patrick.net

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.

Philistine says

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

This house sounds like a candidate for a picture on the last page of a magazine I can't think of the title of right now, but it was about architecture or old homes. The last page was called Re-muddling and it always depicted some horrendous or hideous travesty performed upon an old and once-beautiful home and provided sarcastic commentary about it.

CSC says

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.

There is a lot of truth in this thread about flipped homes. For example - this home right here a few miles outside of Monterey:

http://www.realtor.com/realestateandhomes-detail/473-Forest-Ci_Marina_CA_93933_M21970-66484

It sold a few months ago for around $201k. The buyer put cheap laminate floors in it, and repainted the exterior.... and hiked the price up. It was for sale for around $330k, and now it's down to $309k.

Seriously !!! $100k markup for freaking laminate floors and exterior paint? We're talking 1-2 weekends worth of work with a couple friends and some beer.

I walked through this home a few years ago. It's been vacant for around 3-4 years, had tons of mold/water damage all throughout. No way I would touch it with a ten foot pole. Not to mention, an apartment complex overlooks the backyard: no privacy.

Crap like this deters me from flipped homes as well.

The one thing that bothers me about these fix up flips is, what is it they are covering up? I watched a two story house in my neighborhood that had a mold ring between the first and second floor. Guys came in, ripped a bunch of stuff out of the inside. They apparently "fixed" it up on the inside, but the outside was just painted. The wood siding was all warped and they had the flashing between the first and second floor installed incorrectly. Is an inspection going to uncover this shoddy "repair"? I doubt it. When I see one of these cute "fix-ups" i just wanna run the other way.

seaside says

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 sold the condo I'd lived in for 24 years at 6463 Bordeaux, 75209, in 2005 two months after listing it. The developers who bought it spent the next 6-7 months completely renovating it, including new kitchen and bathroom fixtures. Most significantly, though, they didn't replace the two HVAC units for upstairs and downstairs, which are both mounted in the ceilings and with outdoor units that are now 30 years old--but this was plainly obvious to anyone who looked at it, so they can't be blamed. The most puzzling part of the renovation, though, was the removal of the storm windows which I'd paid $1,500 for in 1983, which included front and back doors which were retained. They not only aided in heating and cooling, but added a measure of security as well. They didn't even replace them with the screens which had been in place originally, but just left unprotected windows! I'll bet they didn't replace the 12 year old electric water heater, either, on which one of the elements had gone to the bad. It took them two years to sell the renovated unit, but it seems to be well maintained by the current owner as I drive by whenever I'm in Dallas.

HousingWatcher says

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.

Buying in 2005 and selling now isn't exactly a flip. A sale is usually considered a flip if it's a very fast turnover.

VanillaSky says

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.

This doesn't make any sense. I'm upset about the bubble too; and I'm angry that prices are so high because irrational buyers drove prices up while banks were basically writing blank checks. But I don't care who I buy from, or whether or not they profit. All I care is that when I do buy, which is not now, prices will have come back down to appropriate values.

I see it this way: The houses in the areas I'm interested in are way over priced, and I'm not interested in taking on a massive amount of unmanageable debt just to free someone else up from their massive amount of unmanageable debt. When the seller/bank/flipper/whoever is ready to come down and sell a home for a reasonable price I'll make my offer. Until then I just watch and wait.

Shawn says

VanillaSky says
is my position economically ir-rational? you bet it is.

This doesn’t make any sense.

is there an echo in here?

VanillaSky says

Shawn says

VanillaSky says
is my position economically ir-rational? you bet it is.

This doesn’t make any sense.

is there an echo in here?

Fine, I'll take some of the sugar coating off of it.

VanillaSky says

is my position economically ir-rational? you bet it is.

That's because you don't have any sense.

Less of an echo now?

Shawn says

Less of an echo now?

no.

now you're just repeating yourself; as well as repeating what i already said. you're kind of slow.

This argument is silly. The only one your hurting VannillaSky by not buying from someone with lots of equity is yourself. Your drastically limiting your selection of houses and you are ensuring that the home buying process is going to be long, as short sales and REOs usually take forever to buy. And in the new "fraudclosure" erra, buying a foreclosure will only take even longer. Plus you are setting yourself up to overpay for a house, because if there is a bargain in your area and the seller has lots of equity, you plan on not buying that house. An estate sale can ofen be a good bargain, but since the sellers of those houses will usually have 100% equity, I assume you will not consider it.

To be honest, if, or when, you ultimately do buy a house, I do not beleive for a second that you will stick to your promise of not bying from a seller with lots of equity. If you see the right house at the right price, you will buy it, regardless of the equity. Your just trying to stir up a debate.

VanillaSky says

is my position economically ir-rational? you bet it is.

swebb says

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

VanillaSky says

of course not. that would be stupid.

buying a house, living there for 20 years is completely different case from someone buying a house, putting on a new coat of paint and trying to pawn it off a week later for 25-50% higher. Thats what he means by the flip.

