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Tunatura / Adobestock
Most consumers are familiar with the concept of house flipping, thanks to a variety of reality shows. Smart, seasoned investors will renovate a house to be move-in ready and then sell at tight profit-margins to make a quick sale. But how does a buyer know if a flipped home is a solid buy or a real rip-off? When it comes to buying a flipped house, asking these three big questions will help ensure you don’t "flip out."
1. Can I get a Copy of the Property History?
As a buyer, it’s wise to find out how many times the home has been sold in the past, as well as the history and prices of those prior sales. Incredibly low sales prices can indicate there is more wrong with the property than what meets the eye. Invest in the help of a seasoned real estate professional to help you acquire crucial property history information before submitting an offer.
In full disclosure states, the law requires for buyers to be provided with a statement from the seller releasing property information for the past several years. However, not all states are full disclosure states, so it pays off for buyers to get to know real estate law for their local area.
2. What Renovations Have Been Done?
The saying "beauty is only skin deep" can be applied to flipped houses too. Some investors will only spend enough money to renovate the cosmetic interior of the house, but ignore major repairs for serious structural problems. Investors who do this are hoping to rope in a buyer and get out of the deal with cash in hand before anyone is the wiser, making a property like this a bad investment.
Buyers should hire their own home inspector to evaluate the condition of the home before submitting a contract to purchase. Inspections not only evaluate the condition of completed repairs, but also what bigger problems might be lurking underneath the surface.
3. Do You Have Permits?
Good investors will obtain permits for any work done on a property more complex than a cosmetic facelift. If permits do not exist, this can cause issues with closing on a property and can result in additional fines if buyers enter into a home purchase contract sans required documentation. Seek out professional legal and real estate advice; call your local city municipal office to find out what work requires a permit and what doesn’t before buying a flipped house.
A flipped house could be a solid buy, or it could be a cosmetically appealing home disguising larger unseen issues. Buyers should approach these home sales with caution and verify all documentation.
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