What Is Micro Flipping Meaning Methods Process Psychology
Nowadays, the move-in flipping can be executed in a matter of hours, sometimes minutes. The intricacies and minutiae of how a home can be removed from a condemned property can now be more easily arranged without costing owners more than the original purchase price of the home.
In this article, we are going to take a look at a fascinating real estate phenomenon known as “micro flipping”.
Micro Flipping Methods In Real Estate: Micro flipping was originally coined to explain the rapid sale of homes in areas that were zoned for low density residential use.
Homes located in prime locations can be quite valuable when they are new because the location commands a premium price.
Not all real estate trends are as startling as micro flipping. However, a dramatic shift in pricing trends are what has transformed real estate from a finite asset to a stock market. From 2015 to 2016, home values grew by 12.5%, while the actual sales declined by 13%.
The rise in home prices have made owning real estate and investing in real estate a riskier endeavour. The recent nationwide delivered/completed housing shortage has put upward pressure on home values, with home prices in metros and big cities experiencing the greatest price growth.
Think of real estate as a portfolio. When a home is sold, the initial investment is made and the asset is sold. If the home appreciates in value over time, the seller is pleased and he or she makes a profit. Homeowners in turn become wealthier and use the increase in cash flow to invest in additional real estate properties, perhaps a vacation home or a new business opportunity. As the home is sold, the money generated from the initial sale is used to purchase the next property to increase the wealth of the owner.
In the past few years, rapid price growth in many areas of the country has made it too risky for the average individual to buy a home. For those in a low income bracket, purchasing a home is unattainable. For many, it would be difficult and expensive to purchase a home and make the required monthly payments.
A micro flipping home allows homeowners to “flip” a home for a profit. Although the intent is not to sell homes to make a profit, the “flipper” is making money on his or her investment in the same way that an individual would if they purchased a home in a location with higher rates of return.
Micro Flipping Process: A home can be flipped very quickly using the help of an experienced real estate agent, a lawyer, and in some instances a licensed contractor. Using the tools and methods of professional real estate professionals, the entire transaction is controlled by a single party.
Real estate properties are inspected and reviewed by an attorney to be sure that all applicable codes and regulations are being followed. The house is inspected by an inspector, which notifies the owner and legal representatives of any repairs that need to be made to the property. An attorney can draft legal contracts and communicate them to the homeowner, and a contractor can conduct the required repairs and renovations to the property.
Because of the large amount of work needed to flip the home, it is necessary for one party to control the entire transaction. The flipper hires an experienced real estate agent who works on commission to sell the house. The agent works with the homeowner to arrange a listing of the property and schedule a showing of the property.
A showing of the home is required to obtain an offer on the property. If the owner accepts an offer, the contract is made with the successful buyer and the flipper has given up his right to a commission on the transaction. The agent in this scenario is only paid when the house is sold and one or more contracts are signed. Once the seller accepts an offer, the house is sold and the flipper has given up his right to a commission.
The agent then takes the commission on the sales of the other properties purchased with the money he received from the sale of the previous home. This is called “piggybacking.” The homeowner also pays the agent and the contractor, if any, a percentage of the sale.
Responsibilities Under Micro Flipping: There are a number of responsibilities involved in the entire process -
# The agent must provide accurate information about the home and the market in order to generate interest and generate offers.
# The agent must screen potential buyers and communicate the benefits of the home to all potential buyers.
# The agent must disclose all pertinent information to the seller, which includes the buyer’s offer on the property, the buyer’s full name, his or her contact information, and any reviews of the buyer.
# The seller and agent must monitor the entire process and ensure that all paperwork is filed with all applicable governmental agencies, including property tax records, homeowners insurance, and contracts with the contractor.
# All receipts are required to be submitted with the home sale.
# In many cases, the paperwork must be filed with the registrar office and the appropriate governmental agency.
# Once the paperwork is filed, the transaction proceeds to closing.
# During the closing, the seller must sign and submit the necessary documents and the buyer must agree to the purchase price.
# If the parties do not agree to all terms and conditions of the purchase, the sale is voided and the buyer loses his or her deposit. A legal settlement is then made in court.
# At this time the homeowner has the option of either accepting the settlement or going to trial in which case the settlement case goes to a jury.
# After the settlement is finalized and the transaction has closed, the house is sold and the flipper has given up his right to a commission.
# The homeowner has to determine if he or she wants to sell the house again and go through the whole process all over again, or if they want to take the money and find a new home.
So, if you decide to invest in a property flip, you need to be well-informed about the process. It’s not an easy investment to make because it’s a very time-intensive process and not everyone is able to devote that much time to the activity.
When you’re looking at properties, you have to remember that these houses need a lot of work and you’re in a bidding war for the right to buy the house. You’re competing with another flipper, who may be paying as much as $100,000 to complete a house flip, and you have to price your property as close to the top bid as possible.
If your price is too low, you won’t even get a look at the house because other flippers will be willing to pay the $100,000 more than you are. If the other flippers try to bid against you at the court hearing, you’re in for a tough fight, so you want to price the property as high as possible so you don’t lose the house to another flipper.
And, if you’re not willing to price the house too high, it may be easier for you to purchase a home without going through a bidding war, because the other flippers will pass on the property to someone else.
On the flip side, if your price is too high, you may not even be able to get a look at the property because it won’t sell to someone else.
A good real estate agent can give you the correct information about pricing and you should always do your homework. Get ready to read a lot about the housing market, the area, the neighbourhood, the previous home sold by the same flipper, all the data associated with the house and the lot, and the surrounding neighbourhood.
A good real estate agent will help you figure out what the house is worth, how much money you need to invest, and how long it will take you to recoup your investment.
