Property flipping is quite common in low-income neighborhoods in where property is available cheap. However, not everyone knows what a property flip is, and some make the mistake of buying properties that are being flipped.

Flippers like to call themselves ‘developers’ and say they are smarter than other buyers. They claim that they enhance the value of the property by rehabilitating it before they sell it.


Some of them do make a few changes in the looks of properties, before they sell them at a huge profit. But they avoid making changes that may involve electrical, plumbing, heating, roof or porch replacement works since that costs money.

The more crooked flippers sell a property to each other several times to increase its valuation. The property is then sold to a buyer who never takes possession and defaults on the mortgage.

Property flips can sometimes involve mortgage fraud. Flippers lie about the value of the property and about the capacity of the buyer to pay. In lower-income neighborhoods real estate brokers and mortgage lenders tend to break the rules.

In the 70s, property flipping and block busting using FHA mortgages left thousands of properties in America vacant. A few people involved in this were tried and convicted.

Property flipping still attracts people due to the low risk and high rewards. Some honest investors also do property flipping. They look for under-valued properties and then sell them at a profit.

Property flipping can cause harm to the neighborhoods where it is practiced. Property flippers artificially increase the price of property beyond its value. This can make other property buyers assume that the prices are higher than they actually are.

This leads to a vicious circle and property prices go up, for some time. The flipped property usually goes into foreclosure and due to this, the property prices in the neighborhood crash to levels below their true market value.

The low values continue until the excess supply can be absorbed. If a house owner has to sell his home during this period, he may have to accept a price lower than what is due on his mortgage

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