Tonights Flip This House

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Submitted by waiting hawk on August 19, 2006 - 10:10pm

This was on the show Flip This House tonight in North Hollywood..
Paid $520 + $55k flipage

Price Reduced: 08/01/06 -- $739,000 to $699,000

Days on Market: 60

http://www.ziprealty.com/buy_a_home/logg...

Submitted by SD Realtor on August 20, 2006 - 2:35pm.

waiting hawk you are awesome!!! I have always hoped someone would actually start chasing down some of the homes that flip this house features to see how they actually did. This is the craftsman in No Hollywood correct?

How bout that Realtor... is she not the prototypical agent? I love the comp analysis that was done. Here are the comps in your area. She didn't talk about expireds, cancelled, days on market, months of inventory or anything like that. Of course in these shows they NEVER do.

The guy that did the flip seems like a pretty seasoned veteran though. He did do a great job and he stuck to his schedule which you rarely see. The work is great work but I will be quite eager to see how it pans out for him.

I know there was another episode that I didn't catch last night cuz we were on the way out with the kids. It was a home in Santa Barbara. Looked like a plane crash waiting to happen, 2 couples, each had kids, the home was like a million bucks to buy and they were gonna flip it. They seemed much less experienced then the No Hollywood guy. I didn't know if you caught it or not.

IMO this show and others like it should have the same labelling as a pack of smokes. TLC should really think about how many people they are affecting by these types of shows.

Submitted by ocrenter on August 21, 2006 - 7:46am.

there's 89 homes that are less than $700,000 and more than 1500 sqft in North Hollywood.

out of that 89 there are 34 (38%) that are asking below $600,000.

maybe the flip is extra special. but I do see it being on a main street and right adjacent to a school. perhaps that add to the character of the building.

Submitted by Carlsbadliving on August 21, 2006 - 8:38am.

These shows are becoming more and more interesting to watch. In the past, the "amateur" invester would buy the house, spend double the original budget and double the time budgeted then sell within a few days and make still make bank. Now the shows feature the same idiots that don't have a clue and the house sits, and sits on the market and when it finally sells they're lucky to barely break even.

The Santa Barbara show yesterday: they bought the house for 1.16m put 90k into it and sold for 1.39m. But after all commissions, fees, etc, the 2 couples split something like $38k. Not much reward there for all that risk. And besides, I can't believe they found someone to pay 1.39m for that place. They really did find the next fool. They got very lucky!!

Submitted by JES on August 21, 2006 - 9:17am.

I couldn't believe they got that price either!

Submitted by no_such_reality on August 21, 2006 - 9:38am.

The Santa Barbara home was Property Ladder on TLC, that one is still interesting becuase it uses amatuers.

I think there are four shows like this between A&E and TLC.

Flip This House is on A&E and used to involve the guy in So. Carolina that was a professional flipping company. Now it's the Montelongo "pro" company flipping some 200 units a year in San Antonio primarily and the Leccima group in Atlanta.

Property Ladder is on TLC and involves Amatuers.

Flip That House is also on TLC and involves 'pros' or at least seasoned flippers with occasional first timers mixed in.

I really wish they'd correct the money. I talk about profit on many but it's often before realtor fees. Only recently, with the slowing market did they start to do the dings for carrying costs.

Submitted by Carlsbadliving on August 21, 2006 - 9:42am.

You're right it was Property Ladder. I can't keep all those shows straight.

You're right about the money. I think before they were making so much money it didn't really matter how the math was done. Now it gets so tight, they include all the costs and it really shows how risky it is.

It will be interesting to see these shows dry up once it's nearly impossible to flip a house. Maybe soon, we'll start seeing shows like "Foreclose This House" or "Property Auction".

Submitted by PerryChase on August 21, 2006 - 10:06am.

I don't have cable to so I didn't even know those shows existed.

But talk about irresponsibility!!  The bulls continuously say that us realists who discuss a 30-50% decline in real estate are irresponsible.  

Those shows will cause many "investors" to loose their shirts.   

Submitted by no_such_reality on August 21, 2006 - 10:26am.

