Are the Flip or Flop auctions real? We’ve addressed the question of the show’s overall veracity, but fans of HGTV’s gi-normous hit still want to know about the auction portion of each episode. How do Flip or Flop‘s economics work? Are they authentic–can you really get houses as cheaply (or efficiently) as Tarek and Christina seem to be able to?
Tarek has been especially forthcoming about the difficulties he and Christina faced when they were building their business back up following the real estate market’s collapse in 2008. He’s also acknowledged how inexperienced he was when it came to the details of flipping houses; in 2015, the Orange County Register wrote that he “would often drive around the Inland Empire scouting houses between 10 p.m. and 3 a.m. after addresses were announced the night before an auction,” in order to try and find any advantage, be it location, condition, or intangibles.
All the work has clearly paid off: Flip or Flop is one of HGTV’s most popular shows, and he and Christina now flip dozens of houses per year, all while maintaining a rigorous shooting schedule. It’s no longer a secret that Tarek and Christina are paid a per-episode appearance fee by HGTV, nor does the show attempt to disguise the fact that Flip or Flop, because of that rigorous shooting schedule, uses multiple construction crews on multiple projects at once.
Perhaps the clearest answer about whether the auctions on Flip or Flop are real comes from a Q&A session Tarek participated in with fans in Irvine CA when Flip or Flop was still airing its first season. One questioner put it to him point-blank: “Are some of the auctions staged? It looks a bit preplanned to me and I read that some of those storage unit shows “reenact” the auctions.”
Here’s Tarek’s full response (which you can read in context here):
Real estate auctions where we buy are real. I must have cashiers checks to buy cash( I lost a 20k check once that was a nightmare)!! I started a new business about 8 months ago buying rentals. I have purchased 11 so far with creative financing. I buy them cash than I get a blanket loan(1 loan) against 5 properties at a time at 10 percent interest at 65 percent Ltv. Even with the high rate I cash flow because I only buy really good deals. Have I lost, no I have not although I have been close a few times when I was new to flipping which was very scary. All I do all day everyday is study and buy real estate. I am starting to learn more about construction. The good thing is my construction team is good and honest and one contractor Battres construction runs all my jobs. It takes a good team to be successful. It took years to put my teams together.
It might also be worth pointing out that the network was initially attracted to Tarek and Christina because of their “real expertise.” Kathleen Finch, HGTV’s president, explained that the appeal of expertise makes the whole operation work: “We’ll go out and find people like Chip and Joanna Gaines, or Tarek and Christina El Moussa,” she said, “who are in the real estate or renovation business, and we’ll build a show around what they’re doing in their regular lives. If it’s a job that requires a license, they have licenses, whether they’re contractors or tradespeople.”
One thing we haven’t been able to find out is how much Flip or Flop‘s success has changed the auction dynamic: do Tarek and Christina get better deals than they might otherwise because they have the fame (and the capital) to scare other bidders away? Or is the opposite true: do they attract an unsavory lot determined to jack up the price on unworthy properties?
Until we can find the answers to those questions, satisfy yourself with more episodes of Flip or Flop! The show’s march continues Thursday nights at 9 PM on HGTV.
(Photo credits: Are the Flip or Flop auctions real via Instagram)