Wealthy Americans have turned to real estate to make some big purchases over the past year, but some who have had a change of heart have become unintentional home flippers—and found profit in the process.
Luxury real estate broker Senada Adzem received a phone call from her buyer just 10 days after closing on the $19 million mansion they had just purchased in Delray Beach, Fla. They already wanted to sell the home. “I’ve never been involved in a situation where the client invested such time and effort to purchase a dream home—only to have to turn around and sell it less than two weeks later,” Adzem told CNBC. The home was recently relisted with the asking price of $23 million, an increase of $4 million, which Adzem is confident the market will support.
Andy Stavros, a broker in Southern California, told CNBC about a buyer who became the unintentional flipper of an $8.7 million home in Newport Beach. On the same day the buyer closed, she decided to relist the home after deciding she wanted a bigger home. The home was soon relisted for $8.9 million; Stavros reported fielding multiple showing requests.
Inventories of multimillion-dollar homes are low. “As a result of a highly competitive market and that there’s nothing else for sale, we were able to flip [a home] for 33% profit,” Adam Wyden, founder of hedge fund ADW Capital, told CNBC about his unexpected short-term flip in Miami Beach, Fla. He had purchased a $4.15 million home that he intended to tear down to build a new home on the property. But he changed his mind and relisted the property in February for $1.35 million more than what he had paid. Just six days after relisting it, the property sold for full asking price.
The luxury market isn’t alone seeing unintentional flips. Spencer Daley, a Los Angeles real estate professional, turned a quick profit for land he purchased in Caldwell, Idaho, in September. He had plans to build on the undeveloped 0.8 acre lot overlooking a golf course in a subdivision. He paid $120,000 for it. Three months later, a buyer called offering to buy it for $250,000—an offer he couldn’t resist.
Source: “Red Hot Real Estate Markets Have Turned Surprising Profits for Unintentional Property Flippers,” CNBC (April 22, 2021)