Don't House Flippers Deserve A Profit?

Real Estate Broker with HOM Sotheby's Intl Realty, 949-510-2395 DRE# 01494165

I was out with a home buyer. This was not their first time, we had sold their home a year ago and they have been traveling, visiting family, and RVing across the country....needless-to-say these are my kind of people :). But while I relate to them personally and greatly enjoy their perspectives on life, I was surprised to find a prejudice against "flipper" homes.



Because of my respect for this couple, I asked them if I could blog about this issue on Active Rain and make the conversation public. So beware....this is public.


The couple expressed that they felt that there was something wrong with an investor making money off someone else's tragedy and they didn't want to contribute....fair enough.


But then as I pondered this, I wondered what's wrong with someone taking advantage of a financial situation to create wealth?



It must be made clear that these are not people who bought short sales and are flipping them without any improvements, we were looking at home which were purchased at auction (I can tell because of the way our MLS shows the title) and then spruced up and re-listed. Normally these homes have fresh paint and carpet, the yards have been tidied up or replanted and often....the kitchens and bathrooms have had granite or tile installed. They are lovely homes!

So if an investor purchases the home, takes the financial risk, creates value and reaps a profit....all while providing an easy escrow and quality home....why is this wrong? I don't think it is!

Posted by




Dre no. 01494165
M 949.510.2395


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Re-Bloggged 7 times:

Re-Blogged By Re-Blogged At
  1. David B. Meyers 08/14/2010 12:47 PM
  2. Randy Poll 08/14/2010 02:54 PM
  3. Kevin Peterson 08/14/2010 03:41 PM
  4. Lisa Ludlow Archer 08/14/2010 04:53 PM
  5. Eva Erdmann 08/15/2010 08:32 AM
  6. Brian Gibbons 08/15/2010 03:37 PM
  7. Bobi Bigelow 08/18/2010 11:23 AM
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Comments 328 New Comment

Nicole Donaghy
ERA Wilder Realty, Lexington SC

I don't think there is anything wrong with it.  What else is to be done in that situation?

August 24, 2010 09:27 PM
Lisa Wiseman
Intero Real Estate Services, San Jose, Silicon Valley

Karen, I work with investors that are trying to flip in a very difficult market. If it weren't for them, many of these homes would be on the market for way too long, adding to excess inventory and overpiced homes. (Many of these homes when flipped are very reasonably priced). Also, if they're REOs or short sales (many rules apply to investors purchasing short sales), they are more willing to deal with all the games the banks play. And they're paying cash!

September 02, 2010 02:12 PM
Jeff Hahn
Coppell, TX Realtor
Keller Williams Realty

Legitimate "flipping" makes sense for all involved.  It's win, win, win.....

September 08, 2010 12:31 AM
Malik Crichlow
Maplewood,SouthOrange,Union Real estate
GoodBuy Homes NJ Essex & Union County Short Sale Specialist

Flippers are needed but only the ones that actually improve the properties and not just do take advantage of buyers and further add to neighborhoods that really need a boost.... I stay clear away from those types of investors...

February 18, 2011 11:26 PM
Matt Robinson
Pensacola Real Estate (850) 292-4000
ERA Emerald Coast Realty

I agree with you on the rehab/flipper side.  What would your clients prefer that investors do...not buy the houses (both preforeclosure and REO) and just let them sit there delapidated and dragging down the values of surrounding homes?  Investors are not given nearly enough PUBLIC credit for how important they are in the housing recovery.  They are the ones absorbing much of the REO, short sale, and shadow inventory, and converting non-performing bank assets into performing ones.

However, I disagree with the obvious bias you personally have against short sale flippers who have "made no improvements" to the property.  You should say, "they have made no PHYSICAL improvements to the property".  A skilled short sale investor and negotiator earns their profit on the deal by negotiating 1, 2, and oftentimes even more mortgages, as well as numerous liens, judgments, and other encumbrances.  This oftentimes takes hours of time, and a great deal of skill to settle all of these accounts, get the owners deficiency waived, and create a property that has free and clear title for the end buyer.  While they may not "improve" the physical property, they certainly do a lot to "improve" the title on the property through their skill and expertise.  This fact is made clear in FHA's waive of it's anti-flipping rule, in which it states that an investor can buy and immediately resell a property for a profit of up to 20% without showing any proof of physical improvements whatsoever.  Even the government admits that there are other factors that play into making a property more desirable to an end buyer other than just physical clearing title and removing the wait time on normal short sales.

The other option would be to let unknowledgeable agents, who have an industry wide 15-20% success rate on short sales, continue to flounder at something they don't know how to do effectively, and end up leaving the seller worse off, and oftentimes foreclosed on. 

May 25, 2011 01:30 PM

Karen Fiddler, Broker/Realtor

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Additional Information

A Southern California Coastal agent's perspective on real estate and other things that interest me!

Author Bio: Karen Fiddler has been a Realtor for...