We love the multitude of TV shows, taking a worn-down home and flipping it. Seeing an old house tuned up always grabs my attention. Hands down, before and after pictures are my favorite part! Have you recently fallen in love with a “flipped” home? Does the idea of moving into a cleanly renovated space excite you? Before you leap into closing on the house, there are questions and precautions you may want to consider.
“Flipped” or “rehabbed” homes are properties that real estate investors buy to renovate and sell for a profit. Sometimes these homes have been secured after short sales, foreclosures, surviving relatives, or at auctions. For real estate investors, part of the profit depends on how fast and affordably they can renovate the property. There’s even more pressure to make sure a home is ready to sell as fast as possible in seller’s markets.
A flipped home is enticing and, many times, a solid investment. There’s nothing wrong with purchasing a flipped house, but before you sign on the line, you will want to ensure you know a bit about the home’s history. Make sure to dig a little deeper.
Before Buying a Flipped Home
Here are some questions to ask:
1. Find out the condition of the house when the flipper purchased it. What was the shape of the home before the renovation? Was it just outdated? Vacant? Did squatters trash it?
2. What deficiencies, damage, or other defects did the home have when the flipper bought it? Ask for a list of issues.
3. Who did the work on the house during the renovation? Contractors? Handymen? Did the flipper do the work personally? Were the appropriate permits secured? Are there invoices that detail the work completed and the money spent on the repairs?
4. Was anything left “as is”? What issues were left uncompleted that may have been deemed too small or not vital to the renovation?
5. What was the legal history of the transfer of ownership? Short sales and foreclosures might have legal obligations on the flipper or other liens.
All State Insurance has provided a great article on this topic. All State advises having an inspection to determine if shortcuts were made. Along with this, they suggest researching the history of the house and researching the seller. Is their business flipping homes? Is this their first-time flipping homes?
You shouldn’t shy away from a flipped home that you love, but don’t go into the situation blind. I have experience working with buyers who have purchased flipped homes, and I’d be happy to help you navigate the questions. Let’s talk (928) 830-6976!