Want to be a flipper? You’re not alone. House flipping, or buying a house at a lower cost and selling it at a higher price, is back with the housing recovery and many are attending “flipping workshops” to find out what all the hype is about. While there are reputable flipping workshops, many unscrupulous workshop leaders are only concerned with making a quick buck–and that buck is yours. Marketplace recently got the scoop on one of these workshops and here’s what they found:
“At a recent workshop just outside Baltimore on a recent Saturday, Terry Royce, who’s been flipping houses for seven years, was sharing some of his secrets. Everything from how to find a seller, or a buyer, even time management tips.
‘I always like to say, this is work, stuff gonna go wrong,’ he said later. ‘It is. And it’s the reality.’
It was Royce’s first workshop. He charged $97 for a morning seminar and afternoon bus tour of some homes that are being flipped.
Zane Watkins was among those on the bus. He said he’d been to four or five other workshops, one that cost him and his wife $300 and ended with a hard sell for another series of seminars.
‘They had three different versions of the package,’ he recalled. ‘One was like $10,000, and $15,000 and $22,000 that you would pay overall.'”
BBB recommends following these tips to avoid falling victim to a real estate investment scam:
Know the costs. While the initial seminar is free, additional seminars and training materials can cost thousands of dollars.
Don’t fall victim to high-pressure sales tactics. Take the time to carefully research the opportunity carefully and don’t sign a contract until you fully understand all of the terms.
Get everything in writing. Check out the refund policy and be sure to get all promises in writing. BBB gets several hundred complaints a year from consumers saying they didn’t get what they paid for from flipping workshops. And, when they tried to get their money back, they ran into a brick wall. Just like buying a home, when it comes to flipping workshops, it’s buyer beware.
If it sounds too-good-to-be-true, it probably is. Many inexpensive homes on the market have been empty for long periods of time or may have been vandalized, which will make for costly repairs and will make it difficult to sell quickly.
Know what you’re responsible for. If you purchase a home with violations, you could face fines or criminal penalties for failing to fix them.
Make a budget. If you plan on financing the purchase of a house, be sure to budget for the appraisal, filing fees, insurance, taxes and maintenance of the house until it is sold.
Do your research. Always check out the company with BBB before doing business. Be sure to check out a company’s BBB Business Review and complaint history at bbb.org first.