Featured Image from: Pilgrim Studios
If you’ve seen the television shows “Zombie House Flipping” or “Flipping Vegas,” you might get an idea of how “flipping” a house works. Real estate investors buy houses in the market that are in extremely poor condition but are also comparatively cheap. They then try to restore the home and make as much of a profit as possible when they put it back on the market for a higher price.
It’s reality television and we have to take some of the things that happen with a grain of salt, but the whole concept of dilapidated homes in the market and renovating it to sell for a higher price is not just a television stunt. You have to remember that the real estate industry in the United States is reaching trillions in revenue each year, and “flipping” has become not only a popular tactic, it’s actually a lucrative business that’s gaining investors millions each year. It’s also a business that benefits homeowners looking to sell their home without investing in renovations to make it welcoming for potential buyers.
Benefits for Sellers
The biggest benefit of sellers with ugly, old, dilapidated homes is that they don’t have to worry about making renovations before putting it up for sale. Given the current state of the market and there are more sellers than buyers, there’s a limit to the amount of money you spend on renovations, decorations, and other expenses when selling a house. And if your home requires major restoration and renovations in several areas, some homeowners may be making a loss because of all the necessary expenses for a proper renovation.
Selling their home in its poor state, therefore, is a possible option for some real estate companies. While they can’t expect a high price compared to newer homes, finding the right real estate company gets homeowners a fair or above-value prices for their home. They don’t have to do anything to make the house look pretty, making it a simple and quick transaction. Instead, the real estate company or investor will be the one to renovate and later sell or rent the home.
No Additional Expenses
Renovating and selling a house will cost a lot of money, including hidden costs non-experienced sellers are aware of. Apart from the renovations to make it look good, there are the home repairs, staging, utilities, closing costs, and additional taxes, legal fees, insurance, and other hidden charges. If you choose to sell your home with real estate agents and stage open houses, you will also be spending more. And sometimes, some decorations (such as a chimney) may be a huge cost but a bad idea, depending on where you live.
Selling your home without thinking about renovating removes a lot of these costs. You wouldn’t have to worry about spending on renovations because you won’t be selling to a person planning to live in the home. Instead, you’re selling to a real estate company or an investor to flip the house. In a sense, you don’t get paid as much, but at least you make the profit and leave the professionals to deal with your home’s changes.
Selling Your Home Quickly
Foregoing the expenses and renovations means a faster time selling your property.Selling your house with an agent takes months, given that there are a lot of sellers like you. However, some real estate investors and companies are focused on buying dilapidated and low-quality homes for the sole purpose of renovating them, and there’s actually a larger market for these homes.
Assuming you can find a company or investor in your area, selling your home can be much faster. If you’re looking to sell your home for fast money without having to attract potential buyers, this is the much more suitable options.
No Need to Pay for Commission
When you successfully sell your home through a real estate agent, a significant cut of your gross sales goes to the agent that helped you sell your house (and sometimes the agent that helped you find a buyer, too). That can depend on how big your house is, but on average, commissions will cost you at $11,790. After renovations and repairs, this could be one of the biggest costs on your part.
Benefits of Real Estate Investors
You might have seen the way real estate investors on television make nearly double the amount they spent on poor-condition homes. While you can’t expect all of them to produce the same output, it’s a lucrative business for people willing to get their hands dirty and have a good eye for a diamond in the rough. Get it right, and you could have these benefits.
Higher Profits Due to Low Interest
People putting their poor-quality houses on the market will less likely find willing buyers from people starting families and people looking for bigger homes for their growing family. People want houses that are already in good condition, and even people looking for homes marked as foreclosed will want to do the least amount of work.
So, these houses can sit on the market for months due to the low interest to work on the house. This is why once it’s finally put up for bidding, investors can get them at a very low price. There’s very little competition especially for poor-quality houses. Some of these houses are just too far gone to repair and get a profit, but under the right circumstances, it can mean higher profits and less competition.
Amateur House Flippers Don’t Have a Good Eye for Opportunity
When you’ve become a professional at house flipping, you gain the ability to see what ugly homes have a lot of opportunity, and what homes are not worth the effort. This isn’t just limited to homes that have more or less work to be done; this also means taking consideration of the house location, the potential buyers, and more.When you have a good eye for potential, you’re more likely to make a high profit with less competition.
Improving Curb Appeal
New real estate investors going for ugly houses are always intimidated by how much work they need to put in on a home. One glance at the landscape alone is enough to turn a lot of investors away. However, curb appeal is much easier to restore compared to the inside of the home – with all the wiring, plumbing, insulation, and the other things inside a house’s walls – and can be outsourced by roofing, landscaping, and painting companies.
Extensive professional landscaping won’t make you millions, but it can significantly boost the home’s value if more buyers are attracted to it in a first glance. This is compared to ugly homes with dirt lawns and no sense of outdoor style.
Selling a house in poor condition and then flipping it is a win-win for both the buyer and seller. Sellers get to sell their house quickly and, depending on the condition, at a fair price. Investors and flipping companies, on the other hand, can choose to gamble on a house, renovate it, and sell it for a much higher profit. It’s a legitimate business, one that’s making the real estate market thrive.