Released: September 21, 2006

Real estate flippers slammed by market

Source: By Noelle Knox, USA Today

nvesting in real estate looked so sexy. Like the tech-stock bubble that turned college kids and housewives into day traders, the real estate boom turned insurance brokers, doctors and bicycle mechanics into real estate flippers, who would buy and then quickly sell homes for easy profits.
Now those profits are shrinking fast. Nearly one in five flippers who sold from April to June actually lost money on the deal, the highest level in 2½ years, according to HomeSmartReports.com, which today will release a report on flipping activity in 147 metro areas.

The vanishing act of speculators is accelerating the decline in home sales this year. That’s making life hard for home sellers but giving buyers a bonanza of choices. It’s also a stark reminder of the cyclical nature of real estate.

Though it’s too early to say how far the market will fall, short-term real estate investors are learning how hard it is to make money — any money — once For Sale signs begin hanging in yards for months. Sellers cut prices, and builders hand out swimming pools to entice hesitant buyers.

Take Jeffrey Epstein, an insurance broker in Florida. When Epstein put deposits down on a condo and a town house under construction in Miami in 2004, he never actually planned to live in them — or even buy them outright.

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