Flipping houses used to be pretty simple. Slap on some paint, toss some pansies in the yard and throw up a sale sign. With the slowing housing market, it isn't that easy any more. People want more for their money and if the house has more, they want to pay less. Can people still make money flipping houses when the market is down? Yes, but they have to try a lot harder.
Reasons Houses Aren't Selling
People who are sitting on a flip flop while other houses in the area are selling should take a hard look at why their houses are still on the market.
- Are other houses in the area selling for less? Do they have added conveniences that the house being flipped can't offer? The seller may need to drop the asking price or offer some sort of bonus, like a landscaping allowance, at settlement to give added value to the buyers.
- Is the house ugly? While it is hard to see the fault in something that has been loved and slaved over, a hot pink house with lime green shutters will not warm the hearts of most potential buyers. Ask for opinions from realtors or that honest friend who is not afraid to say that a favorite dress makes the wearer look 10 years older. Then, be prepared to act on the advice that was given.
- Is the flip a two bedroom home that is located in a family neighborhood? If the flippers can't add a third bedroom, they will have to be prepared to wait and wait some more before they find a buyer.
If there doesn't seem to be a reason the house isn't selling and the sellers can afford to wait, they may want to talk to a realtor about other options. Some flippers are offering buyers a lease with option to buy until the market picks back up. Others are simply renting. There are even a few who are moving into their newly renovated flip and trying to sell the family home instead.
Additional Help for House Flippers
Investors who are right in the middle of a flip may be panicking as they look at the slow housing market. Some of them are cutting quite a few corners as they try to get out of the flip as quickly as possible. However, this could be an even bigger mistake, as potential buyers are frequently lost when their inspectors give them a laundry list of problems. Flippers who are trying to get a house renovated on a budget should:
- Update electrical and plumbing systems.
- Reroof leaky homes.
- Tidy up landscaping.
- Apply a fresh, neutral coat of paint.
- Refinish or clean flooring.
- Replace dirty or missing outlet covers.
- Clean and maintain heating and cooling systems.
- Update kitchen and baths. (If the budget does not allow for a complete overhaul, consider refacing cabinets and replacing the most outdated fixtures and appliances.)
- Finish any renovations that have been started (or put the pieces that were taken apart back together.)
