After a long profitable run for house flippers, the latest numbers show a sizable decline, providing the lowest figures in three years across the country. Southern California and Florida have been hit particularly hard with declines exceeding 10% from last year. Although not as significant, we are also seeing these numbers trickle down closer to home.
During the Seattle real estate expansion, adequate due diligence and a cash offer were the two main ingredients needed to create a profitable venture in housing flipping. We had the opportunity to communicate with a local house flipper who stated that they were exceeding a 10% margin of profit and completing houses in under 120 days. For an average house in the $700k range, that would equal a profit of $70k+. Not a bad margin for four months of work.
Today, things are a bit trickier. We have now started to see failed house flips, something I haven’t witnessed in years.
One example is a 100-year-old Craftsman home in Georgetown. This property was sold as an estate sale in June of last year. There were several offers driving the sales price $66k over list to $456k. The flippers worked quickly replacing the roof, electrical and plumbing systems, furnace, siding, windows, flooring, kitchen and baths. They also finished the basement adding two bedrooms and a bath. Within four months, the house was back on the market with a price tag of $775k.
After eight months on the market and multiple price reductions, the listing still couldn’t hook a buyer at reduced price of $649k. The owner has recently pulled the house off the market. You can view both before & after listing photos in the links provided in References below.
We were in this home a couple of times with buyers. The work was well done & appealed to our modern open concept lifestyle, and Georgetown is a hot market with few single family homes from which to choose. It may simply come down to the annoyingly right Location, Location, Location mantra. Ellis Avenue is a main thoroughfare that abuts Boeing field...talk about noisy neighbors! You could see hangars and planes from the front porch. On a positive note, you would have front row seats for the Blue Angels taking off and landing during Seafair!
Another example is a 1943 home in South Park. This listing was on the market for less than 24 hours last spring. The winning bid was $75k over list, settling at a clean $400k price tag. After an extensive remodel including new systems, roof, flooring, kitchen and bath remodel and paint this home has still not yet sold. It was listed for just under $700k last October. After 10 months on the market and multiple reductions, the listing is still on the market with a current price of $490k.
South Park has been an interesting neighborhood to watch as it was one of the last to start feeling the Old Seattle slipping away. This was due to its geography along the Duwamish that kept it isolated with really only one bridge connecting it to the rest of the city. Many of the neighborhood locals have lived there for decades, and homes are passed through generations. Many of these homes became neglected with older owners not able to keep up with maintenance. They were then sold through estate sales to all cash buyers that attempted to flip them or they were bought in groups & replaced by town homes. We've seen many homes in the neighborhood just like this one. Check out more info below.