When it comes to Flipped Houses – Buyer Beware!
If you are in the home buying market for more than 20 minutes you will have undoubtedly seen the flipped properties that look absolutely spectacular. From granite counter tops to high-end appliances; it looks like the perfect house.
However, it’s important to remember the contractor is flipping the house to make a profit – and the more profit, the merrier – for the contractor.
As a result, some contractors will do a fantastic job making the home presentable, but skip doing things that need to be done if it won’t be obvious to a potential buyer.
A couple who recently bought a 3 bedroom, 3 bathroom row house just outside Washington D.C. for $630,000 learned the hard way. About six months after they had closed on what they thought was their ideal home, they were contacted by the D.C. housing inspector. The inspector told them that his office was investigating the contractor who had flipped their home along with several other homes, and he needed to inspect their property.
The inspector visited their home and when he left he presented the home owners with pages of items that needed repair – to the total of well over $100,000!
Items that were identified (in-part) included:
- The addition on the back of the unit that included two additional bedrooms and two bathrooms did not have permits to be done and would not have been approved had the contractor filed for a permit.
- Electrical wiring was not up to code.
- The beautiful wood flooring that was installed covered up termite damage that was not treated or repaired.
- Parts of the property had serious mold issues that had not been treated, but simply covered up with dry wall.
Because the flipper had never lived in the property he is not required to submit a Residential Property Disclosure identifying all of the issues in the house, The contractor, however, should have reported the issues to potential buyers as latent defects.
Latent defects are a “…fault in the property that could not have been discovered by a reasonable thorough inspection before the sale” but that the seller was aware of.
Unfortunately, if the current home owners decided to sell the property, they would have to disclose the issues now that they are aware of them.
Here are some tips to help ensure the property is what it appears to be before you sign on the dotted line.
- Make sure the flipper provides a list of those who worked on the property, such as electricians, plumbers, etc. Make sure each of the contractors are licensed.
- Request a list of work that was completed, including any warranty information.
- Check with local officials to ensure permits were filed.
- Have a professional termite and mold inspection along with a home inspection.
- Make sure the housing authority has issued a certificate of occupancy.
In a hot market, a flipper may resist providing this information because he feels someone may buy the property without questioning anything. That should be a red flag to you.
If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.
As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.