What to Consider Before Buying a Flipped House

Pros and Cons of Buying a Flipped House

A flipped house can be a good buy, especially if you're not interested in buying a fixer-upper and putting in the time and money to repair it yourself. But because home flippers tend to work on homes with the goal of making a quick profit, results depend on the skill of the flipper or their contractors. Make sure to consider the potential benefits and downsides before making an offer.

Potential Benefits

• Move-in ready: You ideally won't have to put in any extra work, such as repainting rooms or making major repairs, before moving in.
• May have new appliances and a modern feel: The flippers may have focused on changes that can make the house nicer to live in, such as upgraded appliances and a newly remodeled kitchen or bathroom.
• May be cheaper than a new build: A brand-new home could also be move-in ready and have modern touches, but a flip might cost less.
• Fewer contingencies: You won't have to wait for current homeowners to move out because there likely isn't anyone already living in the home.

Potential Downsides

• The upgrades may be superficial: In some cases, new finishing touches might be covering up more serious problems, such as old and potentially dangerous knob-and-tube wiring or termite damage that will be costly to upgrade or repair.
• Minor details could be overlooked: Flippers have to pay taxes, insurance, utilities and other costs while they own the home, which their profits depend on flipping and selling a home quickly. The speed at which they work might lead to small mistakes, such as poorly installed cabinetry or uneven paint jobs.
• The work might not be permitted or up to code: If the flippers didn't get the proper permits or follow building codes, you might be responsible for making (and paying for) the changes after you move in.

What Can You Do to Avoid Buying a Bad Flip?

You may need to do some extra due diligence to ensure the home you're buying won't become a flop. First, you'll need to determine whether the house is a flip because sellers won't always tell you.

Figure Out if the House Is Being Flipped

It might be a flip if:

• The home was bought a few months ago and is already back on the market.
• The seller is a company rather than an individual.
• The owners never lived in the house (you can ask the neighbors or the seller's agent).
• There were select upgrades, such as a new bathroom and kitchen—the rooms that can add the most value to the home.

Look for Poorly Done Work

Pay close attention while touring the home and look for signs of shoddy work, such as:

• Crooked cabinets or mirrors.
• Gaps or excess grout in tiles.
• Fixtures that don't match.
• Leaks under sinks, in the attic or the basement.
• Additions that may or may not be permitted

Hire an Inspector

A professional home inspector might charge several hundred dollars for a walk-around inspection, plus more for extra testing, such as mold and termite inspections. But it may be worth it if you want to avoid expensive surprises later.

Check the Permits and Receipts

Ask the sellers for copies of the permits and receipts for the work that was done, and make sure the contractors had the proper licensing. You can also call the municipality's records office or look for copies of the permits online. Unpermitted work may be illegal and lead to dangerous or costly consequences. And while home inspectors can help, they might miss issues that are hidden behind a closed up wall.

Read the Disclosures

Sellers are often required to give you a disclosure report that lists known issues with the home. Review the report closely to better understand what's in good condition and what might need additional work soon.

In the end, buying a flip is a personal decision that could pay off. But you want to be careful because you won't necessarily have any recourse if you buy a bad flip.