Working with many first time home buyers, there is an appeal to buying a home that has been flipped! What does that mean? Most of the time, it is a home that an investor purchased and went in and completely redid the home! It may have been a foreclosure or a short sale or one of those "We Buy Ugly Houses" houses! Most of the time the investor purchased the house as is, the house needed a lot of repairs and updating, and the investor did all the work!
When the house then comes on the market, it is completely redone - there is a new kitchen with nice granite & stainless appliances, there are new baths with new vanities & floors, there is new hardwood floors throughout - and the house just shines!
There is something very appealing about buying a house where everything has been done for you - is your taste - and that you can just move in and place the furniture!
But, if you are buying a home that has been flipped, it is important that you do your due diligence on the house! There are some really good investors who do a fantastic job on the houses they are flipping - but there are also investors who do a very shoddy job on their flipped houses - and most of the time you don't see the shortcuts and bad work that they done because you are so taken with the new kitchen and baths and refinished wood floors!
So should you stay away from a home that has been flipped? Absolutely not! These can be some of your best buys! But you want to do your due diligence on the house to make sure you are not inheriting problems down the line! Here are some suggestions on how to make sure you are not buying a pig with lipstick!
* Make sure all work was done with the proper permits! I once showed a house to someone - MLS said that there was new 2 zone central air where there previously was no central air, and there was a new master bath added to the house (new plumbing, new electrical, etc) - both items needed to be permitted by the City of Richmond! However, the city had no records of permits issued for either of these items!
* Ask the seller's agent to provide a list of all the work that was done, as well as receipts for the work! This will tell you just what you are paying for, but, more importantly, it will let you know exactly who did the work and if they were licensed contractors!
* Check for mold & old wiring in the attic and the basement! I once showed a house that had a finished basement - it was one of the best things about the house for my buyers! But looking at the basement, we noticed that there was what looked like mold in the basement! And, as it turned out, it was mold - the seller had put up wood paneling on the walls without doing anything to properly keep the basement dry (and Richmond basements do tend to take on moisture)!
* Look at the quality of the work that you can see! Look at the caulking around the tubs and the backsplashes to see if that was done properly! Look at the roof to see if the roof was patched rather than replaced! Turn on the stove to make sure it works properly! Does the quality of the renovation look the same throughout the house? These are all tell tale signs of the quality of the renovation!
* Make sure that there is good title to the house! Sometimes I have seen where the names showing on the tax records do not match the owner shown in MLS! So if you are buying a flipped home, it is very important that a title search be done to make sure that the current owner actually owns the house, has good and clear title to it and can legally sell the house to you!
* Have a home inspection done! In a market like this, where inventory is very very low and it is not unusual to have multiple offers on homes, never skimp on having a home inspection done! You want to know that the major things in the house (electrical, plumbing, roof, appliances, fireplace, etc) all work and that there are no issues you will have to deal with after closing! Even if the seller is not willing to do the repairs, you want to have the right to walk away from the contract if these items were not properly done!
* Make sure you can get a loan on the property! Depending on the type of loan you are getting, it is very possible that the lender will require 2 appraisals to be done - just to make sure that the price the seller is asking can be justified! But if you are getting an FHA loan, the lender is going to require the 2 appraisals if it has been less than 6 months since the seller purchased the house! But FHA will not allow you, the buyer, to pay for the second appraisal - which means the seller must pay for that appraisal! Some sellers will agree to pay for the second appraisal - some won't! So make sure that you are able to get a loan on the property before writing up the offer!
Buying a flipped home can be a good deal for many home buyers in the Richmond Virginia area - but never neglect to do your due diligence on the house! And make sure that the big things have been taken care of by the seller!
Thinking of buying a home? Thinking of selling your home? Have a question? Feel free to contact me - I would be happy to help! Have a great day!