I don't know. They're educational. :-)

I'm not sure which one I saw this weekend, but as we were leaving, the guy, (couple had bought to flip), was on the phone with his boss quitting his job becuase they had missed their deadline for him to get it done. Twice. On top of it, they were broke having blown the budget. Bought in a rough neighborhood, and were living in fear of the mailbox becuase of the bills that kept arriving.

All this before they put it up for sale and it was doubtful they'd even break even...

Submitted by Doofrat on August 21, 2006 - 11:08am.

Great job waiting!!!! My wife and I were watching this exact episode and I said they should have to go back and show what they really sold it for in later episodes, but I guess at 60+ days on the market, it wouldn't make this season!

PerryChase, you're missing out on these shows, they're great! Somebody buys a fixer upper that you think they bought for about $400,000, but then you find out they paid more like $600,000. They fix up the kitchen with, guess what, stainless and granite! They point around alot and show some contractors sawing. The house either looks pretty cool at the end, or has some whacked out design. Either way a realtor comes in and says how great it looks. Then the realtor says I think it'll sell right away for $4.8 million dollars.
Then at the end they state the figures like the place is already sold:

Cost of house: $600,000
Fixup costs: $55,000
Listing Price: $4,800,000
Time to fixup: 3 weeks

Potential Profit: $4,145,000

I'm exagerrating a bit here, but not much. If you're pessimistic, you'll think that these people are crazy, if your an optimist, you'll be writing your resignation letter to your boss and calling a broker to get an Option ARM so you can make your millions flipping.

Submitted by powayseller on August 21, 2006 - 12:22pm.

I don't have cable, so I've never seen any of these shows. I might have a chance tonight though. What time/station does one air tonight?

Submitted by IONEGARM on August 21, 2006 - 12:44pm.

I went past this house when it was listed in June, it was put up on craigslist and I make it a point to check out all craftsman I can.

It is in a horrible location, Coldwater is a super busy street with lots of high density low rent housing nearby, lots of bar on windows and unkept houses. The guy did a terrific job, even if I dont care for the outside much, so many people flip so much worse. He took his time and did a good job. But I dont think it will make up for the horrible location.

Submitted by waiting hawk on August 21, 2006 - 12:54pm.

I thought he did a poor job due to cheap materials. That bathroom tile is the cheapest u can just about install and not to mention LAMINATE FLOORING. I mean for 700k "laminate floors"? WOW

Also the colors are awful. Even the flipper said that he chose what he liked for colors and didnt care much if anyone else didn't like em. Only thing decent is the 12k sized lot. Other than that, that house wont sell close to that.
The second this episode was done I told my wife, "I bet it is still for sale and I'll find it". Sure enough I found it in 2 secs.

My website tracking Temecula and South Riverside County

Submitted by IONEGARM on August 21, 2006 - 1:29pm.

http://www.myebid.com/cgi-bin/auction/vi...

This is the "Property Ladder" house from Saturday, it didnt sell like they suggested on the show (they said it received an offer off of CL for 255k)

Submitted by waiting hawk on August 21, 2006 - 1:44pm.

Great Find!!
# of Bids: 0 Bids
Maybe some bonehead will think it will be a good buy because it was on tv and will be their 15 seconds of fame. I knew these homes on these shows were not sellin!

btw last night that HGTV show called "Buy Me, I almost laughed so hard I just about fell out my bed when their realtor said "you managed to lose all 3 buyers" to the sellers. Buyers lowballed and the seller came down 3k. The buyers countered with 3k more than their lowball. Man I was dyin laughin.

My website tracking Temecula and South Riverside County

Submitted by PerryChase on August 21, 2006 - 2:00pm.

Sounds like those shows are good entertainment.  Too bad they don't have the DVDs on Netflix (I don't have cable). :(  

Submitted by smfj on August 21, 2006 - 3:03pm.

I'm addicted to "Property Ladder" (not "Property Latter" as the auction page said... that was pretty bad). I Tivo it every Saturday night. I think they actually do a pretty good job of showing that flipping is not an easy buck. There have been several flippers that have either made minimal profit, still had the property on the market at the end of the show, or decided to turn it into a rental after not selling (of course, they all say they will do it again, which I find hilarious). They also show people's mistakes, which I think is good (for example, the newlywed couple didn't get a full inspection before buying).

