Home flipping accounted for 4.9 percent of all home sales within the Baton Rouge MSA during the 1st quarter of 2016 according to a report released today by RealtyTrac. This is up 19.5 percent from 2015 at 4.1%. The most recent RealtyTrac report is Home Flipping Increases 20 Percent In Q1 2016 to a 2 Year High
Some Stats on Greater Baton Rouge House Flipping Via RealtyTrac:
Q1 2006 was peak of local flipping
In Q1 2016, flipping has DECREASED 58.2%
In Q1 2016 House Flipping Rate: 4.9%
In 2015, Gross Flipping Profit was $42,463
In 2015, Gross Return On Investment was 41.4%
In 2015, Median Flip Purchase Price was $102,637
In 2015, Flips accounted for 4.1% of total sales
In 2015, the Year-Over-Year Change from 2014 was +9%
The vast majority of REO appraisal work I’ve performed in located within North Baton Rouge and Baker: 70714, 70802, 70805, 70807, 70811, 70812, 70814, 70819 and some in 70815.
Nationally, RealtyTrac’s own chart shows shows Flipping Profits way down, see below!
Foreclosures Sell For 50% Less On Median AND Why This Is Important For Investors And Agents Listing REOs! REO stands for real estate owned by a Lender or a distressed foreclosure sales.
Per the current RealtyTrac stats for Baton Rouge MSA, the median sales price of a non-distressed home was $160,000. The median sales price of a foreclosure home was $80,000, or 50% lower than non-distressed home sales. While RealtyTrac’s local median sales price is not accurate at $160,000, my own charts shows median of $192,400, it does reveal foreclosures sell at 50% of median sales prices.
LENDERS ARE INSTRUCTING APPRAISERS NOT TO USE DISTRESSED ON OBVIOUS DISTRESSED PROPERTIES. From a home appraisal perspective, Lenders have traditionally hired Appraisers to value their REO inventory for disposal. This means Appraisers set the price of an REO property with a possible change in that price by the Listing REALTOR when they take the listing. Lenders have increasingly become very hard-nosed about Appraisers NOT USING APPLES-TO-APPLES COMPARABLES when appraising REOS, despite the fact that REOs sell at a 50% discount to the market. Appraisal order instructions from AMCs (appraisal management companies) for distressed properties, especially for pre-foreclosures, now camouflage the actual status of known pre-foreclosures and instruct Appraisers NOT to use distressed properties as comps. I’ve even had two AMCs argue with me over the condition of a pre-foreclosure on drive-by assignments. Lenders are trying not to lose money on these properties now that nationally, the market is up.
NOTE: This second Baton Rouge chart location is here via RealtyTrac.
These two charts below are from RealtyTrac’s:
Home Flipping Increases 20 Percent in Q1 2016 to a 2-Year High, Shows Flipping Profits Are Down