Flipping and the Las Vegas Home Market
If there is one thing that best describes the Las Vegas luxury home market today, it is ‘active’. Trades happen fairly often, and homes can switch owners only after a few months. Newcomers, mostly young professionals buying their own home for the first time and out-of-towners moving in from other locations in Nevada or even other states, have fueled the continued robust movement of the local market.
It can be surprising to an observer how fast homes can move in the Las Vegas luxury properties market. However, closer inspection reveals a variety of ways that help move home closings faster. One rather popular method is what most people would call house flipping.
‘Flipping’? What’s That?
In real estate terms, ‘flipping’ a house means acquiring it then quickly reselling it for a bit of profit. Usually it involves closing a real estate negotiation for a reasonably low price, then selling it with 10% or 20% markup after a certain short period. There are several reasons why people flip homes in a certain area.
- Many of the homes are sold at discount prices. These could be because of their condition, or because they are on short sale.
- The original owners are relocating and are willing to dispose of the home at the shortest possible time, even with lower prices
- The market is very active, with many buyers ready to purchase various luxury properties.
Usually a market is ripe for property flipping even if none of these conditions are met, but those situations are very rare.
Flipping in the City
As stated earlier, homeowners tend to flip their homes when the market is very active. They tend to cash in on the robust market activity, purchasing a home then quickly selling it for a profit. With a high demand for homes, there will always be another potential buyer looking to buy, and many flippers are aware of the benefits attached to it.
With that to ponder about, it is no wonder that Las Vegas is still one of the most popular places to flip a luxury home. Over the course of the past year, more than 4,000 properties were flipped, with sellers gaining profits averaging over $44,000 in profits per home re-sold. The figures pushed the city up to ninth place among 117 different residential locations surveyed. With the current state of the markets, the figures may remain on a high up until next year at the very least.
Effects of The Flip
Flipping, like any kind of real estate investment, has a lot of long-term implications once started. First and foremost, real estate isn’t as flexible as other forms of investments; the slightest disturbance can lead to major losses. One of the reasons why the housing bubble collapsed in The Recession was due to excessive flipping on the part of homeowners. They overexerted the market’s supply limits, leading to an abrupt drop in housing demands and major monetary and material losses.
This does not mean that flipping should be discouraged. It just means that the homebuyer must keep in mind that flipping should be kept in moderation. Flipping a luxury home does have its monetary benefits, but it all comes down to how the prospective buyer/seller can make the most out of the deal. Furthermore, the buyer has to keep in mind that other factors, like taxes and maintenance costs, can take from or add to his or her flipping plans.
Flipping in an active home market can be a good way to easily regain a major monetary investment. However, one has to keep in mind that even with the right blend of factors coming together, a flipping procedure can fail, and the homeowner can suffer a serious setback. It is always a good idea to consult with a real estate expert before entering into any of these kinds of property negotiations.