(Source: AZCentral) – Catherine Reagor: Many metro Phoenix homeowners have a new issue to deal with now that they have equity in their homes again, investors flipping houses.Letters, calls and knocks on the door from investors looking to buy Valley houses have ramped up.
One day last week, I got a call on my cell phone from an investor wanting to buy my home for “far more than I owe on it.” A letter from a different investor arrived offering to pay cash and close in a few weeks, plus a card on my door from another investor asking me to call if I wanted to sell fast. And it seems like at every major Valley intersection, there are handwritten signs from investors looking to buy homes “for cash.”
“The claims (from would-be buyers) seem to be nothing short of a miracle — top price, fast close, no closing costs, no brokerage fee, and they might even pay for my move,” Scottsdale homeowner Lou Kissling recently told me about the offers he is receiving from investors.
“I always laugh at the solicitations, thinking how can these companies pay top dollar when they have to turn around and sell that same house for maybe 10 to 20 percent higher to make a profit,” he said.
Flips — homes bought and then resold within 180 days — are up 16 percent so far this year in metro Phoenix. But not necessarily because the many smaller investors soliciting homeowners to sell are successful.
Real estate analyst Tom Ruff with The Information Market said flips are up mainly because the big real estate firms Opendoor and OfferPad buy Valley houses at market- rate prices and then resell them. Flippers typically pay bargain prices for houses that need work, fix them up and resell them for heftier profits than Opendoor or OfferPad. Those big firms typically don’t buy houses that need a lot of work. This year through mid-October, 7,502 Valley homes have been bought and resold within 180 days.
Tougher to find bargains
During the crash, most flippers could be found on the Maricopa County Courthouse steps bidding on foreclosures. Few were contacting homeowners because most of us didn’t have any equity in our homes. In 2011, almost 50 percent of Valley homeowners were underwater.But now that rate is down to about 8 percent, and foreclosures have plummeted back to 2005 levels.
So investors trying to flip homes for profit have had to get more creative and aggressive, particularly in popular neighborhoods. I live in central Phoenix, where many Millennials are looking for historic homes that are already fixed up.Kissling lives in central Scottsdale, an area popular with Millennials and baby boomers. Tempe, Chandler and Glendale are also hotspots for flippers now because of homebuyer demand.
I responded to a few of the investor groups who contacted me about buying my house. None wanted to be quoted, but two did give me a range of what they would pay for my house. I thought all the offers were low, per my valuation on Street Scout. But as problems go, it’s not such a bad thing to be besieged by offers to buy your home.