Purchasing a home is a major investment. When you’re searching for a new home, you want to be sure you’re getting a quality, lasting home for the money.
“Flipped” homes — those that have been purchased by an investor at a low price, repaired and updated and then sold at a higher price — have been a major trend in recent years. While some flipped houses may be a worthwhile investment, it’s important to be aware of houses that have been flipped quickly and carelessly…because it could ultimately cost you thousands of dollars in repairs.
Listed below are a few tips for helping you avoid purchasing a poorly flipped house.
Know what to look for
Is it an old house, but everything inside is brand new? Has all of the landscaping been recently redone? Also take a look at the house’s history. Was it recently sold on the low end and is now listed for a much higher price? Any of these circumstances could indicate it’s a flipped home. Be extra cautious while looking at houses that check these boxes.
Be thorough in your examination
If you’ve established that the house has been flipped, look through the house with a critical eye. Are the corners square? Do the floors seem even? Can you see any cracks in the foundation? Were cheap materials used? Will standard appliances fit where they should? Do drawers collide when they open? Is the painting done well? How old is the water heater? The list goes on and on. Don’t focus only on your favorite details in the house; you may miss an obvious flaw.
Do your homework
Even if everything looks okay after going through the house, ask the seller for a detailed list of the changes that have been made. Also ask to see the permits for all of the work related to the upgrades the seller says have been made. After checking the paperwork, find an inspector independent of the investor who flipped the house and have him or her check the work to be sure that the house wasn’t just flipped on the surface. Being thorough in these stages can prevent unknowingly purchasing a money trap that looks good on the surface, but needs major work when you look a little deeper.
If you do “flip” over a flipped house and you’ve just gotta have it, My Bank Tracker suggests following the 20% rule. This rule advises that you add 20% to the asking price to give you a better idea of what the house and any unexpected repairs may cost.
Not all flipped homes are a trap. There are many renovated properties out there that will make great homes. But be cautious and enjoy the search!
As always, we’re here to help you and answer any questions you may have. Call us toll-free at 1-866-745-5158 to talk with one of our mortgage loan experts.