Author Topic: Buying A Flipped Home  (Read 6367 times)

abeyer

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Buying A Flipped Home
« on: April 14, 2016, 11:50:58 AM »
Long time reader, first time poster here. My family and I are looking to buy our first home. I have read a lot about flipping houses through this forum, but haven't yet been faced with the prospect of owning one. I am admittedly awful at bigger jobs but I am learning. We have located a home in a good area, close proximity to the highways (my commute would be about 15 minutes shorter for a total of a 15 minute drive downtown), excellent schools, access to bike trails and shopping, etc. It is in an older quiet neighborhood, built in 1987. We live in Ohio where the median home for this neighborhood is about $200K.

It intrigues us that the extra cost of this home and professional job would save us an incredible amount of time/energy that instead of fixing up a home we could spend together as a family. It looks pretty professional and includes a home warranty. It is a mediocre sellers market right now and there is not a lot of inventory. However, basic sites like Zillow are showing that there may have been multiple investors on the property, likely finishing up a job that someone else started. For instance it sold once in 2005 and looked as though it went through 2 sales since. One in 2012 and one in February 2016. The price of the home never skyrocketed down from what is public record on Zillow, it stayed more or less similar with the surrounding area.

My question is, would this all be a warning sign not to head in the direction of buying someone else's investment? Are there any metrics or pricing percentages that someone who is being careful to purchase a solid, well-built home well within our means should be watching out for? We are less inclined to go the way of "smaller/cheaper home in the nicer neighborhood" because of the "keeping up with the joneses" lifestyle we do not want to go too near. Thanks in advance.
« Last Edit: April 14, 2016, 12:18:10 PM by abeyer »

Cassie

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Re: Buying A Flipped Home
« Reply #1 on: April 14, 2016, 12:27:29 PM »
I would look at other homes in the area to compare and if you really like it make an offer and see what the inspection reveals. If there are issues you can ask for $ to fix them from the seller by a price reduction.

Jim2001

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Re: Buying A Flipped Home
« Reply #2 on: April 15, 2016, 08:24:01 PM »
I bought and lived in a flipped home and learned an important lesson.  The flippers did a bunch of repairs and upgrades themselves.  Decent quality I thought.  But, a few years in, I realized they didn't have a clue what they were doing.  The tiles in the kitchen, bath and laundry rooms started to come loose.   One day I dropped a beer mug.  The floor tile broke, but not the glass beer mug.

That and other experiences lead me to believe that flipper don't give a damn about quality when it comes to repairs.  So, if you're going to buy a flipped house, hire the best inspector you can find to kick the tires VERY hard!

paddedhat

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Re: Buying A Flipped Home
« Reply #3 on: April 17, 2016, 05:53:02 AM »
I bought and lived in a flipped home and learned an important lesson.  The flippers did a bunch of repairs and upgrades themselves.  Decent quality I thought.  But, a few years in, I realized they didn't have a clue what they were doing.  The tiles in the kitchen, bath and laundry rooms started to come loose.   One day I dropped a beer mug.  The floor tile broke, but not the glass beer mug.

That and other experiences lead me to believe that flipper don't give a damn about quality when it comes to repairs.  So, if you're going to buy a flipped house, hire the best inspector you can find to kick the tires VERY hard!


This must be pretty common. I did a light flip on my mom's house after she passed. I told the realtor to give me a month and she wouldn't recognize the place. I brought my subs in to refinish the hardwood floors, install new carpet in all the second floor, and repaint the interior. I corrected and upgraded plumbing and electrical issues, and installed all new light fixtures. All work was done to high standards using decent products. In a month I invited the realtor to take a look. She walked around in stunned silence, muttering OMG, ever so often. I was a bit thrown off by her reaction and asked what the issue was? She told me that the place was far beyond her expectations, since she didn't expect me to be any different than all the other "flippers" she deals with. She then explained that the average flipper tells you they will be done by a specific date, and ends up taking 2-3X as long. She also said that most try to do everything they possibly can themselves, even if they have no clue what they are doing. Finally she said that most are obsessed with finding the cheapest of everything, and generally end up negatively impacting the sale, since the cheesy cabinets, dollar a foot laminate and other obvious shortcuts, turn potential buyers off.

smartmoneymd

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Re: Buying A Flipped Home
« Reply #4 on: April 17, 2016, 03:17:17 PM »
I agree that it's tough to assess the quality of a flip if you are unfamiliar with how the renovation process works and what critical components of the house need to last. I certainly have limited knowledge of anything that can break down, and rely heavily on the inspector and what the other comps in the area are going for.

