It’s Spring and that means an influx of homes will be hitting the real estate market, including homes that were renovated over the Winter by investors or as we like to call them, “Flippers”.
Flippers typically buy homes at a lower price, often foreclosures. Some of these homes need minor cosmetic repairs while others require a complete gut and remodel. They make the homes appealing to a wider pool of buyers who are looking for recently renovated and move-in ready homes. Some flippers are fantastic and do amazing work, while others may, in other words, put a band-aid on bigger issues so you can’t see the underlying problems.
When flippers buy a home, the intention is to get the repairs done as quickly as possible so they can sell quickly and recoup their money and make a profit. The longer they sit on a house, the longer their money is tied up in the property and the longer it takes them to make a return on their investment. To cut down on renovation time, some flippers conduct hasty renovations that may look great initially or from afar, but over time or when looking up close prove to be inferior work.
It’s important to look at not only the finishes and fixtures of the home but also the quality of work and if the flipper is considering the character or history of the home as well. Restoring historical aspects of a home can be more costly vs. just updating the home to make it more modern and more cost-effective. Keep this in mind if you are looking for a home that has
the old-world charm.
Many buyers think that renovations overseen by a homeowner over the course of living in the home are more trustworthy as they are more attentive to actual issues that come up when living in a space. Homeowners know the property better and have an emotional attachment to the home. They want to improve the home and make it more functional for themselves – they are planning to live in the home for some time after completion. An investor is making renovations based purely on profitability – what repairs and updates will give them the best bang for their buck and help the home sell quickly. Time is money and there is no emotional attachment. Again – not all Flippers are hasty renovators, some do deeply care about the quality of their work.
How to tell a high-quality renovation vs. a poor one that raises red flags.
- Do some research on the property. Who is the current owner, is it a company or LLC that recently purchased the home? What types of permits were pulled? Does the property claim to have updated plumbing, electrical, or a new roof but a permit was not pulled? Are there still open permits on the home? The lack of pulled permits is a red flag as reputable contractors follow the legal and ethical practice of doing so.
- Do some research on the owner. If the owner is in fact a company or LLC, do a Google search to see what comes up. Is the company that bought the home a contractor and are they licensed and insured? Are they associated with other properties or projects? Do they have any online reviews?
- Get an inspection. If you make an offer on a home, always get an inspection done by a qualified inspection company. They can determine if updates and repairs are up to code and done properly. Make sure your offer is contingent on the outcome of the inspection – so you can back out if any glaring issues arise.
- Visit more than once. You never notice everything on your first walkthrough. If you want to spot defects or poor workmanship, plan to visit the home at least 2 to 3 times. You’ll pick up on more details each time you visit. If you can visit on a rainy day – you’ll quickly notice any leaks and that ever possible wet basement!
- Pay attention to the small details too. Of course, you’ll be looking at the big items like HVAC, the roof, the foundation, but it’s often the small details where you’ll be able to identify the red flags that indicate a less-than-thorough renovation. Are there gaps in the flooring, does the tile not line up correctly, do doors stick when you open or close them?
- Price doesn’t indicate quality. Even if you are looking at a million-dollar home, it doesn’t mean that the renovations were done correctly. The home may have top of the line materials and finishes, but if they weren’t installed correctly then the quality of the products doesn’t matter.
Buying a home is a big decision and no one wants to find out their dream home has a bunch of issues that come to light months after closing. A good Realtor and Mortgage Lender can help guide you through the process and answer any questions you have. Want to chat? Give me a call, I’d love to help you.
Vice President, Senior Mortgage Lender
NMLS MLO ID: 532621