Both my husband and I are over 60. We’ve been receiving frequent mailings (and calls) from so-called “house flippers,” who buy under-maintained homes, refurbish and remodel them, and sell them at a profit. You may have seen ads from House Buyers of America, We Buy Ugly Houses, Capital Area Home Buyers, etc. They advertise that they buy homes “for cash!” that are “any type, size, or condition.” They also tout that their services are “commission free,” arguing that there are usually hidden charges associated with using realtors, including house cleaning, photographers’ fees, brochures and marketing costs, administrative fees, home staging events, and landscaping.
I spoke with Daniel Bronstein, who’s a Partner at MarketPro Homebuyers based in Rockville; it’s his picture you see on the flyer, which — if you’ve received ones like we have — also feature a prominent photo of your own home. He was in the remodeling/home improvement business and knew Jeanette Winton, who owned MarketPro computer shows. In 2012, they decided they were going to “flip” some houses together.
“We flipped 300 houses in the first five years,” he claimed. “We were very busy.” They worked the Delaware-Maryland-Virginia [DMV] area by doing “a lot of direct mail and TV advertising, targeting owners [who] have been in their homes a long time, certain price ranges, and certain zip codes.”
They especially target “mature neighborhoods where younger families are starting to move into,” like ours. North Four Corners is a “very desirable neighborhood,” Bronstein said. “Houses sell quickly once they’re renovated.”
The average response to their direct mailings “is less than one tenth of one percent,” he admitted. “That’s a low response rate, but we get about 1,000 calls a month.
“The type of people that usually respond are people looking to downsize, who have been in their home a long time,” Bronstein continued. “The benefit of using a cash buyer is that it’s an ‘as is’ purchase, so there’s no need to make repairs. We work with a lot of distressed properties, hoarding. We pack [the owners] up and move them; a professional moving company is included in the price.”
The renovation done is then “top to bottom: kitchen, bath, floors, windows, roofing, siding, new A/C; we completely update the home.”
For all this, claims Bronstein, sellers receive “about 10 percent less than what they would end up with using an agent.” He explained that “if the sellers currently could get $400K and had to pay six percent commission, plus repairs, etc., netting about $340K, we’d be about 10 percent less, but with us they can get to choose their closing date.”
I spoke with a few realtors who work in our neighborhood about the benefits of hiring them for their services versus a flipper.
Flippers claim they’ll save you the six percent commission. “That’s their hook,” said Tamara Kucik, Associate Broker with RLAH Real Estate. “But the sellers are not getting as much money for their home.
“Most of the time, people’s homes don’t need the work that they think they need,” explained Kucik. “Flippers target seniors who’ve been in their homes a long time. I work with Riderwood [senior apartments], [doing] 30 sales a year for them. Some of the clients want to sell it ‘as is.’ But most of them can invest $7-8K and increase their sale by three times that amount in the end. Eighty percent of my clients do [refurbishing] work before their home goes on the market, most of it painting and refinishing floors. Most homes don’t need the level of work the owners think they do.”
Flippers “see value in your home that you think isn’t there,” she said. “They see a quick profit in these homes, but it’s usually well below market value. The only sale that makes sense to a flipper is a true tear-down.”
Realtors, on the other hand, will work to help sellers through the process and can get them more money.
“An agent can guide you on what it makes sense to do and what doesn’t,” said Kucik. “We have vendors that will give our clients discounts. Any agent worth their salt will do those renovations for you. It takes only 60 minutes to get a realtor’s opinion on what your property is worth and they won’t charge you for it.”
Kucik gave an example. “I got a lead on a home that was an estate sale; the sister had died and the brother didn’t want to deal with it. The home was valued at $405K. He put $60K into [remodeling] and it sold for $582K.”
“There is no doubt in my mind who makes the most money when a ‘flipper’ is involved — the flipper,” says Mel Ciment, Business Manager of the Barbara Ciment Team. “Even experienced agents don’t know how high desperate buyers will bid up homes; some people are making good money in the digital economy and they really want to resolve their ‘home’ issues. Testing the market with an experienced agent who has the pulse of the market works very well in these times.”
The fact is, explained Barbara Ciment, that all the homes in our neighborhood sell quickly and for a good price. “I’ve been in this business a long time,” she said, “but I’ve never seen a market like this.”
Most of the time, Barbara told me, all the buyer needs to do is make sure the home is spotless and doesn’t smell. Even if the home owner is a hoarder, realtors can deal with that, too. “I’ve told owners [who want to move but have homes piled with junk] to take what they want and go, I’ll take care of the rest,” said Barbara. She has a team that will clear and clean the house after you’ve gone. But you’ll make much more money than leaving it to a flipper.
For example, a brick, four-bedroom home on Thistle Drive was purchased by a flipper during the summer of 2011 for $292K. Before the year was out, it had been sold to actual homeowners for $405K. I doubt the flipper actually put $113K into it, so how much of that difference did he pocket? That 1960 house with three full baths is now assessed at $449,767.
Even though we don’t plan to move anytime soon, I decided to investigate what our 1955 brick home with three bedrooms and two full baths would bring. The current tax assessment is $349,833. I asked Barbara Ciment to estimate what our home could sell for ‘as is,’ what improvements should be made (at what cost) to make it more valuable, and what it might sell for if those upgrades were made.
Barbara graciously did a walk-through of our modest home and thought it was in great shape to sell. I had assumed we would need to have the kitchen remodeled, but Barbara said the cherry wood cabinets were worth saving. Her only recommendations were to pull up the wall-to-wall carpet to expose the hardwood floors and install a new smoke detector. After a market analysis comparing ours to other homes in our neighborhood, she estimated the value of our house was $511,122, but she thought we could get closer to $600,000.
Then I contacted House Buyers of America; the man who answered didn’t want to give me a price because I admitted I wasn’t ready to sell. When I pressed him, he said their “fair cash offer” (as their postcard touted) would “probably be in the low 300s,” but “it would depend on how much work the house needed.”
Only you can decide — when you finally decide to sell your own home — whether the “convenience” of selling to a flipper is worth the $10Ks (or $100Ks) you’ll lose.
[Bokow grew up in this neighborhood (on Belton Road) and has lived on Cavalier Drive for 21 years.] ■
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