How to Buy a Flipped House
A newly renovated home typically pulls in top dollar, because the buyer assumes it’s turnkey and ready to go. Everything seems so easy on those home-flipping shows on TV, but there can be some unpleasant surprises after closing. Here’s how to buy a flipped house.
Focus on the Details
By looking closely at the details, you can learn a lot about the quality of work done on the property. Watch 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 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 the House Inspected
Some buyers assume a newly renovated house is in like-new condition, so they skip the inspection. Not a good idea. 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? It’s worth paying for an inspection to ensure the home is perfect.
Do Extra 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 Whatever You Can About the Flipper
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 with disclosures. They should 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 mess.