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Good/Fair but low-ball underbid on a house that was flipped
Posted on 12/3/16 at 1:06 pm
Posted on 12/3/16 at 1:06 pm
House last sold for $118K in May 2016, and has been on the market for nearly 150 days at the asking price of $154.5K.
They obviously painted it, refloored/carpeted, and added new appliances to the kitchen (minus the fridge). They even added bells and whistles of molding, fans in every room, and orchard trees in the backyard.
My question is is that really worth that $36.5K up in price?
How can I fairly make an offer on a house that clearly has been flipped in a short period of time and they want to recover that work and then some?
They obviously painted it, refloored/carpeted, and added new appliances to the kitchen (minus the fridge). They even added bells and whistles of molding, fans in every room, and orchard trees in the backyard.
My question is is that really worth that $36.5K up in price?
How can I fairly make an offer on a house that clearly has been flipped in a short period of time and they want to recover that work and then some?
3
Posted on 12/3/16 at 1:09 pm to Pectus
quote:
How can I fairly make an offer on a house that clearly has been flipped in a short period of time
Offer what you think it's worth.
quote:
they want to recover that work and then some
That work they did either had value or it didn't.
I'm trying to grasp what you're asking. The house is going to appraise for what it's going to appraise for. They could have hired Mark Cuban to paint it for $1 million donated to charity - doesn't make the paint job worth $1 million does it?
Figure out what the comparable houses are selling for per square foot, and offer something in the low range of that.
Posted on 12/3/16 at 1:13 pm to Ace Midnight
quote:
Figure out what the comparable houses are selling for per square foot, and offer something in the low range of that.
Excellent. Thanks!
Posted on 12/3/16 at 1:33 pm to Pectus
I understand your thought process, but you can't use that. A little trim work, paint, and updated appliances can truly transform a place. Don't worry about low balling, if they flipped it is unemotional for them it's all numbers and money. Offer what you think it's worth, but remember that there's a high percentage of people that would happily pay the premium to have a house move in ready.
Posted on 12/3/16 at 2:07 pm to Pectus
You can offer whatever you want it's not their job to have to accept a lowball bid. I just sold a condo I did nothing to,literally nothing,I bought it February and just sold it for a 32% gain. They made the argument that I did nothing and it was overpriced and made a low offer,I countered with good luck finding another 3 bedroom in this building or the neighborhood at this price point,they came back with a better offer, I rejected and said it's a vacation home I don't care, and they paid full ask.
Posted on 12/3/16 at 3:05 pm to Pectus
Do you know for a fact that other improvements weren't made that aren't as visible? Like electrical and structural work.
Posted on 12/4/16 at 5:42 am to VABuckeye
I will try my best to determine what other improvements were made.
Until then I will do what Ace suggested and pull info on $/sq ft for houses in that subdivision and go from there.
I feel I listed all of the improvements, however.
Until then I will do what Ace suggested and pull info on $/sq ft for houses in that subdivision and go from there.
I feel I listed all of the improvements, however.
Posted on 12/4/16 at 8:51 am to Pectus
The other improvements don't matter, you really need to not worry about that. The house will sell for fair market value no matter what they paid and no matter what they did.
House flipping is a very very risky game. At most, you are talking about a $20,000 profit probably on a $150,000 house which is not that huge at all. There's plenty of flips that may make $50,000 on homes priced like that.
Was the house bought from the MLS or at auction? Did it qualify for a mortgage? A house can have very minor under $5,000 worth of structural or mold work needed so it won't qualify for insurance and therefore won't qualify for a mortgage. Therefore it is a cash sale only which rules out 95% of buyers potentially. Maybe the house was actually listed for $130,000 and the seller just needed to sell it because of moving or a divorce? So impossible to say.
The only thing you need to worry about is what the market comparisons say it is worth and what you are willing to pay for it, thinking beyond that does not matter at all.
$118,000
+ $4,000 carpet (If tile/ hardwood done double this)
+ $2,000 painting
+ $2000 appliances
+ $ 2000 landscaping
+ $2500 ceiling fans and miscellaneous
= $130k-$135k
Sell for $145-150k - $8000 in closing costs
= net profit potentially of under $10,000.
So for under $10,000 in profit they rejuvenated a property and did all the work for someone. I don't see this as being a ripoff by any means.
House flipping is a very very risky game. At most, you are talking about a $20,000 profit probably on a $150,000 house which is not that huge at all. There's plenty of flips that may make $50,000 on homes priced like that.
Was the house bought from the MLS or at auction? Did it qualify for a mortgage? A house can have very minor under $5,000 worth of structural or mold work needed so it won't qualify for insurance and therefore won't qualify for a mortgage. Therefore it is a cash sale only which rules out 95% of buyers potentially. Maybe the house was actually listed for $130,000 and the seller just needed to sell it because of moving or a divorce? So impossible to say.
The only thing you need to worry about is what the market comparisons say it is worth and what you are willing to pay for it, thinking beyond that does not matter at all.
$118,000
+ $4,000 carpet (If tile/ hardwood done double this)
+ $2,000 painting
+ $2000 appliances
+ $ 2000 landscaping
+ $2500 ceiling fans and miscellaneous
= $130k-$135k
Sell for $145-150k - $8000 in closing costs
= net profit potentially of under $10,000.
So for under $10,000 in profit they rejuvenated a property and did all the work for someone. I don't see this as being a ripoff by any means.
This post was edited on 12/4/16 at 9:02 am
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