Thursday, February 08, 2018

Q: My friend just did what’s called “flipping” of a house he bought here about a year ago.

He’s going to make a big profit and we wondered what you thought of this and if you think we should try it?  I have a little money set aside and I see fixers coming on the market from time to time. 

A:  Flipping a house has been around for a very long time.  You buy a fixer and do a quickie remodel to make it look nice and then sell it for a profit.  What’s important to understand is that this is very similar to the children’s game of musical chairs.  It’s all good until you are left with no chair.  It can be a huge gamble. No one can really predict what the market will do in the future.  It’s best not to try it unless you can afford to lose the money.

In a tight market like we have now, with very few homes to sell and lots of buyers, getting a fixer with the thought of fixing it up to sell would seem to be a great idea.  But we have had some recent sales of such property that did not work out that well for the seller.  It’s possible to run into King County requirements that cost more than you’ve budgeted for.  Since most of the Island is on septic systems, having to update or repair the septic can add substantially to the cost. Also keep in mind that you will have to buy for cash since lenders usually don’t loan on fixers. 

Those of us in real estate have seen the glitzy kitchens, bamboo floors, granite counter tops, etc. many times.  They’ve started to look alike.  The most important thing to remember when fixing up a house is that there will probably be an appraiser looking at it for a future buyer and they’ve seen all that stuff before too. You want to be sure the house is structurally in good shape and that you fix the real problems, not just put “lipstick on a pig.”

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