Buying a Flipped House – Caveat Emptor
The granite counter tops and brand new stainless steel appliances… The shiny hardwood floors… The newly tiled bathrooms with jacuzzi tub.. oh! That move-in ready home….
These flipped homes demand good value in a market with low supply of homes. Investors are flipping houses like its 2006 again!
However, with the flip frenzy, licensed contractors are sometimes not available on timely fashion. And some Flippers make do with the cheapest available contractors to push their project along – begets to horror stories abound of house flips that hid major problems, only to be revealed months after the new homeowners moved in.
Points to consider while buying a Flipped House
- Every home has a history:
Check details like when the house was bought by the flipper and how much time did they take to finish the renovations. Submit the OPRA request form for current and prior permits on the house. The permits opened and closed will give an idea of what work was done on the house and when. It will also give an idea if any work was done without permits (which could be a headache later on). Was the house only cosmetically touched upon or whether major structural changes were made? Were the electrical wires and plumbing drains replaced with new ones?
- Tour the house with a skeptical eye
Don’t focus entirely on your favorite details in the updated kitchen and bathrooms. Dig deeper. Are cabinets of good quality? Are cabinets properly organized with good shelf space? Check cabinets beneath sinks to see for drains/wiring etc. Are they spray painted to hid aged out stuff?
Check the unfinished attic. It could reveal what could be lying behind the new drywall. Check the utility area. Are the furnace and hot water boiler newer? Check for rust on pipes to see if they are old!
I showed few flipped houses to my Buyers. First impressions were usually ‘wow’. We slowly started realizing that the flooring was merely fancy laminate that was soft at few places, the basement walls were painted white over cracks and mold, the main beam running across the basement was very old (would have required sister joists for additional support), dangling soffits, leaking faucets and shower enclosures etc.
- Get yourself a Warranty
Request for warranty on new appliances. Negotiate a 1 year homeowners warranty OR buy your own. A lot of times, these homes are vacant and the homebuyer would be the first one to experience and correct every fault with the house. “No one has lived in a house with a brand new roof to tell whether it leaks or not”!!! It would be great to have a warranty
- Hire an Inspector (or specialist)
Get a professional inspector to inspect the home for leaks or major problems. Just because a home is new, doesn’t mean it is free from troubles.
However, even after the due diligence, anything can happen. I came across 2 instances where the sewer line connected to city main choked and backed-up. Depending on where the blockage occurred, clean-out may be paid by City or the homeowner. With today’s technology, a licensed plumber can do a video camera inspection of the main sewer line to see if there are mechanical defects in the pipe, which most home inspectors don’t see.
Sometimes, structural problems, termite damage, water damage – could be just covered up by a new layer of drywall! A house that has been gutted to its studs and constructed, has a better chance of new wirings, drains, utilities, roof etc. City building inspectors, at least in areas I help Flip, are pretty picky about bringing all work to current code.
There are no rights or wrongs. Look around.. observe.. It could be a really nice home to move-in or it could be a nightmare.