Four Questions You Should Always Ask When Buying a Flipped Home
Buying a flipped home is nothing unusual. The emergence of what seems like dozens of home renovation shows have turned flipping into somewhat of a sensation. Celebrity investors gobble up dilapidated homes, work their magic and present a finished product free of flaws and overflowing with excellent design.
But, that’s not how it always works out. For every high-quality flip, there’s bound to be a home rife with cut corners and shoddy workmanship. When my wife and I bought our first home this past May, the first real estate agent we used told us horror story after horror story of unknowing clients buying flipped homes, only to be hammered with unexpected – and expensive – costs within weeks of moving in.
Aside from feeling cheated, buying a flipped home with issues can be a serious drain on your wallet. For that reason, I reached out to multiple experts to find out which questions you should be asking as you consider buying a flipped home?
Question #1: Have the Renovations Been Permitted?
Cities and counties tend to vary in the regulations they have about obtaining permits for work done on a home. But, says Patrick Madigan, a Keller-Williams realtor in Raleigh, you can usually count on the same set of repairs requiring permits in just about any town or city.
“Most work related to the house’s structural, electrical, plumbing and mechanical systems – heating, cooling and ventilation included – will be required to be permitted,” Madigan said. “If you’re not sure what requires a permit, get a list from the flipper or listing agent of all the updates.”
Permits are the local government’s stamp of approval on the work done on your home — in theory, it means the job was done right and safely.
If it seems like too much work to make the phone calls and pull the permits, Ana Cummings, head of Calgary-based Ana Interiors and a frequent expert on the Homes & Lifestyles Canada TV show, says it’s worth it.
“It’s research well worth its weight because our homes are usually the single largest investment that we own,” she said.
Question #2: Who Were the Sub Contractors and Are They Licensed, Bonded ,and Insured?
Lance Marrs, a realtor at Living Room Realty in Portland, says this is one of the key questions that you need to ask as you consider a flipped home. The investor who bought the house most likely hired a contractor or a series of sub-contractors to renovate the home’s walls, floors, cabinets, electricity, heating, cooling, and more. Those workers are directly responsible for the quality of work and should be vetted before you buy.
“Inquired with the seller as to whether or not the sub-contractors involved with the flip are licensed, bonded and insured,” Marrs said.
A worker who is licensed, bonded and insured has gone through all the work of meeting local requirements for work standards and buying the necessary policies to protect the work he or she does.
But that’s not all you need to find out. It’s important to check with the local construction board to make sure the people who worked on your home are in good standing.
“Check to see if the owner or other key sub-contractors have any claims against them with the construction board,” Marrs said.
Another advantage to getting a list of the people who worked on the house is that you now have a database to which you can refer to in the future if problems arise, says Samantha Hancock, a realtor with RE/MAX Advantage Plus in the Twin Cities.
“Knowing who did the job can help determine the quality of the work and, if there are any issues down the road, you know who to turn to.”
My wife and I experienced this with the flipped home we bought. During a heavy rainstorm, we noticed a water leak above the chimney. Because we got the name of the contractor who redid the roof and the chimney during the flip, we were able to contact him. He sent a team out to lay down some extra tar around the chimney and, when another leak popped up during Hurricane Irma, he came out again to reinforce the seal around the chimney.
It was definitely a tense moment for us as we came home to the tell-tale sign of streaked paint but it was a huge advantage to us that we could work with the roofer to get things fixed, free of charge.
Question #3: Can I See the Before Photos?
There’s a good chance you’ve seen the reveal moment on any number of flipping shows. The homeowners are stunned as they walk through a reborn home that looks nothing like what they were living in just a few months before. Just because the home you’re interested in isn’t on a TV show doesn’t mean that you can see what it was like before you bought it.
“Photos don’t lie,” Cummins said. “They will show what the state of the home was when it was torn apart. That way you can see if there were any hidden no-no’s that could come up to haunt you in the future with respect to pipes, wires, ductwork, etc.”
These photos can also help you determine the scope of work that was done on the house which is, in the opinion of Denver-based McHugh Construction‘s Brian McHugh, a crucial aspect to buying a flip.
“What was the scope of work for the home remodel/flip” McHugh asked. “House flippers are in this for the profit and knowing what was gutted, repaired, replaced or left will give you an idea of if they tried to really add value to the project by doing it right or if they tried to save as much as they could and cut corners.”
Question #4: Do the Windows Have a Double-Lifetime Warranty?
Flippers like to replace windows on homes for a few reasons. New windows increase the curb appeal, improve the home’s insulation and, in some cases, can meet the requirements of FHA inspections.
Michael Bohm of BM Windows in San Diego says that every potential buyer should ask if the windows come with a single-or double-lifetime warranty. Single-lifetime means that the windows are under warranty for the original owner and double means that warranty can be transferred to a second owner.
“If the windows do have a double-lifetime warranty, they will likely be covered if something goes wrong,” he said. “However, the home buyer needs to make sure to have the warranty transferred into their name, usually within 30 days of the sale of the property.”
A Few Other Questions You Can Ask: Small Repairs and Future Projects
The four questions listed here are some of the main questions relating to the big projects done on your home.
However, not all work done on your home could be considered “big”. For example, says Listing Door‘s Sissy Lappin, you can ask the seller if they’ve made any repairs in the last three years that cost more than $250.
“If a repair has been fixed, it does not have to be disclosed unless you ask,” she said.
Also, Madigan suggested the following creative question: “If I buy this house, what would you recommend for future projects?”
Presenting that question is “basically asking the flipper what they left undone while flattering them as an expert on the topic.”
Pay close attention to their response – if they balk or hesitate, it could be an indication that corners were cut.