I hate that "Flip This House" always makes it look like a walk in the park. That just makes me mad, so I don't watch it.

"Flip That House" was good when the group from SC was on - they'd been in business a long time, knew what they were doing, and generally came off as successful, not greedy. The new group is sleazy.

I really don't think there's anything wrong with flipping houses for profit. No different than any other business. The ones who will be successful in the long run are the ones who know the market well enough to make good decisions on purchases, pricing, and design, and have relationships with subcontractors and suppliers that enable them to minimize their costs and time. Even the amateurs that did one or two flips at the right time are better off for doing so. It's the morons who get greedy or have unrealistic expectations that will lose out big time.

Submitted by IONEGARM on August 21, 2006 - 4:04pm.

"I really don't think there's anything wrong with flipping houses for profit. "

Well, when you get it en masse, like we've been seeing it essentially destroys the low end of the market. But then many of the flippers fail and everything normalizes.

Submitted by poorgradstudent on August 22, 2006 - 12:24am.

"I really don't think there's anything wrong with flipping houses for profit. "

I think ethical flipping would involve buying a fixer-upper, renovating it, and then selling it at a profit. I guess I'm not sure if that even counts as "flipping".

To me the distinction is between actually adding value and creating something as opposed to just buying and expecting to sell it at a huge profit.

Submitted by JES on August 22, 2006 - 8:50am.

Let's look to the stock market as an analogy. Is it unethical to buy stock in multiple companies with the intention of making a short term profit? Will it be unethical for baby boomers to pull their retirement funds out of stocks, cash in their profits and live off the proceeds? Is it unethical for you to put $$ in a education stock fund for your kids, with the hope of making good returns and sending them to college?

Definition of ethical = Conforming to accepted standards of social or professional behavior.

Flipping still passes the professional test as it is not illigal and is actually promoted by corporations and government policies. Whether it conforms to socially accepted standards is the real question!

Submitted by JES on August 22, 2006 - 8:52am.

Duplicate

Submitted by smfj on August 22, 2006 - 9:39am.

"To me the distinction is between actually adding value and creating something as opposed to just buying and expecting to sell it at a huge profit."

poorgradstudent, agreed that there is a difference. I was talking about the former, which I would consider "flipping" vs. "speculating" (which is what I would call the latter). One could argue that there are social benefits to "flipping"- fixing up the neighborhood eyesore, for instance. JES is right, though - "speculating" is not illegal, and similar to speculation in the stock market. Whether it's ethical or not is an interesting question.

Submitted by FormerSanDiegan on August 22, 2006 - 10:10am.

On whether speculative flipping is ethical ...

Suppose person #1, the breadwinner of a family of 4 investigates the real estate market in 2004 and sees an opportunity to flip a house for $50K profit to pay towards his kids' education. Is this ethical ?

Suppose person #2 investigates the real estate market in 2004 and sees an opportunity to cash in and sell their primary residence to pay for their kids' education when they think real estate has peaked, plans to rent for a while, and buy in later at a lower price. This is also speculation. Is this ethical ?

Assume that the houses are identical and sell for the same price and all aspects of the property are disclosed.

I have to believe that these are both ethical. There is nothing inherently morally wrong with a person identifying a legal way to produce income or savings by buying or selling a property based on speculating what value that property may have in the future.

Submitted by JES on August 22, 2006 - 10:10am.

Yeah, I would say that it is almost socially beneficial to flip if you are going to do repairs and upgrades. If someone buys an investment property and then flips it in a year, that seems OK to me as well. Unethical things I have seen include employees of homebuilders with inside knowledge buying multiple properties in early phases and flipping them. Also, I once saw a realtor who bought 4 x homes in a Centex community here during a hot market with waiting lists and she lived in one, flipped it, moved to the next, flipped it etc.

Submitted by PD on August 22, 2006 - 10:15am.

There is nothing unethical about flipping or speculating on real estate. Buy low, sell high. So what? It is unethical for lenders to put people into suicide loans. It is unethical for the real estate industry and individuals to lie to buyers and sellers.

Submitted by JES on August 22, 2006 - 10:23am.

