Buying a flipped house: What you need to know

Even if you haven’t watched one, you’ve probably heard of the home makeover shows where professional house flippers make older homes gorgeous and modern. These shows make house flipping look easy and exciting, and the results are often jaw-dropping.

You might wonder if any flipped houses meet your search criteria in your area. And if you find the flipped house of your dreams, should you buy it? To answer this question, you need to know what to look for before you decide.

What does flipping houses mean?

House flipping is when a real estate investor buys a house intending to increase its value through updates and repairs. After the change, the investor will sell the home for a higher price. The results can be pretty impressive, but that doesn’t mean you should pack up everything and make an offer.

Should you buy a flipped house?

Buying a flipped house can be a great way to get into a recently updated home, but it can also come with some risk. Only you can determine whether buying a flipped house makes sense for you.

Advantages of buying flipped houses

In some instances, buying a flipped house can make sense. Here are some reasons why you might consider purchasing a house that’s recently been flipped.

Modern aesthetics and appliances

One of the most obvious advantages of flipped houses is that they are newly renovated. This means it’s more likely your home will have a modern style and up-to-date appliances. Remember, even if they are passionate about design or working on fixer-uppers, real estate investors flip houses to make money. This means flipped houses are often competitively priced and located in an area with a good real estate market. After all, investors want these homes to sell quickly and to be worthy of their investment.

Move-in ready

Another advantage is that flipped houses are usually move-in ready. This could mean that once you move in, you won’t have to worry about upgrading appliances, repainting the walls, or fixing electrical and plumbing issues. Instead, you’ll be able to get right to unpacking and making your new space feel like home.

No closing delays

Buying a flipped house also means that the home is ready for immediate occupancy. Often, sellers can’t financially swing moving into a new home before their current house sells. But investors rarely live in the homes they’re trying to flip, so you don’t have to wait for the previous occupant to move out.

Drawbacks of buying flipped houses

There are risks to buying a flipped house as well. When you make a purchase this significant, you must do your due diligence before taking the plunge. Here’s what you need to consider.

Risk of shoddy craftsmanship

While the house might look brand-new on the outside, it’s important to make sure the upgrade meets the legal building standards of your city. Even if the renovations are up to code, they still might not be as high-quality as you’d like for a home you plan to live in. Many house flippers are good at what they do, but it’s also possible that an investor, especially one new to the business, is simply covering up old issues with cosmetic fixes. Consider verifying the contractors who completed the work on your home to get an idea of the effort they put into the renovations.

Potential compliance issues

Another potential issue is compliance. There are rules and regulations around how structures can be built, and that includes additions to existing buildings. Yes, you might be getting all-new electrical and high-end appliances, but did the developer file the correct permits for the additional bathroom? If not, a housing inspector who’s more than willing to point out these issues could visit you soon.

As legal owners of the new home, you’re responsible for bringing your home up to code. That can add thousands, maybe even hundreds of thousands, of dollars to the cost of your new home.

How to identify a flipped house

At first glance, identifying a flipped house might seem tricky – but if you know what to look for, you can spot the tell-tale signs.

Look up the property’s history

First, you’ll want to check the property history. You can find transaction records through your county assessor’s office. Did the current seller buy the house within the last year? If so, there is a good chance that house has been flipped.

Check who’s selling

Another thing you can do before inspecting the home is to look into the seller. Is it a corporation or LLC? Are there multiple properties under the seller’s name? If so, the house is probably flipped.

Examine the property

Once you’re at the property, note the areas most likely to be renovated: bathrooms and kitchens. Look for fresh fixtures and tiles and updated appliances in these areas. You may also be able to find additional information by chatting with neighbors.

What to look out for when viewing flipped homes

If you go to view a flipped house that you’re potentially interested in buying, you’ll want to be extra vigilant. Here are some tips to help you vet a potential home.

1. Be skeptical

When you view a house that’s been flipped, look at the details. Don’t get fooled by flashy upgrades or trendy designs. If the house seems too good to be true, it probably is. Be wary of words like “custom” and “luxury.” They are often misused, and the definition changes depending on who is making the claim.

2. Make a viewing checklist

There are a few tips and tricks for spotting shoddy workmanship on a flipped house. You may want to consider making a home buying checklist to take with you on your viewing so you don’t miss anything.

When you view the house, walk it slowly with your checklist ready. Pay special attention to areas where shady house flippers are most likely to cut corners, like windows and doors.

3. Verify the contractor

It’s important to make sure the home seller used a licensed and reputable contractor when renovating the house. If not, you could end up with a house that’s not up to code, and that could cause problems ranging anywhere from having to pay for repairs yourself to accidents caused by dangerous handiwork.

A seller who has been taken advantage of by a dishonest or unskilled contractor will pass the consequences of that mistake on to the next homeowner, which could be you.

4. Review permits

To avoid legal trouble after purchase, verify that the house has the proper documentation. If work has been done without the proper permits, that’s probably because it’s not up to code. Reviewing the permits could also let you know if there are any outstanding fees on the property. To get started, visit the city’s website where the property is located. If these records are not kept online, try calling the building or development department to see if someone can point you in the right direction.

5. Work with a home inspector

When buying a home, it’s always important to find a third-party home inspector to examine elements such as the HVAC system, drywall, electrical wiring and plumbing. These inspectors will be able to easily spot signs of shortcuts and other issues that the average person might not notice. Follow steps to verify the house’s structural integrity.

The bottom line: Do your research before purchasing a flipped house

With careful consideration and due diligence, buyers can take advantage of the benefits of a flipped house and avoid the risks. It’s all about being informed and finding the right property for you.

To get started with the home buying process and get ready to make an offer on your dream house, start your mortgage application online today.