Question:
“Last week you talked about selling to a fix and flip investor. But don’t they only buy if they get a really low price for a house?”
Answer:
Not necessarily.
I can speak from experience, having sold dozens of homes where we had offers from investors and from owner-occupant buyers.
Many fix/flip cash investors run such efficient businesses that they can actually pay market value for a home. Here’s how they do it:
- They pay cash, so they pay no loan costs
- They remodel for about half the cost that you or I can*
- They move so quickly that they have minimal holding costs
- They create so much appeal that they resell the redone home at a premium price
- Due to volume, they negotiate lower fees from affiliate services
(*Yes, some save money not due to efficiency, but by cutting corners or just “putting lipstick on a pig.” But many do a great job and don’t cut corners.)
Another reason investors often are the high bidder is that many owner-occupant buyers won’t touch an ugly fixer upper home. That could because they don’t like the house, they’re overwhelmed by the amount of work, or they can’t afford to do all the renovation.
Don’t get me wrong, many flippers indeed make low (and I mean LOW) offers.
But often the highest offer on a fixer upper comes from an investor.
