'Flip or Flop': Tarek and Christina list house at a price they knew it wouldn't sell just to cut heavy losses
On Thursday night's episode of 'Flip or Flop', house-flipping and renovations experts Christina and Tarek, had a very tough time dealing with a project they had at hand. They purchased a house in Fountain Valley, California, for $670k, however, this was not the only amount they were paying to gain possession of this house.
With a number of flips at play, they were short on cash, and in order to purchase this house they had to take out a hard money loan and they needed to pay $3.5k extra per month to the lenders as loan origination fees. With hard money involved, this also meant that Christina and Tarek were on a tighter budget because defaulting on it would mean losing a lot of money.
They did buy the house eventually but it was way too run down. The avocado tree in the yard that they considered to be a selling point of the house had overtaken the entire space of the yard. The fruits from the tree were strewn across the ground and lay rotting. To top that, the entire tree was infested with termites and that's when Christina and Tarek's biggest nightmare came true.
The entire exterior structure was affected due to termites and to repair that damage they had to shell out an additional $1800. Add to that, $12k to repair the house and another $10k to redo the main bathroom and $7k for the second bathroom repairs, Christina and Tarek had run over budget a little too much.
They had also set a timeline of four months to completely flip this house and be ready to list it on the market. However, with so many colossal damages across the property, they were unable to finish it in time and ran three weeks beyond their deadline. This also meant the money they had to pay extra on that hard money loan was now $17,000.
The house was finally ready and as good as new and ready to go on the market and now it was time for Christina and Tarek to work out the numbers. They had spent close to $100k on the flip. This meant the value of the house was raised from $670k to $765,400 but in order to break even, they had to list it for $822k. Tarek decided to take a risk and make money here and list it for $899k.
He knew that this would probably be one of those houses that would not sell for how much it's listed but they were hoping for the best. In a couple of weeks, the house was sold but their foresight was accurate and the only money they made on this project was close to $80k.
'Flip or Flop' airs on Thursdays at 9 pm ET on HGTV.