Real Estate Advice
Flip Off the Flippers
Dear Readers:
My apologies to those who have already read, and remember, this
previous article on the repugnant practice of "flipping"
properties-but I think the subject is so important it bears repeating.
Unfortunately, the fleecing of elderly and unsuspecting homeowners
continues unabated.
Dear Pat,
I'm worried about my elderly neighbor who is moving into a nursing
home. He doesn't have any family in town and some of his close
neighbors have been looking out for him these past years. Here's the
problem--an agent who he called to help sell his house has offered to
take it off his hands by paying him a lump sum of cash. The amount is
far less than other houses have been selling for on this block. We all
want to protect him. What do you advise?
---Concerned Neighbor
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Dear Neighbor,
Unfortunately this scene is becoming all too familiar. Twice this past
year I was called in to give second opinions to homeowners who were
offered cash for their properties by would-be listing agents. In both
cases the houses were worth substantially more than the cash offered.
With a relatively small investment in decorating and repairs, the
homeowners were able to sell their homes using the normal MLS process;
each netted over $60,000 more than the cash offers would have given
them!
Your neighbor is likely being offered a cash deal by a "flipper," an
investor who intends to make a fast buck by selling immediately at a
much higher price. The practice of "flipping" is not illegal in
itself--it's simply exercising the freedom to buy low and sell high--but
who wants to picture some scoundrel congratulating himself on the
great deal he made at the expense of an old man's nest egg? The
infamous flipping cases we've all read about in the papers involve the
illegal practices of fraudulent appraisals and lending, where buyers
are ruined by a mortgage far exceeding the real worth of their
property--the darkest side of flipping. But let's take a closer look at
the legal version, where the real gouging happens to the seller.
Who are these "flippers," and how do they differ from other investors?
For one thing, the investor who is buying property for the long haul
doesn't need to make a killing on the purchase price--he knows the
property will appreciate over time, and he buys with the intention of
paying the mortgage from rental income. A flipper is looking
for profit immediately, thus he must pay the seller less than the
property is actually worth, in order to avoid the much harder task of
finding |
a buyer willing to pay more than
the house is worth. Flippers can be individuals
with contacts to the elderly; they can be
high-profile franchises with big billboard ads;
they can be--and this dismays me the
most--licensed
Realtors who ignore the spirit of their own Code
of Ethics. My advice to
you, good Neighbor, is to step in immediately,
contact a Realtor you trust, or several. Get one
or more legitimate market opinions, and show the
door to any agent or individual who offers cash to
"take the problem off your hands." Remember, if
your neighbor's house is in poor shape, he can
still sell "as-is" to the whole market through
MLS. He'll get a better result than any pre-market
cash offer from an investor. To preserve even more
of his savings a savvy agent can help him through
the process of decorating and minor repairs, and
he can sell at full market price. It seems that
we're going through a time when the Wall Street
shark mentality has moved to Main Street, and we
must take extra care to look out for each other
and ourselves. Don't let the bad guys win this
time.
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Pat
Rosaves is a full-time real estate
professional living in the Seward -
Longfellow area. She has more than 28
years experience in helping people with
their real estate needs. Questions may be
sent to her at River Realty, 2543 38th
Avenue South, Mpls, MN 55406. Or call her
at 612-724-1314 or email her at Pat@RiverRealty.net |
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