Flip or not?

It's becoming more and more difficult to find attempted property flips in Orange County. Then again, TLC did just recently re-air an episode of the increasingly irrelevant "Flip That House" that featured a local RE agent and a $1-million+ Aliso Viejo property.

Flips-in-the-making used to be easy to spot. They were the ones that had changed hands in the past few months, and were listed for way more than the previous sales price. They also had some predictable keywords in the listing, like "completely remodeled," "upgraded" and "WOW!!!!!" OK, the third one not as much.

Now, the vast majority of properties that have "changed hands" recently are foreclosures that went back to the bank and are now REOs. The attempted flips are few and far between.

Is the following property an attempted flip? See what you think. Many factors point to "yes," but if that were the case, a few important things about it just don' t make any sense.

24132 Ankerton Drive, Lake Forest
Asking price: $618,888
Purchase price: $585,000
Purchase date: 6/20/2007
Original asking price: $619,000
Days on Redfin: 21
From listing: Great home recently upgraded. Kitchen has all new appliances. 3 bedrooms and 2 bathrooms. Living room with marble fireplace. Large backyard with patio great for entertaining. 2 car attached garage. Close to near by parks, schools and shopping

On the surface, one might think it would have to be a flip. The price is above the last sales price; the use of "recently upgraded" in the listing; improvements include new kitchen appliances; good maintenance of outdoor space (check out the lawn in the backyard). I also could not find it in any recent foreclosure reports, though I may have missed it.

Then again...One of the bedrooms pictured is painted dark blue. Normally, rooms are painted neutral colors. One huge factor that argues against this property being flip is the price. Even if the seller got full asking price, they'd lose $3,245.28, assuming 6% sales costs. In fact, they were never in a position to profit, considering the original asking price was only a bit higher.

And, if you factor in holding fees and renovation costs (assuming they were the ones who did the upgrades), things would be even worse. Even if the owner were an agent or broker (assume only a 3% commission to buyers agent), their profit margin would still not be good, particularly because of the holding and renovation costs.

As a flip, this property is not worth the effort because the profit margin is too small and the risk is too high.

Is this instead a very unfortunate person who was planning to stay in the property long term, but their plans have since changed? That could explain why there were upgrades - they might have happened when the owner thought they were going to stay. Now, they're only adding to the costs of getting out.

One more wrinkle: Some more digging on Google turned up that the property is (was?) listed on an agent's Web site, for a different price ($599,000) and under an MLS number that no longer exists. The listing description is also completely different and conveys a completely different tone that is more likely to be found on an REO: "Located on a large lot in the interior of the tract. Newer driveway. The house has been enlarged to offer a master suite and larger secondary bedrooms as well as a den. This is one of the lowest priced single family homes in the area and offers ample opportunity for a new owner to create "sweat equity" by improving the property."

In conclusion: I have no idea what's going on. Thankfully, the weekend is upon us. No more thinking required until Monday...