Flipping. It’s not just something you do to pancakes.
This weekend the Seattle Times had an article on condo flipping, Tactics in place to deter buyers from flipping and it more or less paints a rosy picture of the situation here in Seattle. The Cosmo Blog has a follow-up blog post titled condo arbitrage.
This article and topic really deserve a length post but I’ve already spent too much time in Excel today so here’s the quick late night version….
We all know no one’s flipping here right? We have investor caps and the sales people are ‘trained’ to spot the flippers. However, we all know that the re-sales at 2200 and Cosmo the two largest projects to complete this year keep climbing. So how are the flippers doing?
Cosmo has 40 units on the MLS. They’ve sold 15 units since 01/01/2007. Of those 15 units only 3 were not sold by the developer.
2200 was sold out and has 36 units on the MLS. Flippers are doing much better here having sold 15 units since the beginning of the year.
However, it does sound like developers are learning their lesson. Perhaps their best chances lies in the contract addendum mentioned in the article since I’m skeptical of flipper spotting and investor caps:
Williams says she may recommend affixing an addendum to sales contracts stipulating that investors must return their entire profit on a home’s sale if it takes place within a short-term time window, determined by the builder.
I believe Gallery, Brix and Veer all have some sort of addendum in place to encourage 100% owner occupancy (or 100% occupancy by non-investors.) Do folks know of others? It’d be great to pull a list together and compare their terms.