That would be your best bet. If you are concerned, you might want to try two independent inspectors, although you'd be fitting the bill on a house that you might not even buy.

Uturn

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Re: Buying A Flipped Home
« Reply #5 on: April 17, 2016, 03:34:49 PM »
If you can, find an inspector who used to do construction, pay a bit extra if needed.  It's real easy to be blinded by the bling and miss the crap underneath. 
If you start getting that uneasy feeling, walk away. 
If someone skimps on noticeable detail, how did they do what you can't see? 
Pay attention to straight grout lines, even caulk, clean cuts on trim. 
Look under the sinks.  Does it look professional, or does it look like a second grade art project with crooked cuts and glue everywhere?
Also, minimum code = minimum performance.   

paddedhat

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Re: Buying A Flipped Home
« Reply #6 on: April 17, 2016, 05:38:47 PM »
If you can, find an inspector who used to do construction, pay a bit extra if needed.  It's real easy to be blinded by the bling and miss the crap underneath. 
If you start getting that uneasy feeling, walk away. 
If someone skimps on noticeable detail, how did they do what you can't see? 
Pay attention to straight grout lines, even caulk, clean cuts on trim. 
Look under the sinks.  Does it look professional, or does it look like a second grade art project with crooked cuts and glue everywhere?
Also, minimum code = minimum performance.   

Excellent advice. May I add, if the kitchen cabinets were replaced, take a good look at the workmanship. Are the upper cabinets well secured to the wall, and tightly screwed to each other? Squat down and eyeball the front edge of the countertop. Is it laser straight, and are their any gaps under the top, where it should be firmly supported by properly shimmed and leveled base cabinets? Tile or stone floors? Are the tiles dead straight when you step back and take a long view? Are the grout lines even? is it properly grouted, with nice even, symmetrical joints, or are there splotchy areas, low spots, and color variation. Take a look behind the curtain. Get into the crawl space, basement and/or attic and look at the workmanship that nobody expects you to ever critique. Wiring and plumbing look neat and nicely attached/supported? Any HVAC ductwork? Did the flipper hack up a nice installation? Are their runs of flex duct looking like a bowl of spaghetti blew up? Finally, unless you are shopping the very bottom of the market, do the products used appear to be the cheapest shit that Home Depot carries, or something better? Are the countertops preformed, with a rolled front edge and a built in backsplash? Is the sink stainless steel and unusually shallow? Is the new sink faucet a simple chromed unit with separate hot and cold handles? Check the appliances. If they are new, are they the cheapest stuff available to fill the holes in the kitchen? Don't fall for stainless, there is a lot of low end crap available in stainless. Don't forget the silk dress on a pig concept. A lot of these guys think nothing of dropping a lot of coin on redoing the fašade of a fireplace. What about the actual fireplace. Does it work, is it in safe operating condition? Same goes for mechanical systems. Don't confuse a new electric service panel with a newly rewired house. A shiny new panel may be good, but a lot of outdated crap in the walls isn't. Same goes for plumbing. Good luck.

FIRE me

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Re: Buying A Flipped Home
« Reply #7 on: April 17, 2016, 08:49:44 PM »
Long time reader, first time poster here. My family and I are looking to buy our first home. I have read a lot about flipping houses through this forum, but haven't yet been faced with the prospect of owning one.

NEVER buy a flipped house! The flippers have every incentive to make cheap superficial changes (I won't dignify it by calling them repairs or upgrades), ignore or hide major defects, and then sell the property at the highest possible price.

Blindsquirrel

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Re: Buying A Flipped Home
« Reply #8 on: April 22, 2016, 06:33:25 PM »
 Actually,  some flipped houses are good deals and the work is done very well. They are not great deals as selling is a retail prices. If you want wholesale prices, buy a foreclosure. When we flip houses the guys who work for me do very good work. I am also in Ohio, the south west area. If you want, send me a message.

