Transactions that lead to more equity
This month’s look at the Scottsdale investment real estate market offers you, the potential or current investor a look at the results of 3 different types of sale transaction management:
- Sale by a licensed real estate agent
- Sale by an investor/flipper (sometimes with the help of a real estate agent)
- Sale by owner (no agent involved in the sale, however, buyer might have been brought the homeowner by a licensed agent)
This is a new chart that I have customized from our world class real estate data source, the Cromford Report, and for this chart, I have selected all Scottsdale homes sold, within the price sold range of $150K-$350K; prime investor range. It shows average sales price per square foot, in a 12-month moving average format and cut by our 3 transaction types:
- Normal MLS Sale, homes closed (sold) with the help of a real estate agent (the top, brown line)
- Investor Flip, homes closed (sold) by an investor who is a flipper (the middle, red line). For our MLS data set, Flipping is any home bought and the sold within 6 months.
- Non-MLS Sale or FSBO (For Sale BY Owner), homes closed (sold) where the owner has sold their home without the help of a selling agent (the bottom, purple line)
As you can see, the most money/highest price per square foot was achieved when a licensed agent was used. In fact, selecting the last month available, May as an example data point, if the FSBO sellers had used an agent, the average gain in price sold could have been 10.01% ($180.88 per/sq./ft. vs. $164.33 per/sq./ft.).
For those of you who are considering flipping houses as your investment strategy, please remember that there will be additional expenses to your flip. In addition to buying expenses, flippers can invest anywhere from a few thousand dollars to tens of thousands of dollars in the property they buy to get it market ready.
Many flippers target FSBO properties because they know that these homes generally sell for less. And, because so many flippers try to sell their property themselves, they generally sell for a little less than the homes sold by an agent. See chart and compare sold price per/sq./ft. for regular MLS vs. Flipper price/sq./ft.