If you want to learn what you should know
and do if you are buying a flipped house,
If you want to know what you should do if
you are buying a flipped house, you need to
watch this video and we are starting right
now.
Before we begin outlining the 11 most important
things you should know and do when buying
a house flip, if you are new to this channel,
welcome!
I am Kate Smith, a local Hollywood real estate
agent with Kate Smith Group, Exp Realty.
If you want to learn about Hollywood Florida
and what makes living in and around here so
very awesome, look around and check out our
videos and many resources we put together
for you.
Before the Great Recession of 2008, housing
prices climbed dramatically, and homes sold
faster than buyers could gush, “I love that
spa bathroom.”
contractors and even handy Do-it-yourself
entrepreneurs got busy buying fixer-uppers
and improving them in the quickest ways possible,
selling them even quicker, and reaping the
profits.
Enter the real estate phenomenon of flipping.
Today’s flippers are more often professional
investors with access to cash as banks tightened
mortgage loan guidelines and available work
crews.
Low inventory and many buyers’ eagerness
for new construction and remodeled homes has
caused some buyers not to do enough checking,
at least in highly sought after areas, where
inventory moves quickly.
And some buyers don’t insist on an inspection
if the home has been substantially remodeled,
at least visually.
Hence, the need of a knowledgeable and trustworthy
real estate agent to guide buyers through
this rough terrain.
1.
Public record- The first thing an experienced
agent will do when dealing with a flip, is
to look at the public record and see when
the property, last changed hands.
If it’s less than a year ago, the property
may require a more thorough examination.
While not every flip represents a potential
landmine, an experienced agent would be asking
for information about who completed the work,
as most problems arise with work done by DIY
owner-flippers, who lack the skills of licensed
contractors.
2.
Visual inspection- See the property yourself
or, ask your agent to check it out in your
place.
An experienced agent should know what to look
for.
Inspect the structure so they see firsthand
if visible problems exist that may be red
flags for deeper trouble.
This is the first step before they call in
experts.
3.
History of a home - Learn the history of a
home- It is important to check to home history,
check previous sales.
Also, check if it was an owner occupied or,
was it a rental property- as it would make
a big difference in how the home was cared
for.
Check how long a home may have been vacant-
the number of seasons a property goes through
while being empty of occupants can help predict
whether its plumbing and other mechanical
systems may have been neglected or damaged.
4.
Understand the flipping process.
A flipper’s goal is to make a profit in
a relatively short period; many changes are
cosmetic, such as refinishing hardwood floors
and painting kitchen cabinets.
Flippers often replace countertops, appliances,
and fixtures in what tend to be buyers’
favorite rooms: the kitchen and bathrooms.
They may forgo fixing the more expensive,
time-consuming, and less visible problems.
For example, a rotted subfloor may be deemed
not worth fixing if it’s underneath gleaming
boards, and dated plumbing may be left untouched,
as long as faucets work and water pressure
seems okay.
They also know that most buyers reach a point
where they want to be done looking and are
happy to focus just on what’s move-in ready,
new and pretty.
5.
Check all the appliances and faucets.
The majority of work in flipped homes is often
in kitchens and bathrooms, and turning on
the water in those rooms can be a quick indicator
of any plumbing issues.
We have seen numerous house flips that have
plumbing issues due to shoddy workmanship
on hooking up water hoses.
Turning on faucets will signal if there are
issues with the water pressure, or in some
cases, if the hardware hasn't been hooked
up to a water source at all.
6.
Look under the cabinets.
House flippers often focus on the cosmetic
appeal of the home rather than the functionality.
Check the cabinets beneath sinks and other
the areas you can easily open to see the beneath-the-surface
work.
7.
Look under the kitchen sink, particularly
at the garbage disposal.
If you see that the drain lines, disposal
and wiring have been spray painted, it's a
sign the flipper or contractor is covering
up a dated disposal, an appliance he says
is often neglected in a flip.
8.
Eye the baseboards and paint.
If baseboards or paint lines look uneven,
it can be a sign that the flipper made shortcuts
throughout the house.
Look at how the floor, baseboard and wall
meet to check for straight lines.
9.
Walk over to the water heater.
If it looks old, it probably is old.
A new water heater can range in cost between
$600 and more than $2,000.
10.
Hire a certified home inspector.
If all looks good so far, now it is time and
highly recommended to hire a certified home
inspector to avoid surprises later.
But even home inspectors can miss signs of
problems beyond the surface.
A good inspector will follow up on possible
trouble spots - a wall that sounds hollow
and may be lacking solid backer board and
studs , with requests for more information.
11.
Bring in additional specialists-After reviewing
the inspection report, if there are any areas
of concern calling in a skilled expert might
be a good idea.
An average plumbing inspection ranges from
$150 to $400.
In the case of electrical work, a new junction
box may suggest all’s well, but that doesn’t
mean wiring was brought up to code.
Houses built in the late 1960s and early ’70s
often were wired with aluminum, which was
outlawed, and copper was required.
An electrician will pull off the panel cover
and examine what lies behind.
12.
Check on what permits were pulled -It is important
to see the permits that the flipper pulled
to perform work, especially in cases where
the floor plan was changed or a load-bearing
wall was removed.
A lack of permits in a municipality that requires
them should be a major red flag.
Also, make sure permits were inspected and
approved, not just pulled.
Thanks for joining me today!
As promised, you can find instructions on
how to download your Free copy of The Ultimate
Buyer’s Guide in the description below.
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Kate Smith, Hollywood Florida.