I agree with you FormerSanDiegan. I do think that laws need to be tightened to prevent the kind of flipping we are seeing because it can damage communities. But in the end homeowners need to be held responsible too. There are ways to stay away from flippers and investors. For example, my recent experience has taught me to be wary of all new developments because there are too many investors, buyers who are stretching their finances, and other games going on that make for an unstable neighborhood. Better to buy in an established area where the neighbors paid in the 300s for the homes, there are no investors, and where most people are there for the long haul and not many homes go up for sale.

Submitted by PerryChase on August 22, 2006 - 10:31am.

Lenders are just serving a menu of products. They want to maximize their profits.

It is unethical to sell Coca Cola, cigarettes or fatty food? These will certainly harm the consumers.

I think that people who make bad decisions will have to pay eventually. The economic downturns serve to clear up the excesses.

Submitted by FormerSanDiegan on August 22, 2006 - 10:35am.

JES -

I agree on most points, except one. I don't see how laws could be tightened to "bad" speculation without also negatively affecting others. How do we legally separate the speculators from the poor soul who bought a house in January, is diagnosed with cancer in April and sold in the summer for a profit ? Or the guy who gets a job transfer notice out of the blue, three days after closing escrow, in a rising market. Both of these "lucky" homebuyers would have effectively flipped for a profit during the heyday of 2003-2004.

In the end, I think we agree that the market participants (traditional buyers) and people with vested interests (neighbors) ultimately will win out over the speculators and irrational buyer behavior.

Submitted by SD Realtor on August 22, 2006 - 2:44pm.

Couple of points... PS and others who don't have cable. These shows are very entertaining. I think that they do a disservice by not displaying the outcome and I also believe they are not portraying the amount of time and effort it takes to successfully rehab a home. Again though they are very entertaining.

I think inhibiting free markets is not in the best interest of our country. I think that if people are smart enough to take advantage of market conditions, INDEPENDENT of what that market is, then more power to them. Lots of money was made in speculation and now lots is being lost. Good for the winners and tough luck for the losers. Why do you guys want to restrict others who did well. Personally I am jealous and envious. I wish I would have taken the risks to buy a few homes in 2001 and spin them but I didn't. So if banana's shot up to 5 bucks a pound would we limit people who speculated on them? Would we say that nobody can buy more then 6 bananas a week or prove you have a large monkey at home to justify that consumption? That no you cannot buy 200 bananas now just to sell them at 6 bucks a pound next week. We need to make sure everyone can buy bananas. (I know this is a ridiculous analogy)

Don't we have an entire stock market and futures system that is based on speculation?

I am sorry but I don't buy into the morality issue because I don't see it? Perhaps many people who were priced out of the market are VERY HAPPY that they didn't buy now. Perhaps they could have relocated to a cheaper area as well. Perhaps they simply could have saved more money and continued to rent.

I think that limiting opportunity based on a "moral" issue does not work in a free market economy in the long run. Intelligence, and patience, and not buying something you simply cannot afford are what will ultimately work out for you.

Submitted by JES on August 22, 2006 - 3:22pm.

As far as laws and restrictions are concerned, I agree that the free market should continue to be free, but we will always need laws. And those laws are impacted by what society deems as moral. I would not be in favor of a law that dictates how many homes you can buy, or who can and cannot buy, but even current tax laws provide incentives and disincentives for various actions, in the housing market and also the stock market.

For example, even if you sell your primary residence before two years are up you can still claim a partial tax break if you had a death in the family, lost a job etc. If you don't meet the criteria, you get no breaks. These laws are in place because as a society we have decided that it's beneficial to give tax breaks to encourage home ownership, but also to encourage people to keep the home at least two years to provide some stability to the market. Builders and communities are also crafting rules against flipping because they have realized that flipping can have a negative impact on business and neighborhoods.

Arguments I've see about the morality of this center more on the disruption and instability to neighborhoods it causes and not necessarily on the fact that a family now has to pay more for housing. And most of my beefs with the current system have to do with non-independant insiders gaming the system without consequence. Buyers also need to be held accountable to know that flipping is going on and to stay away from those areas, just like they should be expected to know that a 1 month interest only loan might be a bad idea.

Submitted by bob007 on August 22, 2006 - 7:12pm.

flipping is ethical. Why should it unethical ?

I think government ought to to tax flipped properties at a higher rate than investment properties/primary residences.

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