NEVER Buy a Flipped Home

For $15,000, we put $30,000 into the renovation and we're listing it at $90,900. Buying a flipped home may sound like a great idea. You feel like you're buying a brand new house. That's all well and good, but once you scratch the surface on that flipped home, it may reveal some things beneath that surface, beneath all the prettiness, the newness may reveal some issues that these flippers and investors kind of overlooked or tried to cut corners to maximize their profits. So this video, I'm going to tell you why I would never buy a flipped house. Okay. I'm back. Another installment of my never buy series. And I'm sure everyone's thinking I'm like the most negative real estate agent that's out there. Ouch, baby. Very ouch. Listen, I'm not. I make these videos to teach consumers what to look for when they're buying a home. So this time I want to talk to you about these flipped houses because in the past few years, especially a few years ago, when the interest rates are really low, a lot of people, the investors, small investors, LLCs jumped in to buy homes to turn around and flip thinking they're going to make a quick buck. Look, I have mad respect for that. You know, I encourage people to invest in real estate. However, a lot of times these homes are renovated on the cheap. They end up causing a lot of problems down the road for homeowners. So I'm going to give you some reasons why I wouldn't be buying a flipped house, but I will also share with you tips on what to look for. Should you come across a flipped home? I know inventory is low right now and you need to buy something. I will share some tips with you on what to look for. So don't worry. Okay. The first reason why I wouldn't buy a flipped house, it's the poor workmanship. Now, I'm not speaking for every LLC and investor out there that you all do really shoddy work. I'm not saying that, but there are a lot that do. I've seen quite a few of these homes that were flipped. The workmanship is, yeah, not so good. Now when you walk into a house and you see a brand new kitchen with the quartz countertop, the brand new cabinets, the new flooring, it all looks really nice. But you have to kind of look past all the prettiness they did to the house to see if there's any structural problems. Like say, did they replace the windows? I bet you they didn't. A lot of times they'll cut corners and they won't replace the windows because why? It's expensive. So remember, flippers are trying to maximize their profit. So while they're focused on making the house look pretty per se, by slapping a coat of paint on and putting flooring and new cabinets and all that, they tend to neglect the major components of the house, such as the HVAC, water heater, even structural issues. So I have seen houses I've walked into and it's the original furnace or it's the original air conditioner. Sometimes the roof wasn't even addressed. They just went in and just prettied up the inside and that LLC is then asking for a much higher price for the work that they did, but yet the major components are still original. Yeah, that's going to fall on the buyers once they've lived in it for a while. They're going to have to turn around and replace that. So that's the reason why I wouldn't consider a flipped house. Another reason why I wouldn't buy one is that there tends to be hidden problems in these flipped homes, meaning that they will go in and paint over water damage. They'll cover up mold. They'll even try to hide structural problems because remember, they want to sell the house And if they see anything that needs some work, and again, not saying for all of them, same for every one of them, but for the most part, they want to go in, do the work, turn around and sell it and make their profit. So you've got to be aware of that too. There's that potential that they are hiding problems such as water damage, mold, what have you. And that just really turns me off and I wouldn't buy it. So renovations that are performed by a flipper, they often come without warranty protections on the house, unlike if you were to buy a house directly from a licensed contractor or a builder. So that's another reason why I would not be considering buying a flipped house because of that alone. It's unlike when you buy a brand new house, there are warranties that, you know, something breaks in the first year on the inside. On the outside, typically it's a 10 year warranty. You're not going to get that if it was renovated by the flipper themselves or the LLC. Another reason why I wouldn't buy one is the lack of historical knowledge about the house. Okay, so hear me out on this. When these flippers buy the home, their focus is to get in there, renovate and turn around and sell it. They're only possessing the home for a short period of time. They don't really have knowledge of the history of the house, whether or not there was issues with the house. Did the house ever take on water? If there were any past repairs done on the house, they're not always going to know about that. And they also aren't going to know anything about the neighborhood. Like say if there's a potentially bad neighbor living next door, they're not going to know about that. So that's another reason why they don't care about the history of it. They're just going in, renovating and turn around and selling. So that lack of transparency about the history of the house, that could lead to some major issues down the road once you've been living in it for a while. The biggest issue with buying a flipped home is that if the flipper did not file the proper permits to do all the work on the home. I've seen and heard stories about this. This is something one needs to be very cautious about. Sometimes these flippers will go in and just do the work and not even file permits with the town and the work could potentially not be up to code. So that is a huge, huge problem. And that could lead to some legal issues down the road. So again, just be very wary of that, that there's that possibility. They did not file any permits, nor did they have the home properly inspected by the town's building department. All right, here are some tips. If you stumble upon a flipped house and you really like it, here's some things I'm going to share with you. If you're going to be pursuing buying one, first and foremost, be skeptical when you're walking through the house. Don't get sucked in by all the prettiness of the new kitchen, the new bathrooms, the new flooring, all that stuff. Don't get sucked into that. You want to walk around the house and look at the details. Look at the doors. Did they replace the doors? How about the windows? Did they replace the windows? A lot of times flippers will not spend the money and replace the windows. So if the windows are older, you know what? That's a problem. Guess who's going to have to replace that down the road? You are, and that's going to cost you a lot of money. Okay, circling back to the whole building permit issue, if you're going to pursue a flipped house, you can go to the town and request to see the permits that were filed on that house. And this is very, very important because there still could be open permits too. So if there is work being done on the house and that permit hasn't been closed, that means that the town has yet to come in to do the final inspection to approve the work that was done. So very, very important. You go to the town or you can have your lawyer, if you're working with an attorney, have your attorney contact the town to request to see all the permits that were filed on that house. Another thing is you want to verify the contractor who did the work and make sure that they're licensed and reputable. Do your research on them to see what their history is and if they have a good reputation and most importantly, that they're licensed. The other important thing, maybe the most important thing that I will be doing if you're going to buy a flipped house, and this is for anybody buying a house, bring in a home inspector. Now, I'm sure you will, anybody's going to do that, but the home inspector is really going to look at what's going on with this house and they're going to help identify any potential issues. So spend the money, get an inspector to look through everything. And even if you have to bring in other inspectors, so if the house has a chimney, I'd be bringing in a chimney specialist to look at the fireplace, make sure the chimney is intact, that if the lining was replaced, make sure the job was done correctly. You also want to bring in, if you have to, go ahead, bring in a structural engineer to check the foundation. Again, remember what I said before, they don't always know the history of the homes that they're buying. So now this is falling on you to determine if there are issues with the home because the flippers not going to know, they don't care. They're just going in to renovate and sell the house. So bring in all the inspectors that you need to, and just to make sure everything is on the up and up and the house is in good condition. I'm not here to throw shade at the LLCs and the private investors. Good on you that you wanted to get into real estate and buy homes and turn around and sell them, but got to make sure you're doing everything on the up and up because it's not fair to these people who are buying the homes, who have to end up spending more money to fix the mistakes that these flippers failed to fix themselves to begin with. If you want to know what type of houses you should never buy, watch us, it's a good one. Thank you so much for watching me today to get your dose of real estate reality. My name is Jackie Baker, and I will see you next time.