What to Know About Buying a Flipped House
Buying a flipped house is an option available to you in most real estate markets if you're looking for a property that doesn't need any immediate renovations.
In other words, it's a way to buy a turn-key, like new property without paying for or waiting new construction. So what's the catch? Here's what we think you need to know about buying a flipped house.
What is a Flipped House?
A flipped house is one that was purchased, renovated, and quickly resold for profit, usually without every being used as a residence. Home renovation shows have made this business all the rage.
In some cases, buying a flipped house turns out in the buyers favor, especially for someone who doesn't have the time, money, or desire to renovated a house but wants something turn-key and updated. If you are aware of the potential risks and red flags that point to them, buying a flipped house can be a great option!
Buying a flipped house often means getting a good price on an updated home. Real estate investors who are flipping houses want to make money quickly, which means their properties tend to be priced competitively. The longer a flipped house sits on the market, the longer an investor is waiting for cash to move on to the next project, and this may work in your favor as the buyer.
If you don't like the idea of renovating a house, but a new construction or custom home isn't an option for you, buying a flipped house may be the right route for you to get a home with new appliances, new finishes, and an updated look.
The potential downfall of buying a flipped house is getting stuck with a home that was not properly renovated. Some real estate investors are willing to cut corners to accelerate the timeline and increase profits.
In order to make sure you don't end up with a property that needs a surprising amount of work, prioritize a thorough walkthrough and professional inspection and don't compromise on getting proof of permitted renovations.
Make a Viewing Checklist
With some healthy skepticism and an eye for detail, you can learn a lot about the house during a viewing. Make a checklist of things to look for during your walk-through so you don't get distracted by features in the home or the excitement of the hunt.
Our list would start with:
- Windows and doors: Is this a place where corners were cut? Were they replaced? If so, was it with quality materials?
- Faucets: Do they all work? How long does it take for water to heat up?
- Quick fixes: House flippers looking to cut corners sometimes use a quick fix like wood putty to hold together water damaged flooring or paint over a water spot on drywall.
Use a Good Inspector
No matter how thorough you are in your viewings, having an honest, qualified, third-party inspector is totally essential when you buy a flipped house.
A professional inspector will be able to spot red flags in the workmanship, as well as verify the quality and condition of the HVAC, plumbing, electrical, drywall, and roof. Work with your real estate agent and ask for referrals from friends to find a highly recommended home inspector in your area.
Ask for Copies of Permits and Contractor Information
A quality real estate investor will be ready to offer proof that the renovations were permitted and that reputable contractors worked on the home. Ask for copies of the permits for any major renovations that were done; if there is hesitation to provide these, consider it a red flag.
Get the information of the contractor(s) that worked on the property before buying a flipped house. Take the time to look them up and peruse their online reviews as if you were hiring them yourself.
With patience and a team of honest real estate professionals on your side, buying a flipped house can prove to be an excellent investment for you! Contact us today to find out how we can help find the perfect house in Celina or Prosper real estate.
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NTREIS data last updated May 22, 2022.