BlueHouse

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Re: Buying A Flipped Home
« Reply #9 on: April 22, 2016, 09:42:39 PM »
Pull the permits. See what work the flippers had permitted and inspected. If you have a new furnace but there is no permit for furnace, run. If any walls were moved but there is no structural engineer involved, run. Gas with no permit?  Run. If there is a permit, check the inspections were completed. It seems like there was some history on this house. See if you can talk to the inspector and get some background.

paddedhat

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Re: Buying A Flipped Home
« Reply #10 on: April 23, 2016, 08:20:28 PM »
Pull the permits. See what work the flippers had permitted and inspected. If you have a new furnace but there is no permit for furnace, run. If any walls were moved but there is no structural engineer involved, run. Gas with no permit?  Run. If there is a permit, check the inspections were completed. It seems like there was some history on this house. See if you can talk to the inspector and get some background.
Sorry, but this is the kind of silly idea you get from watching too much shit on TV. I built homes for decades. Like any competent builder, I can walk around the outside, and take a quick look at the basement/crawl space, of 99% of all homes in my region, and tell you what walls are bearing and if they are an issue to remove. If I have a need to confirm it, then it's time to crawl up in the attic for the rest of the story on load paths and bearing. If I decide to eliminate a bearing wall, my engineered lumber supplier will size the beam to carry the load, and provide point load data for the bearing, if desired. If not, I can use their online information to do the calculations myself.
Bottom line? The vast majority of SFR structural renovations are done with absolutely no need for an engineer, and they are done correctly. This whiny BS on the flip shows as everybody wrings their hands wondering "if it's a bearing wall" are done for drama. The average renovation contractor knows the answer long before they start to demo. anything. IF you are in an area where there is off the charts code compliance, you may need to get the calculations stamped, which most of us know how to get done for a small fee. It's also important to understand that there are still vast areas of this country where you do not need permits to do a lot of the remodeling and renovation work involved in a flip. In most of my market area, the local officials could give a rat's ass if you replaced your furnace, or tear an interior wall out.

Miss Piggy

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Re: Buying A Flipped Home
« Reply #11 on: April 23, 2016, 09:35:28 PM »
Pull the permits. See what work the flippers had permitted and inspected. If you have a new furnace but there is no permit for furnace, run. If any walls were moved but there is no structural engineer involved, run. Gas with no permit?  Run. If there is a permit, check the inspections were completed. It seems like there was some history on this house. See if you can talk to the inspector and get some background.

We are in the midst of a major kitchen remodel. It includes moving the stove from the perimeter to the island and converting from electric to gas. We gave a thorough list of our plans to our municipality's inspection manager, and all he cared about was the electrical work. I was shocked to find out we did not need to get a permit for the gas work. (We did have the gas line professionally installed by our local utility gas provider, so I feel confident in the work, but we would not have been able to get a permit for it if we wanted to.)

BlueHouse

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Re: Buying A Flipped Home
« Reply #12 on: May 10, 2016, 12:54:40 PM »
Pull the permits. See what work the flippers had permitted and inspected. If you have a new furnace but there is no permit for furnace, run. If any walls were moved but there is no structural engineer involved, run. Gas with no permit?  Run. If there is a permit, check the inspections were completed. It seems like there was some history on this house. See if you can talk to the inspector and get some background.
Sorry, but this is the kind of silly idea you get from watching too much shit on TV. I built homes for decades. Like any competent builder, I can walk around the outside, and take a quick look at the basement/crawl space, of 99% of all homes in my region, and tell you what walls are bearing and if they are an issue to remove. If I have a need to confirm it, then it's time to crawl up in the attic for the rest of the story on load paths and bearing. If I decide to eliminate a bearing wall, my engineered lumber supplier will size the beam to carry the load, and provide point load data for the bearing, if desired. If not, I can use their online information to do the calculations myself.
Bottom line? The vast majority of SFR structural renovations are done with absolutely no need for an engineer, and they are done correctly. This whiny BS on the flip shows as everybody wrings their hands wondering "if it's a bearing wall" are done for drama. The average renovation contractor knows the answer long before they start to demo. anything. IF you are in an area where there is off the charts code compliance, you may need to get the calculations stamped, which most of us know how to get done for a small fee. It's also important to understand that there are still vast areas of this country where you do not need permits to do a lot of the remodeling and renovation work involved in a flip. In most of my market area, the local officials could give a rat's ass if you replaced your furnace, or tear an interior wall out.
PaddedHat, your post was incredibly condescending and I hope you don't speak to people IRL like that.  I don't watch the flip shows, because I don't have cable TV, so no, the idea wasn't from TV.  There is an enormous market for flipping right now that brings in people with no experience as a contractor, and that's what I hope the OP would avoid. It's great that you do things by the book, but not everyone does.  I was thinking about legitimate documented problems in my area. 

