Have you recently fallen in love with a “flipped” home? Does the idea of moving into a cleanly renovated space excite you? To see an old home tuned up with brand new appliances, gleaming marble countertops, and fresh wood floors can make other homes seem shabby by comparison, but be careful before you make the leap. There are some precautions you want to take before you finalize the transaction. “Flipped” or “rehabbed” homes are homes which real estate investors buy in order to renovate them and sell them for a profit. Sometimes these homes have been secured after short sales, foreclosures, surviving relatives, or even at auction. For real estate investors, part of the profit depends on how fast and affordably they can renovate the property. In seller’s markets, there’s even more pressure to make sure a home is ready to sell, fast.
Know The Home’s History
While there’s nothing necessarily wrong with a flipped house, you will want to make sure you know a bit about the home’s history. Naturally, you’ll want to do all the due diligence you’d normally do when buying a home, but it can be useful to dig a little deeper.
Here are some questions to ask:
What shape was the home in before it was renovated? Was it just outdated? Vacant? Trashed by squatters? Find out the state of the home when the flipper purchased it.
What deficiencies, damage, or other defects did the home have when the flipper bought it? Ask for a list of issues, if possible.
Who did the work on the house during the renovation? Contractors? Handymen? Did the flipper do the work personally? Are there invoices which detail the work completed and the money spent on the repairs? Were the appropriate permits secured?
Was anything left “as is”? What sort of issues were deemed too small or not vital to the renovation?
What was the legal history of the transfer of ownership? Short sales and foreclosures might have legal obligations on the flipper or other liens.