During your home search, you likely have come across a house or two at a really great price with a newly renovated kitchen or bathroom or beautiful new landscaping. Is this flipped home truly a great deal in a tight real estate market? Or should you be skeptical? The answer is not clear-cut. Flipped homes have serious potential for buyers – they are likely in an attractive or up-and-coming neighborhood, are move-in ready, and are competitively priced. The true value of a flipped home rests in the skills and abilities of the seller. If you are considering buying a flipped home, do you know what to look for during the buying process? Let’s take a dive into areas of the home you should look at closely during a tour of the property to make sure the house is well suited for occupancy.
Purchasing a Flipped Property? Here’s What You Need to Know
Important Advice if You are Buying a Flipped Property
What to Look for When Purchasing a Flipped Home
If you’re considering buying a flipped house, it’s best to “kick the tires” so to speak to make sure the house is in good condition and doesn’t need an additional cash investment once you are the owner. At a quick glance, the home may be sparkling clean and have new appliances, however, some house flippers skip the detail work and once you move in, the small defects may add up to thousands of dollars in additional work. Look past the shiny new upgrades and pay close attention to:
- Windows and doors: Do they open and shut properly? Smoothly? Some house flippers ignore the bones of a house and skip upgrades to critical components like windows and doors.
- Water pressure: Turn the faucets in the kitchen and bathrooms off and on. Is the water pressure high? Low? Plumbing is often an overlooked area for flippers and poor water pressure can indicate an issue with the home’s plumbing system.
- Less visible areas: The old adage “out of sight, out of mind” rings true for some flipped homes. Pay close attention to areas of the home that are unoccupied like the attic, garage, and especially the basement. These areas can be breeding grounds for mold issues and can also show signs of water leaks, damaged framework, and drafty walls.
- Old water heater: A properly maintained water heater can last between 6 and 10 years. How old is the one in the home you are considering purchasing? If it’s older than 10 years, that is a sign the house flipper may have overlooked critical HVAC and plumbing systems during renovation.
- Stained ceiling tiles: Where there’s a stained ceiling tile, there’s a leaky roof or a dripping pipe. Stained tiles are a huge red flag when purchasing any home, especially a flipped house.
Buying a flipped home can be tempting – after all, the home likely has some fun, fancy upgrades and the price is right in your budget! But be thorough in your home inspection and make sure you protect your investment during and after the sale of the home.
How to Protect Your Investment
If you are in love with a flipped home and are ready to make an offer, be sure to protect your investment before diving in. Here are several ways to protect yourself during the purchase of a flipped home:
- Work with a trusted realtor: Realtors know nearly everyone in the local real estate market. Ask your real estate agent if they know the person or company that performed the flip. Trusted house flippers have a good reputation and the not-so-good ones? They, too, have a reputation. Your realtor should be able to guide you and offer insight into who did the renovation work.
- Title search: Some flipped properties have a questionable past! The home may have been in foreclosure, or the previous owner may be deceased. A title search can help you uncover any issues with the title before moving forward with the purchase of the house.
- Craft your offer carefully: When putting together your offer on the home, be careful about how it’s written. Make sure there is an inspection contingency as well as an appraisal contingency. You should also ask for a home warranty in your offer and if possible, be conservative with the earnest money you put down. If you discover any issues that make you change your mind, you don’t want to be out of too much cash. Talk to your realtor about the best earnest money deposit that will make your offer attractive but not too risky.
- Purchase title insurance: During the title search, some issues may have popped up and been resolved. There are issues, however, that can arise after you close on the flipped home. Owner’s title insurance protects your investment for the duration you own the home.
- Work with a trusted title company: During the home buying process, one of your main partners is your title company. The responsibility of the title company is to verify that the seller of the house you are buying legitimately has the right to sell you their property. They will also manage the closing process for you including overseeing escrow, preparing paperwork, and coordinating schedules for settlement day.
Bottom line? Flipped houses can be a great investment, but not all flipped houses are created equal. Before buying a home that was flipped, do a thorough inspection and research the person or company who did the renovations. If everything looks like it’s in order – go for it!
Your Local Title Company in York, Pa.
Watermark Land Transfer is a real estate settlement and title insurance company in York, PA. We have worked with hundreds of buyers purchasing flipped properties and know what to look for during our title search. Our team of title agents makes it easy for homebuyers to buy a flipped home in Central Pennsylvania and Northern Maryland. We offer both on-site and virtual services and treat our clients like family. If you are in the process of buying or selling a home, reach out to us today to see how working with Watermark Land Transfer can help.
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