Clues that a flipped home has underlying problems

Key takeaways

• Flipped homes can hide poor workmanship, so buyers should closely inspect the exterior for signs of water damage, drainage problems, structural issues and shortcuts in roofing, siding and foundations.
• Inside, buyers should look past fresh paint and staging to assess material quality, plumbing, moisture, flooring stability, doors, windows and signs of mold or hidden water damage.
• Researching permits and property records and paying for a thorough home inspection are critical steps to uncover risks and avoid costly repairs after purchase.

Concerned you're taking a risk by purchasing a flipped house? The quality of rehabs can vary, with some investors taking shortcuts to finish a house on time and within budget.

Fortunately, there are telltale signs that a flipped home suffers from poor quality. Take note of these issues when considering one.

Walking around a house is a simple way to find structural problems, said Bert Miskell, the owner of BPM Heating, Cooling & Plumbing in Frederick, Maryland, who offered this advice:

• Pay attention to where different materials meet, such as the roof to siding and the siding to the foundation, he said. Gaps, uneven lines or excessive caulk use usually indicate that water infiltration has been a problem.
• When examining siding, wavy boards typically indicate that the sheathing underneath wasn’t replaced or nailed correctly.
• Downspouts should be positioned to carry water several feet away from the structure. Flippers sometimes skip extensions, and that can lead to a flooded basement.
• Look at the roof from a distance, paying attention to the lines of the shingles. Wavy edges or mismatched shingles can indicate that a flipper covered the old layers instead of performing a full tear-off.

Homes in humid climates such as Miami and coastal areas have the additional problem of salt air and humidity, said Miltiadis Kastanis, a Compass real estate agent in Miami, Florida.

“They can corrode metal, wear down HVAC systems and weaken concrete over time if the waterproofing wasn’t done right,” Kastanis said. Look around balconies, roofs and window frames for signs of water intrusion or rust, she said.

Other red flags to watch for:

• Do you see sagging crawl space floors?
• Does the chimney lean to one side?
• Do balconies, roofs and window frames show signs of rust?
• Are there cracks in the foundation?
• Is the yard sloped so that water drains away from the house, not toward it?
• Does the deck have cracks and sag? Does it have loose railings?
• Does the outdoor heating and cooling unit show signs of wear and tear? Are the vents properly installed and venting away from the house?

Pro tip: Check less visible spaces, such as underneath the basement stairs, for signs of water damage.

Note the materials the flipper used, said Paul Dashevsky, co-CEO of GreatBuildz.com, an Encino, California-based service matching homeowners with pre-screened general contractors.

See whether they used respected brands for appliances, fixtures and finishes, he said. Ask about the type and manufacturer of insulation and check for its quality, he said. Well-done work is a sign that corner-cutting wasn’t an issue, he said.

New paint, flooring or excessive staging can hide problems, Dashevsky said. Watch for signs like musty smells, uneven flooring or new caulking around cracks, which suggest water damage or foundation problems, he said.

Dashevsky also offered the following tips:

• “Run your hand along the freshly painted wall. Can you feel bubbling spots that may be hiding water damage?”
• “Step firmly on the corners of every room. Can you feel soft subfloors over the new vinyl planks?”
• “Are the doors properly aligned? Do they open and close smoothly?”
• “Do windows open easily and seal correctly? Are there noticeable drafts?"
• "Are outlet covers and fixtures installed evenly and securely?"
• Moisture is the biggest problem in basements, said Miskell. "Trust your nose. If there's a musty or damp smell, that's often a sign of water damage, even if the walls look freshly painted."

“I would always pay for someone to use a mold scanner to make sure there are no hidden problems,” said Mark Worthington, a branch manager at Churchill Mortgage in Bend, Oregon. “Moisture and mold can be financially devastating if undetected prior to purchase.”

When you are looking at a flipped home to buy, it's important that the plumbing is functioning properly, said Brendan McCarthy, CEO and owner of home repair firm SALT Service Co. in Austin, Texas:

• Inspect the shutoff valve leading into the home. Run a hand around and feel for moisture. Is hard water building up around it?
• Turn on every faucet and let it run to see whether the water pressure fluctuates or if the drain gurgles.
• Flush toilets and look for leaks. Listen for odd sounds.
• The area behind bathroom and kitchen sinks is a good place to hunt for shoddy work. Look under the sink area and check for water stains, soft wood or poorly glued PVC fittings.
• See whether the valves under sinks are new or if they have hard water built up around them.

"If you see a mix of copper, PEX and PVC pipes tied together with adapters, that's a sign of a patch job instead of a proper re-piping," Miskell said.Pro tip: Feel under countertops to determine if they are made of solid stone or have a laminate covering, such as wood or wood composite. It can be a sign of the quality of the flip.

Replacement of a mechanical system is a major indicator of the contractor’s work, said Mike Nielsen, a sales manager at Churchill Mortgage in Hingham, Massachusetts.

• Check whether the brand of the heating and air conditioning system is reputable, Nielsen said.
• Check the furnace or heat pump filter, Miskell said. "If it's dirty, you can bet the system hasn't been serviced in a while."
• Check that the sump pump actually runs, he added, because some flippers will install one just for show, without wiring it to the electrical system, he said.
• Ductwork that looks freshly spray-painted doesn't necessarily mean it has been properly sealed, said Miskell. "Run your hand along the seams while the system is running. If you feel air escaping or hear a faint hiss, the joints weren’t sealed properly. Real sealing uses foil tape or gray mastic paste, not paint."

Here's the information you should check at the local clerk's office regarding work that requires permits.

• How long did the flipper own the home?
• Were permits pulled for the work?
• What work requires a permit?
• Are the contractors who performed the work reputable?
• Was there any work that a municipal building inspector ordered the flipper to fix? Did the flipper get a reinspection?
• Are all the tax payments up to date?
• Are there any liens on homes?
• Was a licensed professional involved in flipping the home?

Are all the tax payments up to date? Verify the business licenses of flippers and contractors.

If you're interested enough in the house to make an offer, ensure you get an inspection before you buy. An inspection will help you identify issues that may be lurking beneath the surface.

More on this topic:

• U.S. investors are flipping homes the most in these states
• HVAC red flags to watch for when shopping for a home
• Your step-by-step guide to investing in residential real estate