How Does the Popularity of Home Flipping Impact You?
These days, you don’t have to channel surf for very long to come across a television show about renovating, or flipping, a home for profit. The transformation of a neglected and dilapidated house into a gorgeous, functional property makes it easy to draw in viewers.
But what does the fascination with flipping mean for homeowners looking to upgrade, and shoppers searching for their first home?
Set Your Expectations
First of all, homebuyers should understand that, despite their current status in pop culture, flipped homes only make up about five percent of single family and condo sales. Depending on where you live, your search for a freshly renovated home in an established neighborhood could be in vain, or at least take longer than you hoped.
In addition, any flipped homes you can find may lack the camera-ready style you’re used to seeing on TV. In general, shopping for a home requires deciding which features are most important and being willing to compromise to stay within your budget and location requirements. It’s also critical to take the inspection stage of the process seriously in these homes. A recently remodeled home could be hiding huge headaches behind a fresh finish.
Be Aware of your Competition
If you happen to be buying or selling in an area with a lot of flipping activity, expect some added competition. For buyers, if multiple investors are working in the same neighborhood, the chances are good that there are lots of other buyers looking as well, and prices may be on the rise.
Sellers should survey the landscape to determine if nearby homes are more updated or have newly added features. If they want a top dollar offer, they may need to consider doing minor upgrades to attract shoppers. The good news is that if the home needs a lot of work, investors looking to profit themselves could drive the price up and make for a quick sale.
Manage your Motivation
If you’re part of the do-it-yourself crowd, you may have found inspiration from the repetition of successful flips coming from your flat-screen. Before you call a realtor looking for that first project, understand that profits from flipping have been declining recently.
Despite hitting an all-time high in early 2018, they most recently sank to a two-year low, selling for an average of $63,000 more than the original purchase price. While mortgage rates are still at historic lows, a recent uptick has likely hurt the flipping industry, along with increases in materials and construction costs.
Whether you’re buying, selling, renovating, or all of the above, let an Open Mortgage lending specialist explain the mortgage options available to you. Find out more at OpenMortgage.com.