Flip sales boost affordable housing inventory, but buyers beware
Jan Stapleton - 2023 NETAR President
Unless you’re a cash buyer, there’s no way around the fact that its tough going in today’s housing market – especially if you’re a first-time buyer or looking in the $250,000 or under price range. That’s why some buyers are looking for flips the way buyers used to look for foreclosures. And make no mistake about it. A flip can be the best or the worst of housing finds.
The first thing we should establish is just what is a flip?
Basically, it’s a property that an entrepreneur has bought, upgraded, and put back on the market. HGTV and other reality TV shows made flips the romantic route to fantastic changes and real estate riches. But much – or most – of what is seen on these programs is oversimplified or scripted. In other words, most of it is fake TV.
Flips are a big deal in the NE Tenn. – SW VA market. During the first three months of this year, they accounted for a little over 11% of existing home sales. And they are a prime source for affordable homes.
During the first quarter there were 134 flip sales in Carter, Greene, Hawkins, Sullivan, and Washington counties, according to land, property, and real estate data curator ATTOM. There were probably more because some area counties didn’t have enough sales to be included in the analysis.
Sales prices for the first quarter flips ranged from $178,950 in Greene Co. to $230,000 in Washington, Co. That’s a little bit of sunshine for an affordability market that’s down 10% from last year.
There’s no doubt about it. Buying a flip can be a smart move. But it involves extra due diligence to ensure you’re getting the deal you hope you’re getting.
Here’s some pointers from local flippers and Realtors® who have seen the good, the bad and the ugly of flipped homes. Local building officials mirror the need for caution and report that they are seeing a record number of flips with code and other issues. Kingsport has added a portal to its website, where people type in an address and see every permit that has been issued for a property and its status.
Here are some of the things real estate insiders say are important on a flip sale punch list.
Does the seller have a history as a flipper? Ask for the names of people who bought a home from the flipper. Talk to them.
Get a list of what has been done. With it, you can eyeball the improvements, open, and shut the doors, and get a hands-on impression of the quality of the work.
The “what has been done” list is also the gateway to check that any necessary permits and or inspections were made. And don’t overlook the need to confirm that the folks who did the work had any or all the licenses required. The seller should have copies – most do because it moves the process along, and they’re interested in selling the property as quickly as possible to recoup their investment.
How long did the flip take? The current average time from purchase to sale is 183 days.
Buyers should also hire an independent home inspector. A licensed, accredited, and insured inspector will go over the property and give you an itemized list of the findings.
Flipped homes are an important part of the local housing market because they take homes where maintenance has been neglected, ones that are dated and need a facelift – or more – and get them back into the housing inventory. A good flip can mean a good deal. But a poor flip can be a money pit for buyers who don’t do some extra due diligence.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us