Average House-Flipping Profit Surges 19% to $62,761 in Q4

Average House-Flipping Profit Surges 19% to $62,761 in Q4

Flipping houses was a practice glorified on cable television in the years before the housing meltdown, but its becoming popular again, as investors swoop in on homes priced, on average, 13 percent below market.

Rising home prices is fodder for new and seasoned flippers looking to turnaround properties quickly in the fastest moving markets. House flippers will buy a house for as cheap as possible, make any necessary changes to the exterior, fix anything that’s broken by getting things like Garage Door Repair, and then selling it off quickly to take advantage of the market.

Homes flipped in 2013 accounted for 4.6 percent of all U.S. single family home sales during the year, up from 4.2 percent in 2012 and up from 2.6 percent in 2011, according to RealtyTrac.

The figures represent homes that were purchased and then resold within six months.

Rising home prices have helped investors see profits again. The average gross profit on flips was $62,761 in the fourth quarter of 2013, up from $52,746 a year earlier.
“Strong home price appreciation in many markets boosted profits for flippers in 2013 despite a shrinking inventory of lower-priced foreclosure homes to purchase,” said Daren Blomquist, vice president of RealtyTrac.

In 2013, 21 percent of all properties flipped were purchased out of foreclosure, but that is down from 27 percent in 2012 and 32 percent in 2011.

Meanwhile, flipped homes were still purchased at an average discount of 13 percent below market value in 2013, Blomquist said. That’s the same average discount as 2012, indicating that investors are finding discounted buying opportunities outside of the public foreclosure process – particularly in those markets with the biggest increases in flipping for the year, he said.

RealtyTrac’s report also shows the biggest increases in flipping nationwide occurred on homes with a flipped price of $400,000 or more.

Although flipping increased across all price ranges, flips on homes with a flipped sale price above $400,000 increased 36 percent from 2012, while flips on homes with a flipped sale price at or below $400,000 increased 17 percent from 2012.

The average time to complete a flip nationwide was 84 days in 2013, down from 86 days in 2012 and down from 100 days in 2011.

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