones loosing out. Thats the truth of it all. Not realtors. Not real estate industry people. Not people that would buy a house. See we are all winning. For once WE are ahead in the game.

Core logic, Reality trac. I'd sooner believe a convinece store robber. They say houses are 30% under the prices they were at the peak. I am seeing 50% as much as 65% under peak prices. For me it's just not there yet however. I am estatic about all of this. Elated. Praise the Lord overjoyed. Overwhelmed by the way prices are going. Sure I could sign up with big money and big corporate logic. However why should I when I can be independent. Watching and waiting while this all falls into place. Houses, assets bought for a song. All the stuff you had to sweat a lake to pay off. Going for next to nothing. Watching them steadly getting sucked under. This is the day the regular guy gets back. Gets his. Gets to live a nice life.

ArtimusMaxtor says

However why should I when I can be independent. Watching and waiting while this all falls into place. Houses, assets bought for a song. All the stuff you had to sweat a lake to pay off. Going for next to nothing. Watching them steadly getting sucked under. This is the day the regular guy gets back. Gets his. Gets to live a nice life.

Sorry Artimus . . I always find your posts quite unintelligible. I finally realized it's incomplete sentences. Many of your sentences contain a verb and direct object but are missing a subject.

I just cruised by an open house this weekend and the realtor was very proud of telling one of the prospective buyers “my husband is buying all these foreclosures fixes them and sells them for profit, I have a list of them if you are interested”.

Makes me cringe, that is why the average person can't get a house for their family to live in. Because flippers usually have pretty tight relationships with realtors and they grease one anothers palms, leaving the rest of us out of the loop. So in the end we have to purchase their overpriced dump. I'm all set, I'll purchase a fixer upper, thanks.

I usually don't like flippers that put in $25k of work and try to sell for $100k more than they paid. HOWEVER, this doesn't look like a flip. If you scrool down to the listing and check the listing from 2006, it's the same kitchen and flooring. This looks like a standard REO to me. I'm not sure about your area, but in LA county, $267/sqft and a nice looking house is a great deal. I'm sure you guys do your homework just like I do...let the prices fall!

http://www.redfin.com/CA/Walnut-Creek/145-Montanya-Ct-94597/home/919850/ebrd-40224402

Listen, it's all BS. I have had two long term relationships with contractors. Both have done very high work, being flown out to places like Nantucket and The Vineyard, the other doing only multi million dollar homes in gated communities. They have both also done flips and lower end homes. They have both confided in me the markup behind these projects. It's astronomical and absolutely obscene. What the work costs as opposed to what they are making in way of profit is ridiculous. It's pure greed. No other way to put it. The philosophy, they do it because they can. I think people like that are unethical and I've had this conversation with both of them, not to mention every tradesperson I know that charges exorbitant prices. Folks don't complain when you can't afford to take your 5 year old to the emergency room. Charity starts at home. Start being ethical and treating people the way you would want to be treated and stop being so greedy, just because you can. Remember you can make a living without making a killing.

As a potential homebuyer in the next few years, I almost always disregard a new renovation. My three reasons typically are: renovation is ugly, we don't share the same style; seller trying to maximize profit and may use cheaper materials; because it's a renovation the seller's asking price will be too high.

I agree with you completely. I would much rather buy a house that needs the work and I will happily do it my self. It seems that sellers today think that granite is a fix all. I actually don't like granite. If I buy a house with it, I will have it deinstalled. Imagine that?!

I've seen some horrible flips and in one case I laughed out loud in front of the realtor and home owner.

fl350 says

I would much rather buy a house that needs the work and I will happily do it my self.

Lots of people prefer that but be prepared to really DIY. Because if you DIY as in hire your own people to do it, you can't really compete with the people buying those pricewise. Because they really are doing it themselves and not hiring anyone. I've seen threads where people were complaining about how homes that need work get bidded beyond what it's worth because they will need to hire ABC to do XYZ.

illustrateth says

I get really frustrated seeing flips that are charging a premium for work that doesn’t make any sense.

It's very unethical. Flipper are the dirtbags and one of the biggest reasons for the bubble and the crash. They'll burn in hell.

I wouldn't buy someones flips either, flips are unethical and screw the buyer. There is a reason bible advises against this behavior, of course we have too many "atheists" who never try to read between the lines to understand what is being shown to them.

ChrisLA says

They’ll burn in hell.

Not quite. There are millions of buyers that are not in the same boat as you do. Flippers will be fine but buyers will keep burning for years to come.

"p.s. if they cashed out a heloc it’s recourse so it’s not free money as you imply; hopefully the collection agencies will hound them forever. it’s not a way i would want to live."

If they spent the money, good luck collecting it. They can file for bankruptcy. And it gets even better: That HELOC they default on is TAX FREE income.

How do you buy stocks VanillaSky? Maybe the person your buying stocks from is profiting big time and, on top of it, is a homeowner! Certainly you don't transfer your wealth to stock sellers, right?

I also won't be likely to ever buy a flip. Most of the people doing it either don't know, or don't care, how to properly do repairs or upgrades, and most are likely to be overpriced. The ignorant may be easily fooled by cosmetic frills and a fresh coat of paint, but I know that lurking under the lipstick is probably a pig. Water leaks, termites, mold, shoddy work, corrosive Chinese drywall, wiring problems, etc. Flippers were, and still are, a part of what makes housing artificially over priced. Even though many think housing is cheap now, it's still above what it should be. The average person cannot afford much house at all because their incomes have not gone up, but are instead going down relative to the cost of living including housing. Job security is nonexistant, and many are just one serious illness or injury away from complete financial ruin. Maybe finally a lot of people are realizing this and not buying, or at least not overbuying. Attempts to keep prices up will ultimately fail, but a few fools will still buy into it every time the TV set tells them to buy now. Flippers are mostly doing it wrong...wrong construction, wrong ideas, and wrong price. That is why I will probably never even look at one let alone buy it.