http://wamu.org/news/15/05/07/dc_files_suit_against_virginia_couple_over_shoddy_house_flipping

I have personally seen these homes after they've caved in on themselves.  I've personally seen homes that sit unfinished for years because a concerned neighbor pulled permits, found the flipper had none (or the wrong ones), reported it, and had stop work orders placed on homes.  So I stand by my statement to pull the permits and make sure everything that requires a permit has a permit. 


paddedhat

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Re: Buying A Flipped Home
« Reply #13 on: May 12, 2016, 06:15:32 AM »
If you are so butt hurt by my "incredibly condescending" post, you would do well to never get involved with the construction business, and a lot of other places beyond the corporate world. Places where a warm fuzzy environment of PC, "don't tell the truth, somebody may be offended by your "micro insult", and  "I'm retreating to my safe space", not only does not exist, but never will.

As for catastrophic structural failure, it happens, but it is exceeding rare,  in most geologically stable regions.  Typically only occuring as a result of extreme neglect of proper maintenance, or mind blowing stupidity on the part of incompetent DIYers, or criminally negligent "contractors". Most laymen have little understanding of how forgiving traditional "western" style stick frame structures are, and how difficult it is to screw up to the point that you actually create a mode of  instantaneous failure. In my region, which has a long history of large volumes of SFR construction in a code free environment, structural failure is a statistically insignificant issue.

Like many in our over-regulated, "there must be some government agency to protect me" society, you place an unworthy trust in the fact that you are allegedly protected by building codes, compliance, and enforcement. My region has been under vigorous enforcement of the International Building Code SFR regulatons for a decade. During that time I have dealt with inspectors who were extraordinary competent, and interested in assuring that the work done in their jurisdiction was done well, and resulted in a safe, durable product. I have also dealt with others who didn't have a clue what they were doing, and spent their time in the field trying to hide that fact. I have been forced to do things that endanger the health and life safety of the home's occupants because it's "in the book", and wasted thousands, to tens of thousands of dollars per project, on details that add no value, or are not required in my region, but are "in the book".

There is absolutely no reason to believe that code enforcement will do anything for the quality of home remodeling beyond it's basic intention, that being to set a MINIMUM standard for safety and durability. This must be tempered by the reality that alleged benefit from such enforcement is highly dependent on the competence and rigorousness of the permitting, and inspection process.  To illustrate, I recently watched a new home being built on my block. The builder is somebody I'm real familiar with. An unethical scumbag, who is also smart, and well versed in how to navigate around the thousand page book we all follow to satisfy the code gods. Without stepping on the site, and with little investigation beyond glancing, while driving  by, I spotted at least three serious issues that are violations, and will result in structural, health and possibly life safety problems for the occupants, in the future. The reason these issues will only be addressed by the owner, long after the one year warranty expires? Because all of the violations were concealed, legitimately, before the inspector was called for the next phase inspection.

Bottom line?   Successful code enforcement relies on competent agencies, on one side of the table, and honest, well trained contractors on the other. It is actually pretty easy to cut corners and do inferior work, while cutting costs, and maximizing profits, regardless of who is watching. If you are the kind of contractor who lacks ethics, it can be greatly beneficial to do work with customers who, like yourself, place a high value on the rule of law, and doing everything "by the book".

So you are welcome to "stand by your statement" for as long as you need to. As long as you understand three things.

 #1   Permits and inspections can be a great asset to the homeowner, or a waste of time and money. 
#2   I, and a lot of other builders and contractors, can and will do a great job for you, regardless of the inspection process. We can also tell you who to avoid, since we know that they can, have, and will continue to fuck customers, regardless of the inspection process.
#3   MANY local jurisdictions are regulated in such a manner that NOTHING inside of an existing structure requires a permit or inspection. In my region I can tear a wall down, install a furnace, or rewire your house, without a permit. In the vast majority of cases, the end result will be a satisfied customer, a competently completed project, and a lot of time and money saved on having the government intruding in the process.