Are Home Flips Taking Longer to Resell in 2013?

[Corey Dutton]

A couple of my most active real estate flippers in the Utah market called me this week with a problem. Both of these investors are still sitting on their most recently rehabbed properties after nearly 6 months, and they are still not resold. They’ve both been under contract several times, but no sale has yet consummated.

These two properties are identical to the rehabbed products that came from these real estate investors last year. The houses are located in very desirable neighborhoods with low inventory, they have been rehabbed with high-end finishes on the rehab work, and both have been perfectly staged. But the DOM of these two properties is the problem. In 2012, their resales were moving in 60 days or less. These same properties are now being resold within 60-120 days. In other words, the DOM for the resales have increased significantly from one year ago.

Regardless of where you’re located in the U.S, your DOM is a factor that all savvy real estate flippers should keep a pulse on. (And it’s hard not to pay attention to this when your carrying costs start to eat up your profit). Because inventory is still so tight in many markets in the U.S, maybe you aren’t experiencing this in your corner of the market. Please tell us what is happening in your corner of the market.

[Justin Morgan]

I think my concern would be "why" have these homes been "under contract several times" with no sale consummated?

I want to know WHY this is happening, a buyers problem, home problem, or sellers problem? What kind of buyers are putting the home under contract and then bailing... cash offers or financing? There is a lot that can be done to prevent flaky buyers.

Do you have feedback as to WHY they buyers bailed?

Otherwise: we are seeing a lot of buyers jumping on one property but not all agents or buyers can perform so... screen very carefully. It is a sellers market with buyers starting to scramble before they know if they really can perform.