The phenomenon of flipping houses can be quite a temptation and hard to resist. However, not every venture results in a profitable outcome. Every real estate agency or house-flipping hopeful must adhere to a prudent process of flipping if they want to yield a positive return on their investment. Before deciding to invest and flip houses, there are three situations one must carefully consider to obtain and increase market intelligence of the county in which they are currently residing: death, divorce, and downsizing. Here the concept of downsizing implies downsizing of employees through layoffs or workforce downsizing. This should not be confused with the concept of downsizing in the context of real estate, where downsizing refers to downgrading your existing house to a less expensive home.
Real Estate Investors or firms look for the three essential circumstances of death, divorce, or downsizing during the process of flipping as described below:
Death
In the case of death, there is a strong probability that the deceased’s successors will want to make a quick decision and liquidate tangible assets. With emotions running high and acting in tandem with rapid selling, the new owners may want to sell the property as soon as possible and at a price below the assessed market value. For example, a property valued at $200,000 could be for sale at $100,000 or $125,000. Therefore, due to emotional stress and panic selling, the owner will accept almost any price to sell the house. At this time, the real estate investment agencies or individual investors should leverage the situation, seize the opportunity, and purchase the property at a lower price.
Divorce
The second happenstance that can enable a house-flipping purchase is when a couple is going through a divorce. Divorce has a significant impact on emotional decision-making, and it is estimated 40% to 50% of couples in the United States will end their marriage in divorce. Once it is finalized, then comes the aggravating process of paying out alimony and dividing assets. At this point, one party inevitably becomes emotional and may decide to sell their property. The husband will take into consideration the amount for alimony and how he will stand fit financially. When considering all unavoidable costs and payments involved in divorce proceedings, the property owner may be increasingly inclined to sell their home immediately.
Consequently, they may be compelled to sell the house at a discounted price and below the assessed market value. Although the process of divorce is private and personal, a well-connected broker will have a network of friends who can supply information that is applicable to the market database.
Downsizing
Workforce downsizing is not a new ordeal in the era of globalization. Whenever the organization or a firm has been vulnerable to an economic downturn, the most common response is to downsize to save costs and maintain the profitability margins. If an employee has taken a mortgage on their house and been downsized, they have two options: either the person can simply call the financial institution and declare bankruptcy or actively try to liquidate assets, including selling their house. If he chooses the latter, he would either contact real estate agencies or put up an advertisement of the sale in the local newspaper or any other medium such as social media platforms.
When thinking about how to obtain properties to purchase and flip, consider searching for properties that are on the market due to a death, divorce, or downsizing. In many cases, the sellers in these situations will be motivated to relinquish the property and will often do so below the assessed market value.
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