Durham Region For Sale By Owner Private Real Estate Sales

If you are considering flipping real estate, be careful of pit falls.

In recent years, some TV programs show individuals that are ‘flipping' and making a bundle of money. If only it was that easy. Then everyone would be doing it. These shows do not introduce the guy that lost money. All TV shows have a happy ending.

The best advice is to consider the worst case scenario. What can go wrong that will blow the entire project up and reduce your projected profit? Or worst still, end up in negative figures.

Here are some ideas on what to look for when considering flipping real estate.

1. If you are purchasing the property as a flip, don't let emotions get in the way. Look at it strictly as a numbers game. If the level of profit you require is not there, pass on it and look for something else.
2. Financing a property that you are going to flip is difficult. Prior to entering into an agreement, explore your mortgage options.
3. Buying is easy. Selling could be a lot harder. Be prepared to have the property on the market for a period of time. Although you might think it will sell in a couple of weeks, it might take 6 months. Ongoing costs will be utilities, maintenance, property taxes and mortgage payments. Factor in for the long haul and if it sells faster, consider it a bonus.
4. Know what costs are involved before you buy. Prepare a work sheet that details everything required to market the property for top dollar. You might make your offer conditional on a contractor viewing the property to provide estimates for repairs. Once this is done, add a figure for surprises. Again, if this expense is not necessary, it is extra profit.
5. The market might drop into a slump before you list the property. Real estate markets change from month-to-month. When you get ready to sell, it could be awful quiet out there.
6. The cost to buy real estate is minimal. There are no realtor fees to pay, however legal fees can run around $1,000. Selling is different. You can market the property as a Private Sale on HomesByOwner.com. If you list with a real estate agent, the commission will run in the range of 5-6% plus GST. Closing costs are higher than a purchase as the buyer's lawyer does the bulk of the work in a transaction. You also have to pay Ontario Land Transfer Tax and title insurance. There might be mortgage broker fees also. For a sale, expect to pay in the range of 2-3% of the purchase price.

As with any legal transaction, we highly recommend that you consult with a real estate lawyer for an estimate of costs before you sign any documents.

Learn more about our Durham Region Homes For Sale website.