After the housing market meltdown, home values sank faster than we’ve ever seen. Most people were afraid of “betting” in the housing market and stayed away from buying or selling homes.
However, there were those that just knew that the market would eventually come back from the bottom. These investors bought homes, “flipped” them and now are selling them at prices reflecting the market rebound.
If you fell in love with a flipped home and are thinking of buying it, there are several things you must keep in mind.
Things to Keep in Mind When Buying A Flipped Property
- If you’re thinking about buying a flipped home with an FHA loan, most lenders will require you get two separate appraisals and wait a period of 90 days after the last sale date (i.e. you can’t make an offer on a home that was sold less than 90 days ago).
- Don’t be fooled by the fresh paint and new carpet, make sure you inspect for other important things such as:
- Mold – If the home has been sitting empty for a while, you want to make sure that there isn’t any water damage and mold in the home.
- Furnace – Not only do you want to make sure the furnace has been replaced or is in great condition, but if the investor has replaced it, make sure that the furnace blower’s fan is not completely covered with drywall dust.
- Air conditioning – You definitely want to check that the AC is in good shape or has been replaced. People tend to forget to check the AC during the cold months.
- Electric system – As with any home, you want to make sure that there are no major issues with the electrical system.
- Insulation – A lot of times investors don’t spend the money on replacing attic insulation, adding an expense for you once you move in.
- Windows – Some flipped homes do have new windows but because the investor was trying to save on costs, the windows may not be the right size or are of poor quality.
- Plumbing – Since no one has lived in the remodeled home, you may find leaks once you start using the drains. Also, check tiled floors for any leaks, since these have higher risk of developing them.
- Roof – Ideally, the investor replaced the roof (assuming this is an older home and hasn’t had the roof replaced before). If you only see patches of shingles replaced, then it may be a red flag and you may end up having to replace the roof soon after moving in.
- Pests – Since flipped homes are usually older homes and have been unoccupied for a while, the risk of pests can be higher. You want to make sure there are no pests, especially termites, in the home.
- As you can see from the list of things to inspect above, always get a home inspection when buying a flipped home. It’s even more important with a flip because you want to make sure the investor didn’t cut any corners when remodeling the home.
- Check for permits! This is important because you want to make sure that all the work that was done is up to code and done properly by a professional.
- Other signs to give you an idea of poor workmanship are:
- Badly designed kitchens (E.g. drawers not able to open or close properly)
- Nail holes not filled
- Cabinets that are too small for the room
- Countertops that are not secured properly
Even though this list may look a little scary, don’t let it discourage you from buying a flipped home if it’s a good buy and has been remodeled the right way. Also, these things mentioned above can be seen in private-owned homes as well. In other words, just because someone has been living in a house for a long time and has done some upgrades, it doesn’t mean that the workmanship is better than in a flipped property.
Do you have any other advice for those considering a flipped home? Share it with us!