Question:
“We just got a surprisingly good offer from a flipper. Should we be suspicious?”
Answer:
Yes!
In the past, flippers have made offers on my clients’ homes at attractive prices and gotten us to sign the contract and take the house off the market. Sometimes, the flipper had never even seen the property.
Then during escrow, they tell us they’ve “re-run their numbers and the remodel cost is higher than expected” and we need to drastically cut the price or they can’t buy the house. This is SOP (standard operating procedure) for many flippers.
For that reason, now I’m very careful with flippers. I’m dubious of offers so high that I know the flipper won’t make a profit. And I quiz the agent on whether the flipper has physically been inside and run their numbers. And I make it clear the price will not be renegotiated during escrow.
So the story I described above rarely happens anymore with my clients. And when it does, I’ve warned my clients about the risk.
To be fair, there are times when the flipper inspects the house closer like any homebuyer and finds defects that were not obvious at the time. That could be a bad roof or sewer line. And it makes sense that they’d want to renegotiate the price.
But all too often it’s the former situation. So be careful!
