The Flip that Flopped in Montville

Today we are looking at a story of a poor flipper who will be luck if they do not lose too much money. Spent lots of money to make all the important upgrades listed on HGTV - granite counter-tops and stainless steel appliances.


About the property -

An immaculate penthouse condo in lovely Montville in the desirable Montville Chase development. Condo is a one bedroom, one bathroom unit with approximately 810 square feet. Unit has been fully renovated with all rooms recently painted, brand new water heater and kitchen has been completely redone (renovations include granite countertops with full backsplash, stainless steel sink, new flooring and all top-of-the-line energy star stainless steel appliances). Unit also features its own washer and dryer, vaulted cathedral ceilings and a balcony with a great view that is perfect for barbecueing. Montville Chase has very desirable ammenities that include a swimming pool, tennis courts, clubhouse and jogging path. ... I am flexible on price if the buyer is serious and qualified.

Now a look at the financing -

• The house was purchased for $262,000 in August 2007.

• The mortgage was for $234,000 with Mountain Mortgage Corp.

• The house if currently listed as a FSBO on craigslist for $274,900.

While this is a bit of profit if it ends up selling at full price - however looking at the upgrades and the carrying costs for the past 8 months and the seller is already underwater. The difference between purchase price and selling price is only $12,900. Upgrades and carrying costs have eaten that $12,900 long ago. The floplord probably wants to sell the property yesterday so as not to lose too much. However this flipper is doing a horrible job of selling on their own. A fuzzy picture of the outside of the building and no crystal clear pictures of the upgrades will definitely not be bringing in a full price offer.

The ad lists the following renovations include granite countertops with full backsplash, stainless steel sink, new flooring and all top-of-the-line energy star stainless steel appliances. Add in the new water heater and the painting and the flipper is underwater. Even if all the work was done by the flipper themselves the material probably cost well over $12,900. Add in the carrying costs and the closing costs and this is a flip that flopped.

About four years ago this flipper would have made a nice profit on this flip. But now the seller is chasing down the market with this listing. Things sure sound great on HGTV with the flippers making a few upgrades and even with big mistakes and long time-lines still claiming to make a great profit. Rarely do the shows go back 6 months to a year later to say if the sales price and profit really materialized. Also notice how the shows say projected profit - which is usually the gross profit. After taking off 6% for realtor fees most of the HGTV flippers make very little money. Additionally since they did not live in the residence for two years they also have to pay taxes on the profits. People have to remember it is TV and even reality TV is not real life.