A cooling trend in real estate flipping
If buyers have felt lonely making the sole bids on houses these days, it might be because home flippers, those who buy property with the intention of renovating and reselling quickly, haven’t been as active in the last year.
“Flipped” houses, considered by analysts to be those owned for six months or less, accounted for 3.2% of all home resales statewide in 2006, down from 4.2% in 2005, according to http://www.homesmartreports.com , a market-tracking website.
Flipping also proved less profitable last year as 24.9% of such sales resulted in a loss for the seller, compared with 7.5% in 2005. In 2006, flippers sold for a median $45,000 more than they paid (not factoring in improvement costs), down from $52,000 in 2005.
“The market where you could just go in, tidy something up and make a lot of money is gone,” said Jad Najjar, a longtime flipper and real estate broker in Beverly Hills. The number of his clients looking for houses to flip has declined 75% in the last year, he said, in part because it’s become a more rigorous and less profitable business right now and less experienced buyers fear a potential drop in the market. Najjar himself has had a 50% drop in profits from flipping since 2005.