Head over heels for a flipped house? Here’s how to make sure you’re getting a great deal.
Many home buyers wrongly assume that a newly renovated home is, well, just that: new. They perceive it as move-in ready and free from hassles. The newly renovated home typically pulls in top dollar, because the buyer assumes it is perfect, turnkey and ready to go.
Although house-flipping shows on television often make the process seem easy and feature beautiful homes with happy stories, they don’t follow through to see how the home withstands daily use, weather patterns and typical wear and tear.
Some contractors or property flippers want to move on to the next job as soon as the first one nears completion. Others may uncover unforeseen expenses that send them over budget. As a result, their work may be rushed or subpar.
If you’re buying a flipped house — one that the seller purchased less than one year earlier — the following tips will help ensure you don’t get any unpleasant surprises after closing.
Pay attention to details
As tempting as it can be, try not to get caught up in the excitement of new appliances, marble baths and other fancy bells and whistles. By looking closely at the details, you can learn a lot about the quality of work done on the property.
Be on the lookout for telltale signs of rushed worked such as:
- Light switch plates that aren’t flush with the wall or are at an angle.
- Crown molding that isn’t completely matched at the corner.
- Gaps between the countertops and the wall.
- Gaps in bathroom tile.
- Doors or cabinets that don’t close tightly.
Cosmetic mistakes could be an indicator of larger issues that can’t be seen with the naked eye. If the flipper was sloppy on the small details, pay extra attention to other areas such as the electric panel, the water heater’s gas line, and plumbing connectors.
Get an inspection
Because many buyers assume a newly renovated house is in like-new condition, they think it’s okay to skip the inspection. That’s not a great approach, however.4 Keys to Buying a Flipped House Click To Tweet
An inspector can check the contractor’s work, and may find issues buyers would miss. For example, were renovations done to code? Did the contractor cut corners or do the bare minimum in places because of a tight time frame?
Sure, the town/city likely would have had to sign off on the renovations, but city officials are only looking at health and safety issues. The home inspector can check the house from top to bottom. It’s worth paying for an inspection to ensure the home is perfect.
Double your due diligence
When buying a flipped home, it’s more important than ever to review the disclosures. Did the contractor take out permits for the work? If so, were all the permits signed off on?
If you aren’t given copies of all the work approvals or finalized permits, ask for them. If you don’t get them, look them up online or go to the local building department. Any permits taken out or applied for (and officially signed off on) are public record.
Never close on a home without making sure all permits were cleared. Otherwise, as the new homeowner, you could be on the hook for illegal or bad work.
Learn all you can about the flipper
Is the owner the contractor, and is he experienced? Does he have a good reputation in your community? Ask your agent about the background of the person who flipped the house.
Good investors have been at it for a long time, and their reputations precede them. A flipper with a solid reputation should have nothing to hide, and should be open and free with disclosures and provide you with documentation and warranties. Good home flippers want happy customers, too. They don’t want calls from buyers or attorneys a year later with liability issues or complaints about their work.
In the past 18 months, there has been a marked increase in the number of homes bought simply to be renovated and put back on the market. While the improvements may be done well, there’s also a chance the contractor or flipper cut corners or rushed through the project, simply to move on to the next one — leaving the new homeowner with a nightmare on their hands.
Flipped homes should always be double- or triple-checked for potential issues. Inferior work could end up costing you money and giving you headaches in the long run.