Flipping Phoenix Houses

Everyone has a weakness. For Superman, it was kryptonite. My business partner, Manny Romero, can’t handle the smell of cat urine (I know this because we walked through an REO house once that reeked of it and he had to make a fast exit after just two minutes). As for me, I get turned inside out for the new, shiny, techy stuff like iPhones and flat screen TVs (the new iPad with retina display is on my Christmas list).

Occasionally, I’ll stumble across a property with a do-it-yourself owner that had a weakness for awful decorating. This guy transforms his house into a shrine of tackiness. I’ve seen everything from cultured stone interior walls to living room floral murals.

As a fix and flipper I love writing offers on do-it-yourself properties because while the so-called “upgrades” may seem heinous to the untrained eye they are actually quite inexpensive to change.

Take a look at this gem I found yesterday:

Clearly this homeowner thought painting the cabinets would add a certain Martha Stewart-like appeal to the kitchen. Instead, it frightened off every retail buyer within 30 miles.

But for under $2,000 my project manager can buy cabinets off the shelf at Home Depot and replace these eyesores. For around $1,000 I can get a good painter to cover up the grapevines (that’s what they look like to me).

So I say long live do-it-yourself homeowners! They help keep us fix and flippers in business.

I am a home seller.

I know there are less than 13,000 active listings on the Arizona Regional Multiple Listing Service. I know there are only about 10,000 single-family homes available to buy in the greater-Phoenix housing market. I know in the last 30 days 8,221 houses have sold. And I know there is a 1.5-month supply of homes for sale.

These figures make it painfully obvious that the greater-Phoenix area is a seller’s market. But, if you’re not into numbers let me explain it another way.

When I list my remodeled, 4 bedroom, 2 bathroom home for sale like the one pictured to the right – complete with refinished cabinets, granite counter tops, new carpet, paint, stainless steel appliances, window blinds, light fixtures and door hardware – I will receive multiple offers. More than likely, at least one will be all cash.

If I accept your offer and you ask for a long list of minor repairs I may refuse to fix them.

If you fail to close in 30 days I will require you pay a $50 per day late penalty. If you need more than 35 days to close I will require that you release your earnest money to me immediately. It will be non-refundable. And if you decline I will put the house back on the market.

Forget about your dream home. You’ll have to cancel the moving van and unpack all of those boxes. You won’t get the $400 you paid for an appraisal or the $450 for the home inspection back. Worst of all, you’ll have to start looking all over again for another house in one of the hottest real estate markets in the country.

You say I would never do this? I just did. Last week.

After 35 days the buyer of this beautiful Peoria, Arizona home asked for a one-week closing extension. I agreed to do this IF they agreed to release their $1,000 earnest money deposit to me.

They balked. I walked.

The house went back on the market the following morning and I had three full-price offers by the end of the day – one all cash.

Don’t believe what you read or hear on MSNBC, CNN, FOX or the USA Today.  The greater-Phoenix area is a seller’s market. I am a home seller and I have the leverage.

For now.

The market will eventually shift. It always does. And when this happens you, the homebuyer, will have the upper hand and can write me a letter. You can remind me that there are hundreds, if not thousands, of other homes just like mine for sale. That the market is distressed and I need to discount my property, replace the HVAC unit and roof and re-plaster the pool. Yes, I’ll lose money. But at least the house won’t bleed me to death anymore. I’ll accept your offer, fix everything and throw in a bottle of $100 wine at closing.

I remember those days. Not fun.

The good news is, for both of us, prices and interest rates are about as low as they’ve ever been. We’re on the road to recovery. At least we’ll both benefit from that.

467 Days.  That’s how long it took to buy the house on Las Arboledas in Gold Canyon, a picturesque little suburb located 30 miles east of Phoenix.  A short sale listed on the Arizona Regional Multiple Listing Service, I knew the property would make for an ideal second home.  So why did it take so long to purchase?

Here’s the story…