An aerial view of the Rockybrook Estate in Delray Beach, Florida
Ten days after closing the most expensive mansion sale of the year in Delray Beach, Florida for $ 19 million, luxury real estate agent Senada Adzem received an unexpected phone call.
“The buyer called me to say they were going to sell the house. In all honesty, we were surprised,” Adzem said in an interview. She related how the buyer said his plans had changed. He and his family could no longer move to Florida.
“I’ve never been in a situation where the client invested so much time and effort buying a dream home – only to turn it over and sell it less than two weeks later,” said Adzem.
The client re-listed the property known as “The Rockybrook Estate” at $ 23 million, which was $ 4 million more than he paid for it a few weeks earlier. Adzem said she expected the unintended short-term flip to pay off.
“With the glowing luxury market in South Florida and the dazzling splendor of this resort-style property, we are confident that the seller has an excellent opportunity to make significant profit on this deal,” she said.
The scenario is not an isolated one. It is playing out in several U.S. real estate markets as the rising value of stocks and other assets has helped increase the purchasing power of the rich. Because many of these buyers want to live in a limited number of markets, luxury home availability can be tight.
The amazing room at the Rockybrook Estate in Delray Beach, Florida.
Delray Beach is a good example. The multimillion dollar inventory of luxury items in the city on Florida’s southeast coast is at a 10-year low, down 45% from 2020, Adzem said. In the first quarter, the average sales price for a luxury single-family home there rose by more than 53.7% compared to the previous quarter, according to the Elliman report.
“The low inventory of megamansions, especially in a booming property market like South Florida, has a positive impact on the seller,” she said.
The same day this home was sold at 14 Sandy Cove, Newport Beach, California, the buyer decided to put it up for sale.
Photo: PreviewFirst / Stavros Group
In Southern California, realtor Andy Stavros also had a buyer who turned into an accidental pinball machine. Stavros sold his client a $ 8.7 million home at 14 Sandy Cove in Newport Beach, California. On the same day it closed, Stavros said the buyer had decided to put it up for sale.
A view of the back yard at 14 Sandy Cove in Newport Beach, California.
Photo: PreviewFirst / Stavros Group
Stavros said his client’s plans changed because she saw and bought a bigger house in the area for $ 13 million. That meant she no longer needed the four-bedroom, eight-bath house she had just bought. When she asked Stavros to sell it, its price was $ 8.9 million.
The view of 14 Sandy Cove in Newport Beach, California.
Photo: PreviewFirst / Stavros Group
According to Stavros, his client didn’t want to make money, but it could happen. Potential buyers called before the listing went online.
“All at once I have several requests,” he said.
Deciding to sell a multimillion dollar property the same day you close it is usually not a profitable strategy. However, if the property is desirable and in a hot, low inventory market, an accidental house flipper can make a sizeable profit, according to Devin Kay, South Florida real estate agent.
“We are surprised daily by what things are being sold for,” said Kay.
Properties in demand
La Gorce Island is a small gated community that Cher, Ricky Martin, and Billy Joel once called home. Wyden said he intends to demolish the obsolete 4,500 square foot residence on the half-acre property and build a larger new home.
“Immediately after my contract was signed someone offered $ 400,000 for my contract,” said Wyden in an interview. He added that he declined the offer because he wasn’t a pinball machine. He and his wife planned to move to La Gorce Island permanently, and a few hundred grand profits wouldn’t change their plans.
“The intention with my wife was to build a house,” said Wyden.
However, soon after, the Wydens found they weren’t facing all the headaches of building a new house and instead made an offer for another house in South Florida. In February, they re-listed the unimproved property at 31 La Gorce Circle for $ 5.5 million – a whopping $ 1.35 million more than they paid for it.
“I thought people might say I was crazy or there might be a bidding war,” said Wyden.
Even Kay, the Wydens real estate agent, was shocked when he sold the property at full price six days after it was re-listed. “I had no faith in my head that we would get $ 5.5 million for it,” he said.
Wyden said, “I’m not in the real estate speculation business,” but just like the stock market, prices inevitably go up when demand goes up and supply goes down. La Gorce Island is only 2 km² so there is a very limited supply of houses and even fewer opportunities for demolition to develop.
“Due to a highly competitive market and the fact that there was nothing else for sale, we were able to turn it around with a profit of 33%,” said Wyden. He added, “I probably under-sold it. I could probably have got six [million dollars] for this.”
Wyden’s Flip outperformed the Miami Beach market, where luxury single-family home sales prices rose 20.2% quarter over quarter in the first quarter, according to the Elliman Report.
Not just luxury markets
And it’s not just luxury markets that see very profitable, unintended flips. Los Angeles real estate agent Spencer Daley made a surprising profit on a brief move in Idaho.
“These are prices Boise has never seen before. This is new territory,” Daley said in an interview.
Douglas Elliman real estate agent, 31, bought property in the town of Caldwell in September. It was a vacant three-acre lot overlooking the Timberstone Golf Course in an off-course subdivision about 20 minutes from Boise. Real estate records show he paid $ 120,000 for it.
“It wasn’t like I bought it and I was going to turn it over,” said Daley. “I bought the land to actually build on.”
He had the architectural plans and received a cost of about $ 380,000 to build it. Daley figured it would take a year to complete the project and then planned to bring the house to market for somewhere north of $ 600,000.
But three months after buying the property, Daley said something he never expected had happened: a buyer called with an off-market offer he couldn’t refuse. He sold the property for $ 250,000.
“It was more than twice what I paid for it,” said Daley.
Warren Johns is the local real estate agent licensed by Mountain Realty who was representing Daley. Johns said he helped another customer, also an accidental pinball machine, buy and sell a vacant lot on the same street. According to Johns, the buyer paid $ 95,000 for the lot and sold it for $ 250,000.
The accidental flip earned its client more than 163% of their original investment in less than five months.
The supply of real estate on a golf course in the Boise metropolitan area is low, said Johns. The properties in the Timberstone area also have an added benefit that also fueled demand. He said it was one of the few subdivisions in the region where raffle buyers can bring in their own contractor.
“Builders were unable to get into other developments controlled by other powerful builders,” so these builders came to the Timberstone subdivision as land buyers to develop and then sell. Both lots that Johns helped his clients turn over went to buyers who were builders, and he has a third lot in the subdivision that is now also under contract with a contractor.
Daley said a huge short-term gain made his decision obvious.
“If the win is there and the risk is less, I don’t know why you wouldn’t,” he said. “I made more money selling the property than selling a finished home.”