Morality of Flipping Cars/Houses

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When you watch shows about flipping houses, do you think it’s immoral? For instance, somebody with a particular set of skills is able to see the value in an old house and they may or may not add value to it. They may just know the original owner underpriced it. They then turn around and sell it for a lot more. Do you think there’s a moral obligation to inform the original owner that they are underselling it if you know its true value?

Or let’s say you tell your sweet old aunt that you need a car and she sells it to you for a low price because you’re family. Then you turn around and sell it for double the next month. Should you give her the profit? Were you acting immorally?
 
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Well, I think typically flipping houses involves fixing them up quite a bit. Seems okay to me unless the work is shoddy.
I think that would be immoral to flip auntie’s car, but I don’t know how often that happens.
 
With a lot of these upgrades to houses, it’s putting lipstick on a pig. For instance, they put about $4,000 into the house, sometimes less, and then sell it for $100, 000 more.
 
Well that seems a bit extreme. I would suspect it’s a lot more than 4k in most cases. Plus the cost of the house to begin with.
If it seems so easy to you, have you thought about what it would take to actually flip some houses?
 
Consider it a finder’s fee, even if no value is added. If time, money or labor are invested, then it’s business as usual - a moot point.
 
Jen95 said:
Well that seems a bit extreme. I would suspect it’s a lot more than 4k in most cases. Plus the cost of the house to begin with.
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Indeed. If I remember correctly, redoing a kitchen can easily cost $30,000, never mind if the electrical work was done badly, the insulation, the plumbing, if they redid the entire layout and knocked walls down, redid other rooms like the bathrooms, bedrooms, etc. You could easily dump $100,000 to redo a house.
 
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True, because the flippers gain more skill choosing which house to flip, what to sell it for, what kinds of house problems are fixable, etc.
 
Lara said:
With a lot of these upgrades to houses, it’s putting lipstick on a pig. For instance, they put about $4,000 into the house, sometimes less, and then sell it for $100, 000 more.
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True, but often the owners do not want to do the cosmetic work. They would rather price it low for a quick sale and not have to bother. In such a situation, it seems like a win-win.
 
I see nothing immoral in it. The buyer gets a lower price because of needed improvements, often major issues most buyers don’t want to deal with. The sellers could do the improvements if they wanted to get financing and take the risk but usually it’s not an option or they just don’t want to. The flipper is risking a lot financially.

When the work is done properly, which is hopefully ensured with permits being pulled, it can save a home and upgrade an entire neighborhood

Anyone can get an estimate for upgrades, an inspection and a bank or realtor appraisal for a few hundred dollars, and if they don’t act prudently to know the value of what they are selling, it’s really not the buyer’s fault.
 
I happen to know prices quite well for a certain used product. Sometimes I tell the people what they don’t know, ie. that they should take their ad down and sell it for more at a particular time. (They never thank me for this information.) Other times, I buy it at the lower price and see if I can flip it. Once I had to sell for less than I bought it for, so I do take some risk that I’m wrong.

When my brother played the stock market for a year, I questioned whether he was adding value to the world. In the end, he lost some money and the game was up; he had to get a real job.

Of course, all business owners are somewhat immoral in my view. The first thing s/he needs to do to be successful is pay her/his staff a lousy minimum wage. Then she has to bamboozle them with Christmas parties to let them believe she cares about them.The minute there’s not enough work, she lays them off instead of taking from her profits to tide her worker over. And now business owners want a lot more than the ten per cent profit that kept them happy in the past, or the current interest rate plus a few points.
 
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If the OP is talking more about the flippers who are primarily taking advantage of rising housing costs in an area, then IMO it is immoral. People need somewhere to live, like they need food. Those house flippers are a bit like the powerful in a famine-stricken country who use their position to make a profit from food sent there as aid for the hungry.
 
Jen95 said:
Seems okay to me unless the work is shoddy.
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This is key. Most of these morality questions can be answers with an “it-depends.”

There’s plenty of reading out there on how to flip homes ethically.

Real estate laws have fortunately tightened up quite a bit. For instance, in many states, someone can get sued for just painting over mold on walls.

The more ethically flippers conduct business, the more their trade can continue. It benefits everyone.
 
But that’s my point. The buyer is taking advantage of the seller’s imprudence. She or he could be warning them to be prudent.

Also, once you have a few million dollars combined with a strong insight into the market, buying houses becomes less and less financially risky.
 
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Exactly, they’re capitalizing on their specialized knowledge. Nothing immoral in that.
 
What would be wrong with it? I don’t have time to get my house ready so it can be more attractive to a long-time owner. You think you do. You take a gamble, pay me cash now for my property and see if you can do better than I did.

There’s nothing immoral about being the “middle man.”
Lara said:
Or let’s say you tell your sweet old aunt that you need a car and she sells it to you for a low price because you’re family. Then you turn around and sell it for double the next month. Should you give her the profit? Were you acting immorally?
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If you convinced her to give you a good price because you needed a car, you had better have an understanding about whether it is your car to sell if you want to or if she would expect you to give her the right to buy it back if you decide you don’t want it.
 
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My friend once told me her mother, who mended clothes, would charge $8 to unstitch the big, loose stitches that keep pockets closed on business jackets until they’re sold. All the mother had to do was tell the people–who were ignorant of sewing–“Here, look. Pull this thread here and your problem is solved/ pocket will open.” I thought it was immoral that she didn’t.

That’s an example of specialized knowledge.
 
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Lara said:
When you watch shows about flipping houses, do you think it’s immoral?
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There’s nothing innately immoral about receiving wages for labor … or watching shows on it.

As long as - deceit is not involved.

=
 
Obviously I don’t think it’s immoral to just watch the show. lol. I’m talking about the subject of the show.
 
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