Buying a Flipped House Can Come With Costly Hidden Problems, So Take These Proper Precautions

Brand new homes often aren’t in the budget, or even available in certain areas, which makes finding a totally renovated or updated home in any price range appealing to many buyers.

While some people might cherish finding a house that needs updating, and becoming a weekend warrior taking endless trips to the home improvement store, most buyers would prefer to buy a house where someone else already put in that effort.

So, when you’re on the search for a home and find one with a brand new kitchen, updated bathrooms, and a fresh coat of paint on every wall, there’s a good chance you and every other buyer in the price range will jump at the chance to buy it.

But before you get swept up in the heat of the moment, you might want to figure out if the updates and renovations were done by someone “flipping” the house for a quick profit.

Some House Flippers Just Slap Lipstick on a Pig…

A recent article from realtor.com paints a pretty bleak picture of buying a flipped house based upon the experience of a Pennsylvania couple. On the surface it looked move-in ready with a remodeled kitchen and updated appliances, with a new roof and siding on the exterior. But unbeknownst to them, the work had been done by a house flipper, and there were some issues lurking below the surface.

Almost immediately upon moving in, they found electrical issues such as lights and outlets that didn’t work correctly… or at all. Then a drain pipe flooded their basement. And to top it off, the HVAC wasn’t strong enough to heat or cool their second floor. All told, they were looking at having to spend nearly $20,000 out-of-pocket to fix the problems.

Sadly, this isn’t entirely surprising. The key to flipping a property is to do it as quickly and cost-effectively as possible, so the potential for corners to be cut is definitely high. It’s easy for a house flipper to spend their time and money on the things that buyers will see and fall in love with, as opposed to the guts of a house which aren’t as sexy or exciting to the buyers — especially since that type of work can be more expensive and time-consuming.

In their defense, most flippers don’t actually live in the houses they renovate, so they may not even know about issues that aren’t obvious to the naked eye.

Whether flippers do it deliberately or not, enough people have found issues after buying a flipped house that it has given them a bad reputation, which gives many buyers (and real estate agents) a legitimate reason to be leery of buying one.

But That Doesn’t Mean You Shouldn’t Buy One…

While it can’t hurt to have a healthy bit of skepticism if you fall in love with what appears to be a flipped house, there’s no need to avoid them altogether. A flipped house can be an amazing opportunity to buy a move-in ready house and avoid the time and cost of updating on your own dime and time.

Just because a house is being sold by a flipper, doesn’t mean there will be costly issues waiting to happen once you own it. You just need to take proper precautions to make sure a house that is being flipped doesn’t have issues before you own it…

Rather than rule them out entirely, here are some tips to help you avoid buying a flipped house that’s potentially riddled with problems:

• Do some research on the flipper. House flippers come in all shapes and sizes. You might find completely different levels of quality between one who does it often and performs quality work, versus another who just watched a Youtube video about flipping houses for profit and is giving it a try for the first time. Ask for references and examples of their previous work. Look for any reviews or complaints you can find online. The insights you gain from doing this will help you either feel more confident, or guide you to look at the house with more scrutiny before moving forward.
• Hire a home inspector. No matter what home you’re buying you should always hire a professional to do a thorough home inspection, but it’s even more important when the house is being flipped. Inspectors can’t see everything, especially if it’s something behind walls or underground, but they know what to look for and can usually see telltale signs of most major problems.
• Check for permits and approvals. Ask the seller if all of the work was done with proper permits and approvals, and to provide you with proof. If the seller isn’t willing or able to do so, or you just want to double check for yourself, go to the local building department (or equivalent authority) and ask to see any permit requests and approvals for the property you’re interested in buying. Cosmetic work, such as painting or refinishing hardwood floors, for example, usually don’t require permits or inspections by the building inspector. But any major renovations or repairs usually require permits and inspections.

Doing those things should help you catch any red flags, or give you some assurance about the flipped house you want to buy. But keep in mind that you could find yourself dealing with a surprise issue with any house you buy, whether it was flipped or not. It’s not necessarily something the previous owner deliberately hid from you. They may not have known the problem existed, or was about to become a problem.

So, as long as there are no glaring issues or red flags, buying a freshly renovated flip house shouldn’t be any more risky than buying any other house, as long as you do your due diligence before buying it.

The Takeaway:

Flipped houses offer move-in ready convenience but can hide costly problems. While some flippers cut corners for profit, not all do. Research the flipper’s reputation, hire a thorough home inspector, and check for permits to avoid surprises. With proper precautions, buying a flipped house can be as safe as any other.