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Real Estate Flipping 101

by Scott Darling

If you watch home-and-garden cable channels, it looks like everyone is flipping houses. i.e. buying a piece of real estate, making minor repairs, and quickly selling it at a substantially higher price.  Basic investing 101: Buy low, sell high.

real estate flippingCertainly sounds appealing--and you may be tempted to join the ranks of those who have been successful in this field.  Be forewarned, however, that like most money-making endeavors, real estate flipping requires time, money, patience and skill.

For tips on how to begin, steps to follow, and advice on how to avoid pitfalls, read on…

Do your research and be knowledgeable well in advance:

  • Talk to (and learn from) successful flippers, read up on the subject, follow real estate deals in the newspaper, use the Internet as a teaching resource, attend open houses and auctions.
  • Identify possible house locations, size, and style.  Educate yourself on how to recognize promising properties and how to spot a lemon.
  • Familiarize yourself with current prices, taxes, utility rates, HOA fees, municipal and restrictions in each area you are considering.   Study your market. Get to know it as well as you possibly can. Understand the trends, the kinds of houses, the neighborhoods, the streets
  • Visit the potential homes and neighborhoods in person.  Talk to residents, Realtors, and repair companies who are familiar with the area.

Set up a budget, a time line, and financing:

  • Figure out how much money you have (or can put your hands on using investors) without borrowing
  • Calculate the cost of repairs, taxes, utilities, materials, contractor/labor expenses, and the like.  Professional contractors advise flippers to add an extra 10% to their repair estimate.  Also, to be on the safe side, make sure that you’ll be able to hold on to the home as a rental property for a while, if need be.
  • Experts suggest factoring in the flip time into your budget and your potential profit before you purchase the home. According to investors, a successful flip is one that makes you around a 15% profit.

Be prepared:

  • When you find the right house, you must act quickly to buy it.
  • Have appraisers, agents, contractors, skilled laborers lined up so they can start work immediately upon your purchase.  Remember, in flipping, time is money!
  • Be ready to make quick decisions, devote a great deal of time (and possibly sweat equity) to this project, and face unexpected expenses.

Information courtesy of Chester County Real Estate Expert Scott Darling.

 

Chester County Real Estate Market Trends for December 2014

by Scott Darling

2015 is off to a great start for home buyers according to an executive order announced last week authorizing FHA to cut .5 percent from the annual mortgage insurance premium for the FHA backed loans with terms greater than 15 years. For most FHA loans this will reduce the annual premium from 1.35 percent of the loan balance to .85 percent. Loans with balances above the loan limits in effect in most areas and with current MIP of 1.50 to 1.55 percent will see new premiums of 1.00 or 1.05 percent respectively. The upfront premium for all loans will remain unchanged at 1.75 percent.

Borrowers with FHA-insured loans can refinance and obtain the lower annual MIP, as long as the original endorsement was after May 31, 2009 (Older loans have a lower annual MIP. The annual MIP was increased from 0.55% to 0.90% in October 2010, to 1.15% in April 2011, to 1.25% in April 2012, and to 1.35% in April 2013 for borrowers with less than 5% down.)  

Take a look at December’s real estate sales broken down by school district.

Downingtown School District

The number of homes selling in the Downingtown school district in December​ 2014 dropped by 2.56% when compared to December​ 2013. The average selling price increased 1% to $379,527. The median selling price decreased by less than 1% while the average market time decreased by 15 days.

Date Sold
Listings

Average
Selling Price

Median
Selling Price
Average
Days On Market
Dec 2014 76 $379,527 $357,000 54
Dec 2013 78 $376,190 $357,275 69

 

West Chester School District

The number of homes selling in the West Chester school district in December​ 2014 increased by 20.4% when compared to December​ 2013. The average selling price dropped by 11.5% to $317,000. The median selling price decreased by 11.9% while the average market time decreased by 2 days.

Date Sold
Listings

Average
Selling Price

Median
Selling Price
Average
Days On Market
Dec 2014 118 $332,270 $317,000 54
Dec 2013 98 $375,679 $360,000 56

 

Coatesville School District

The number of homes selling in the Coatesville school district in December​ 2014 dropped by 31.76% when compared to December​ 2013. The average selling price decreased 1.73% to $215,000. The median selling price decreased 2.74% while the average market time grew by 31 days.

Date Sold
Listings

Average
Selling Price

Median
Selling Price
Average
Days On Market
Dec 2014 58 $215,850 $215,000 79
  85 $219,652, $221,065 48

 

Great Valley School District

The number of homes selling in the Great Valley school district in December​ 2014 increased by 83.3% when compared to December​ 2013. The average selling price increased 15.6% to $480,567. The median selling price didn't change while the average market time increased by 15 days.

Date Sold
Listings

Average
Selling Price

Median
Selling Price
Average
Days On Market
Dec 2014 44 $480,567 $435,000 63
Dec 2013 24 $415,711 $435,000 48



Unionville School District

The number of homes selling in the Unionville school district in December​ 2014 increased by 16.67% when compared to December​ 2013. The average selling price increased 2.09% to $475,173. The median selling price dropped 11.17% while the average market time increased by 3 days.

Date Sold
Listings

Average
Selling Price

Median
Selling Price
Average
Days On Market
Dec 2014 28 $475,173 $407,500 99
Dec 2013 16 $465,457 $458,750, 96



Tredyffrin-Easttown School District

The number of homes selling in the Tredyffrin-Easttown school district in December​ 2014 increased by 94.59% when compared to December​ 2013. The average selling price increased 1.25% to $451,108. The median selling price increased 3.8% while the average market time decreased by 15 days.