ChrisLA says

uying a house, living there for 20 years is completely different case from someone buying a house, putting on a new coat of paint and trying to pawn it off a week later for 25-50% higher. Thats what he means by the flip.

Except he explicitly called out "people with hundreds of thousands of dollars of equity" in addition to "flippers". So, in his book, someone who bought in 1995, has paid for 15 years on his mortgage (building equity), and has enjoyed some "reasonable" appreciation (in addition to the big run up and bust) would be off his list, too. That's the point, it's not just the flippers. It's people who stand to walk away from the transaction with significant cash left in their pocket. I get the crap-flipper issue, but this other one doesn't make as much sense to me.

I guess what I am saying would not be understood by someone that disliked what I am saying. Or someone that only understands Hawaiian. Look I added real estate industry to the mix. This is your big break use it. Or remain loyal to the price gougers. You don't want an independent life and want to serve them? Be my guest. Can't figure out what to do for yourself? You got yourself into what you do now and are half way successful. Stop watching TV sitting in your own gravy. Make your way again and be very successful.

My point here is not flips. What the negative people are after here is this: The U.S housing market restarted with all of its very high prices that make people struggle. Having to do nothing short of killing their neighbor for his wallet just to make a house payment.

This is everyones big break large and small. They all had to make house payments. Now is your time with prices sometimes 50 to 65% under market. To get a house and not make horrendous payments. I would not buy now because prices are still going down. It does not even make sense to buy and wind up in negative equity.

Alex Jones made a comment: House prices have dropped in certain areas to 18k. Thats just not good for America. He made a statement something close to that. NOT GOOD FOR AMERICA. Now that guy is a lemming. A lemming can't think for himself. Guy I just set you free. If you know everything about houses and housing nows your time.

Me too. I can see the flip job a mile away. Ugly granite counters, cupboards in some ugly finish and whatever tile Home Depot is selling in a poor layout. After fixing up 3 houses in other states for myself, I refuse stick myself with someone's for-profit renno. The perfect house to buy is the well maintained home that is out-of-date. It is livable as is. Better to spend you money on moving a few walls for superior function and design and forget the expensive house bling ( I've done that too and it's enjoyment is ephemeral).

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.

That is the attitude of a looser, winners want everyone to win. There is enough for everyone. You want to win at someone else's expense, people like you usually don't win and never know why. I feel sorry for you.

ChrisLA says

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.

So buying low and selling for a higher price is immoral? Isn't that what builders, stores pretty much every viable business in the free world does? If people didn't snap up these flipped homes, then there would be no flippers. Sounds like you would be happier in a Socialist country where there are no evil profits. Most buyers couldn't or wouldn't want to undertake a major renovation and prefer to buy a house that is done. It is not as easy as it looks on TV after all. Didn't know the bible had a chapter on the perils of buying a flipped house. I have heard it has chapters on how to correctly beat your wife. Atheists do not say crazy things like "They will burn in Hell" but that is another topic.

carolinefpf says

That is the attitude of a looser, winners want everyone to win. There is enough for everyone. You want to win at someone else’s expense, people like you usually don’t win and never know why. I feel sorry for you.

i'm set for retirement. care to make any more stupid assumptions?

Don't buy someone's flip sounds reasonable.
The situation now with some over priced areas is that both people and banks are very reluctant or even stubborn to admit
defeat. But if there is still a huge difference between what people can pay (borrow) and the price of the houses, something is going to give. Time will tell.
My friend here is always upset because once upon a time his place was "worth" $1.3 million. Today it's about $500K or so, he paid $400K and did extensive remodeling probably for about $75K. So, he's a little better off than when he bought in 99, but he's not underwater either.
But in Santa Cruz you see more bums, homeless, weirdos, and closing businesses downtown all of the time. There are lots of wealthy students here and many illegal aliens which maintain rents.
He once wanted to sell out at the top, pocket about a million bucks and move to a mellower location, and be similar to a homesteader. He talked about no tax states, e.g. New Hampshire. Or, less taxed states, like maybe N. Carolina?
Anyway, his wife said "NO" so he now sees life ahead of him working forever since he really has no assets. I told him to reverse mortgage his house someday.
Fips are good in dolphin shows and circuses, they cost much less to experience.

VanillaSky says

carolinefpf says

That is the attitude of a looser, winners want everyone to win. There is enough for everyone. You want to win at someone else’s expense, people like you usually don’t win and never know why. I feel sorry for you.

i’m set for retirement. care to make any more stupid assumptions?

Your strategy sounds like those email plans where they want everyone to not buy gas on a certain day. Like that will have an effect on the oil companies. They don't advocate driving less, or buying a more fuel efficient car--just don't buy gas on Tuesday.

Your plan is just dumb.

tatupu70 says

Your plan is just dumb.

which is funny because i've already made my money; unlike you.