Flipping NUTS!!
Charleston real estate tales from the barbershop (well, actually the hair salon as told to me by my hair stylist).
Because my hair stylist is a former real estate agent (who isn't), we talk about real estate when I get my hair cut. And she is in the process of selling and buying a home. Her current home is under contract and they went ahead and made an offer on another home. So far, so good.
It turns out that the seller of the home she wants to buy bought the home a couple of months ago but apparently decided for whatever reason that they either didn't like it or wanted to make some money by flipping it. Not a really smart thing to do in today's real estate market but nonetheless, it's listed for sale.
And the list price was $30,000 more than was paid for just a few months ago.
Now, homes generally haven't gone up in value that much in the last couple of months unless you actually added value by doing some significant improvements. None were indicated to have been made.
But some sellers apparently think they have a way around that to increase the value by making the house larger than it is by adding a couple of hundred feet to the square footage.
Except that when the home is appraised, the appraiser is going to measure the home and come up with the real square footage which happened to coincide with the square footage listed in the tax records (which aren't always accurate but were this time).
So the appraisal comes back and guess what, it appraised for exactly $2000 more than what the home sold for a few months ago (and that is not because the home went up in value but merely because an appraisal is just an opinion of value and another appraiser could have appraised it for $2000 less than it sold for previously).
OK, so the home will sell for a couple of thousand more but considering the expenses of closing costs and real estate commissions, the seller will be taking a financial loss.
And if the sellers discovered that they didn't like the home after moving in, they probably should have been more careful in their selection.
But, if they were flipping, they were flipping NUTS!!
Photo courtesy of Flickr Creative Commons by Proudfoottt