Flippers: A perfect example of my earlier point
Flippers: A Perfect Example Of My Earlier Point OfferPad Incentivizes Realtors On May 7th, I wrote a post to help Sellers understand the pitfalls, THE
©2023 Home Sell And Save | All Rights Reserved
It seems that my Facebook page has been overrun by ads for companies offering to buy homes from those looking to get out quick. There are National companies, State or Local groups and even single person Investors.
But regardless of their size, they all offer the same promises; a quick stress free sale. But like most things in life, there is usually a cost when something is presented as “easy” or “stress free”.
A Flipper or Investor is a company or person that wants your home for one of 2 reasons; fix up and flip it as fast as possible, or purchase and keep as a rental property. Either scenario requires the buyer make a profit.
To answer the third question above, yes, they are all the same as it relates to how they want to buy your home, with one caveat, but I’ll get to that later in this post.
A Flipper has to purchase your home for a price that is low enough to cover all these expenses:
Plus, they are a business so they’ll need to make a profit. Plus they’ll want a buffer to cover any unexpected’s.
You don’t need to be a math mathematician to see that you will not be paid market value or anything close to it.
Most Flippers are experts and they rarely overpay for a property. They know their business very well and unlike someone looking to make your home, their new home, Flippers rely on the math; not the heart.
An Investor is often synonymous with Flipper, but an Investor could be buying your home to keep it as a Vacation or Long Term Rental. And like the Flipper, an Investor needs to make all the same investments I listed above, plus they need to make sure that the income generated/rent collected covers their monthly costs:
Another type of Flipper is one that secures a Contract to purchase your home. The Contract however includes language and terms, which allows the Flipper to market your home for sale, in hopes of finding a buyer before the Flipper has to pay for your home.
They make a profit by selling it for a higher price then they agreed to pay you. And while they’re looking for such a buyer, you’re still paying for the upkeep of your home; taxes, insurance, electric and water, etc…
But if they don’t find a buyer, a few things can happen. And none of them are good for you:
Please don’t think this never happens. Because it does and a few years ago I was lucky enough to catch such a scam. A Realtor in Miami had somehow contacted a past client of mine, an elderly man in poor physical and mental health, and convinced him to sign a contract with all the terms I’ve listed above. Thankfully, the Contract was poorly written and a single call from an Attorney was all that was needed to kill the deal.
But others are not so lucky and they are scammed.
I’m not going to bore you with all the math, maybe in a video format, but not here:)
So, I’ll explain it like this.
One of the oldest Theories in business is the Theory of Supply and Demand, which says, that the value of something is often determined by its availability. Put another way, the more people that know your home is for sale, the more valuable it is, as those interested compete to get your home.
And the best way to get the greatest exposure, is to place your home on the MLS, and its long list of partner public sites.
The more people that can see your home, the greater its value.
You don’t have to give your home away to get a quick sale. You just have to be realistic and understand the market.
If 3 Realtors show you that homes like yours are selling in 60 days for $400,000, then don’t list your home for $425,000. List it for $399,000. I promise you’ll still get a higher price then the Flipper/Investor route.
Don’t be fooled by this promise. Since the Mortgage Crisis in ’06 and ’07, 99.9% of home sales in Florida are listed as As-Is. Not to mention that the most widely used Purchased Contract used by Realtors in Florida is entitled “As-Is”. The buyer can do their inspections. You then decide to accept or deny any attempts by the buyer to renagotiate based on issues found in the inspection.
Remember, this August will see a big change in Real Estate, as Sellers will no longer be required to pay a commission to a buyers agent. Its unclear how this will effect home prices, but its more likely than not, that Sellers will see a higher net on the sale of their home.
Instead of paying 2 commissions (listing agent and buyers agent), a Seller could use that money to list a bit lower to generate greater interest, or keep it until after Inspections and Appraisal are complete and use the funds to keep the deal moving forward.
Remember, with Home Sell and Save, LLC., the Flat Fee plans are under $700 and our highest commission plan is just 1%.
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©2023 Home Sell And Save | All Rights Reserved