Date Sold
Listings

Average
Selling Price

Median
Selling Price
Average
Days On Market
Dec 2014 72 $451,108 $410,000 49
Dec 2013 37 $445,557 $395,000 64

 

Owen J Roberts School District

The number of homes selling in the Owen J Roberts school district in December​ 2014 increased by 29.03% when compared to December​ 2013. The average selling price decreased by 5.7% to $318,523. The median selling price dropped 16.67% while the average market time increased by 23 days.

Date Sold
Listings

Average
Selling Price

Median
Selling Price
Average
Days On Market
Dec 2014 40 $318,523 $270,000 76
Dec 2013 31 $337,788 $324,000 53

 

Phoenixville School District

The number of homes selling in the Phoenixville school district in December​ 2014 decreased by 19.51% when compared to December​ 2013. The average selling price increased 1.27% to $261,252. The median selling price decreased 8.73% while the average market time decreased by 32 days.

Date Sold
Listings

Average
Selling Price

Median
Selling Price
Average
Days On Market
Dec 2014 33 $261,252 $218,000 69
Dec 2013 41 $257,987 $238,860 101

 

Curious about the value of your home? Get your home's value here!

Information courtesy of Chester County Realtor Scott Darling.

What's Up In 2015 for Real Estate?

by Scott Darling

A new year has begun and it seems to me that time goes faster and faster each day. The economy is predicted to grow around 3% in 2015 and as you can guess that is good news for the real estate business!  The real estate market holds a few more predictions for 2015…

  • 2015Interest rates are still low compared to what they have been in years passed but Freddie Mac is predicting that interest rates will rise above the low 4% they had dipped to in 2014 to up to 5% by the end of 2015.  Still these interest rates are extremely low so if you are in the market for a new house you should go ahead and plan on making a purchase sometime in the year of 2015. 
  • Prices for houses by the end of 2015 are predicted to be a little higher than in years passed but not so high that they won’t still be affordable.  Home appreciation will likely move to 4.5 percent instead of 9.3 percent as in 2014.  It may be that home appreciation will drop to 3 percent by the end of 2015.
  • If building a home is in your plans then you are apparently on target with a lot of other folks. The building of new homes is expected to rise 20 percent from 2014.  If you don’t find the house that fits your every need this coming year on the market, it will be a great year to build it to your own specifications. 
  • Not as many folks will be refinancing in 2015.  As a matter of fact refinances will drop to make up only about 23 percent of single family orientations this coming year.  In 2014 refinances made up roughly more than half of single family orientations. 
  • It will be a bit easier to get a loan for your new home purchase in 2015 as some of the restrictions that were once placed on new home buyers will be eased.  Funding sources will grow for new home buyers in 2015 as well. 

As you can see there is a lot of good news for the real estate market in 2015.  If you are considering buying a home, don’t wait another day longer…get on the phone and give me a call today to get you started in the right direction. 

Information courtesy of Chester County PA Realtor Scott Darling.

4 Really Bad Reasons Why Sellers Overprice Their Homes

by Scott Darling

Be sure to read the article below from Realty Times author Blanche Evans discussing why sellers overprice their homes. She doesn't mince words!

Why would sellers deliberately sabotage their chances of selling their homes? It doesn't make any sense, yet it happens all the time.

house for saleSellers arrogantly slap the highest price on their homes that they think they can get away with. Then they're surprised when the market slaps them right back with insultingly low offers or none at all.

If you're a seller getting ready to list your home with a real estate professional, and you're even thinking of testing the market with a high price tag, it's time to slap you and get your attention.

Here are four really bad reasons to overprice your home.

You think you're smarter than everyone else.

If you're truly smarter than everyone else, then your agent, the buyer's agent, the buyer's lender, the county appraiser, all the other sellers who have sold or who currently have their homes listed in the market and every buyer on the market is stupid compared to you.

Maybe you'll get lucky and some state lottery winner will write you a check. Oh, yeah, that'll happen.

You want control.

You're the seller who hires a real estate professional, but then doesn't listen to a word she says. Or you politely listen, smile smugly, and then inform your agent that you're in no hurry, you can afford to wait for the right price, you can always decide to drop the price later, blah, blah, blah.

But you're not in control. The market is in control. Buyers don't have to buy homes, and they certainly don't choose to buy overpriced homes.

You're dishonest.

Like keeping an ace up your sleeve, you see nothing wrong with hiding information from your agent or the buyer. Maybe you want to put such a high price on your home because you owe more on your home than it's worth. What if you can't get your price and you have to ask the lender to take less money. That's a big risk. It takes more time, the lender could say no, and your buyer could get righteously angry and walk away.

You're entitled.

You feel you deserve nothing but the best, but you're really the client from hell. You really think it's your hapless agent's job to meet your unrealistic expectations. You expect your agent to hire Josh Whelan to video your home, put a full-page ad in the New York Times, hold an open house every week, stand in your front yard with a bullhorn and get buyers to step right up -- all for a discounted commission.

Overpricing is a risk. Buyers aren't stupid. Agents don't work for free. Lenders don't ignore lending guidelines. So don't be stupid. Don't overprice your home.

Information courtesy of Chester County PA Realtor Scott Darling!

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Scott Darling
RE/MAX Action Associates
403 W. Lincoln Highway #101
Exton PA 19341
(610) 594-SCOT
610-363-2001
Fax: (610) 363-5275