BA: So the market is changing, and as investors adapt to those changes, what do you think the biggest mistake is that home flippers could make within this emerging scenario?

DS: That’s a great question. The biggest mistakes they make is to be uneducated, greedy, and emotional about real estate.

Let’s run through the average flipper’s mind for a second. They sit there Saturday morning, watching these TV shows and HGTV, and the amateurs portray themselves as experts. What I find is that it creates such a negative connotation around what we do for a living: house flippers are bandits; it’s illegal; you can’t do that; oh my god. Right? And the reason that message is out there is because so many people have winged it. It’s a wing and a prayer instead of a process and a formula, for want of a better term. And if you wing anything in life, you’re going to fail.

Instead, let’s also look at it this way. Not everything I’ve ever done as a real estate investor has been successful. But I most definitely have never gone into any scenario blind or uneducated. I’ve done my due diligence. So these folks sit there on a Saturday morning and wish and want and dream, and all of a sudden, they can borrow $60,000 from Uncle Charlie, because Uncle Charlie loves them. And the next thing you know they lost that $60,000. And then they create the “oh my god, house flipping doesn’t work” scenario. So there’s that one part being uneducated.

Another big failure is greed. It’s unfortunate to say that. I’ve found that I am much more successful in business by being of service rather than counting every dollar along the way. Such attitudes perpetuate more greed, because when you go into a greedy situation, you get bit, for want of a better term. And then you have to come out and be even more ruthless to compensate for your greed in the first place; it can most definitely snowball.

Don’t get me wrong. I like to make money. All right? Let me make that incredibly clear. But I do not like to make money at somebody else’s expense, whether it be emotional, financial, or spiritual. At the end of the day, do what you say you’re going to do. Do business with honesty, decency, and integrity, and you will get some longevity.

The final mistake is emotion. You’re emotional if you say, “I’m going to make this house look so phenomenal that everybody is going to fall in love with it.” Well, as soon as you say those words, you’re in danger, because you need to be able to market to the masses and not to your own personal likes or dislikes when it comes to putting an asset back in the market place.

So I would definitely say those three things: greed, lack of education, and emotion. If you have one or all three of those running, watch out.

Dave Seymour is a co-founder of CityLight Homes, a real estate investing firm in New England. Dave also founded the Flipping Formula, a national real estate education program with his business partner, Peter Souhleris; the CityLight Homes team was national recognized on A&E’s hit TV show “Flipping Boston.”