With interest rates and the “cost of money” continuing to rise, several things are beginning to change markedly in the real estate market. One noticeable change that recently has become very palpable to me begs the question: “Where have all the those flippers gone?” Well, with higher borrowing costs, a reduced Buyer pool and still a very limited supply of inventory (as of this writing, only 33 Active SFR listings in Burbank) the “flipper ranks” have been thinned considerably! This became very apparent to me when I recently brought out a new listing in Burbank, that 6 to 12 months ago would have had me deluged with inquires and offers from them. Although the property is in the flight path of the Hollywood-Burbank Airport, it’s a relatively large 4BD, 3BA home, approx. 1,700 sq. ft. with most of the infrastructure/main operating systems updated or replaced. However, the home is admittedly dated and in need of cosmetic updating. It’s listed for $1,045,000 – one of the lowest priced listings and lowest priced per sq. ft. ($616) homes currently on the market. Again, a few months ago I would have had a ton of interest and offers from the flipper crowd! Now, I’ve still got flipper interest, but the ridiculous, borderline desperate variety!
With prices moderating, material costs and carrying times increasing, these guys can’t attain the profit margins when they resell their shiny new products that they used to. Sooo, they have to be able to acquire properties at lower prices to hit their profit targets. I’ve seen the result of this dynamic with two ridiculously low offers within the first days of my listing hitting the market. One offer was $175,000 below the list price and the other $65,000 below. Neither one of these so-called agents personally saw or showed the property to their LLC entity Buyers, nor bothered to call me before submitting their “low balls” to explain their rationale. Nope, just throw nonsensical offers out there and hope something will stick with an uninformed agent and/or desperate Seller. I don’t price homes to appeal to a certain type of Buyer. I work with my Sellers to price a property reasonably and at fair market, as indicated by like for like closed sales reflective of the current market, preferably no older than 90 days. By the way, thanks to properly pricing my client’s home, WE ENDED UP GETTING FULL PRICE! Yep, the market and ranks of flippers are both experiencing reduced inventories – and that might just be a good thing, at least when it comes to flippers! What do you think? I’d love to hear from you!
