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Jim Klinge
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Posted by on Jan 12, 2018 in Jim's Take on the Market, Real Estate Investing, Thinking of Buying?, Tips, Advice & Links | 8 comments | Print Print

Buying A Flipped Home

With the lack of new homes available, the flipped homes have become a substitute for buyers who don’t want to do any repairs or improvements.

Here are four good questions:

Question #1: Have the Renovations Been Permitted?

Question #2: Were the Sub Contractors Licensed, Bonded ,and Insured?

Question #3: Can I See the Before Photos?

Question #4: Do the Windows Have a Double-Lifetime Warranty?

A good article on the details:

Click to article

8 Comments

  1. I would assume a flip will require nearly as much work as any other house. We recently bought a flip and the list of things that we had to do or still need to do include redoing the floors, working on drainage, repairing cracked grout, reinstalling cabinets and appliances correctly, fixing poor stucco, etc etc etc.

    Plus flippers don’t care about the little things, like making sure proper wall anchors are used, screws aren’t stripped (or screws are used at all), doors line up well, fixtures are square and properly positioned, that trim doesn’t perfectly line up, old windows removed instead of replaced, etc.

    With that being said, am I upset about the purchase? NO! The flippers still did more work and made more improvements than I could have afforded to do on my own, and I got the house I wanted (going in to it knowing we would certainly need to do much more work). And, unfortunately, it is sentiments like mine that let flippers get away with it.




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  2. I did a “walk-thru” of a 2-bed house in the day before the crash, when buyers had completely lost their collective minds. It’s like they were some kind of crazy cult.
    I had some questions, related to the house I figured should go for $475K, but actually sold for $800K, went thru my not-as-crazy mind. This is what the buyer should have asked herself:

    1) Should a completely renovated kitchen carry a faint cache of decades old bacon grease?

    2) Should the garage roof have a slight, but consistent slope to it, suggesting a sleepy elves lair?

    3) Should the living room have a very unusual ceiling made of thin wooden slats painted white? If so, might it imply unusual thrift concerns of the flipper?

    4) Does the half bath for the master bedroom look like somebody bought all the accoutrements at Home Depot, then proceeded to make them fit after the fact, and does the flipper proudly tell you, “betcha couldn’t tell this was the original walk-in closet!”

    5) Does it have a shed in the backyard that was converted into a nifty studio rental?

    6) All in all, does the “recently renovated” property seem to merit a specific slang-term descriptive, usually avoided for application for reasons of propriety our President unless the subject of Haiti is introduced?




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  3. One more question to add to the list: “Have all the subcontractors/workers been paid?”
    Even if the owner/flipper says yes, check with the appropriate city or county department that there are NO liens on the property.

    I heard of a nightmare for new owners about six months ago. The flipper had not paid all the subs, and now there were liens that the new owners were responsible for. You have nobody to blame but yourself if you don’t do due diligence. That’s why “buyer beware” is a cliche, especially with flipped houses.




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  4. Mold
    Termites
    Asbestos

    How in the world can any buyer see through the flip sheen to identify these three fatal aspects?




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  5. In this market with low inventory, how often is it that a flipper would not have permits or licensed bonded insured crew doing the work and when they don’t have the above, how often is it that they have to take a hit on price as a result ? I would think they would dodge the questions anyway , no ? Hopefully I am wrong which I may we’ll be .




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  6. On asbestos note the age of the structure, anything built before the 1980s and it is a possibility.




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  7. how often is it that a flipper would not have permits or licensed bonded insured crew doing the work

    My guess is 80% of the time = no permits and unlicensed contractors.

    No hit on price – if you don’t like it, don’t buy it. There are plenty of others who will.




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