How Not to Flip Your Sacramento Home
Can you make $100,000 profit on a Sacramento home you bought last summer and flip it? To clarify the answer further, let’s say the home was purchased at market value, the price at which most homes in Sacramento sell. Forget about the fact that the home abuts a gated community, and it’s not actually located in the gated community but instead is situated on a busy street with traffic. The caller wanted to know if she could make $100,000 profit, darn it, she wants to flip. Flipping the home is her goal because she and her husband no longer want to own this house.
Why don’t they want to own the house they bought only last summer? Because the work commute to San Francisco is too long. The sellers underestimated how gruesome it would be to drive 2 hours each way every day to go to work. So, now it is imperative that they make $100,000 profit and dump what they view as a bad decision. They’ll just flip it. They watch cable TV.
I tried to explain to the seller — without looking up the sale of her home or anything about it — that our market experienced its big appreciation in 2012. The first half of 2013 brought more appreciation and we saw another leap. But we’re pretty much done jumping around at the moment, and the market has been fairly stable since last July. I wondered what she thought would make her home worth $100,000 more than she paid for it, plus the costs of sale to flip it.
To get the answer, I go where I usually go when I’m looking for horribly bad property information that is widely available to the unsuspecting public — which is Zillow and its Zestimate. Believe it or not, this time Zillow wasn’t that far off on value, maybe by only $20,000, so it wasn’t Zillow’s fault. I pulled up listings in MLS to see what else was for sale in her neighborhood because sometimes it’s another home for sale in Sacramento that makes sellers think they can get more for their home. Hey, it’s down the street and on the market . . .
They don’t always realize that people can ask whatever they want. They stick any old price tag on it and find a real estate agent who is willing to list that home for sale. Sometimes, believe it or not, that Sacramento real estate agent could even be me as I don’t always turn down overpriced listings with potential — because those homes could sell someday for less, and I’d like to be that agent when they sell. It’s not my home. I do inform my sellers if I believe the price is too high, but it’s always their call because it’s their property.
Sure enough, I found a home for sale that is listed at about $100,000 more within a half-mile radius. It has a ton of upgrades. Quiet street. Nicer location. Bigger property, single level, and in fact wasn’t really a comparable sale at all in the world of Sacramento real estate. The potential seller who contacted me had a solution for this though, she could put in $50,000 to remodel her home and then she could make $100,000. Is she a professional flipper? Don’t think so.
And this is what HGTV has done to the minds of otherwise normal people.
The difference between me and the other two real estate agents she called? I talked to her. But my name would be mud if I encouraged her, and that’s just not the right thing to do. It means I won’t get the listing, but that’s how it goes.