by Kandy Klee
Is a “Flipped” House a good buy?
The definite answer is…..maybe.
- Move in ready. A flip may be a good buy if you don’t want to clean up someone else’s dirt. Often times, investors have painted, installed new flooring and have it sparkling clean. You could literally just move your furniture.
- No “honey do.” If you aren’t handy or would rather be hiking on Saturdays, flips have the “honey do” list complete. No leaky faucets or chipped tiles to worry about.
- Financed upgrades. Yes, you could buy new shiny appliances on your own, but now they are part of the home purchase and can be financed in your mortgage.
- Fair price. An investor needs to set their price in line with recently sold comparable homes. If they get greedy, they will rack up holding costs. Normally, flipped homes are priced to sell.
- Financeable. Savvy investors know what inspectors and appraisers need to see in order for a home to be financeable. You won’t be disappointed by losing out on your dream home because it failed inspection or appraisal.
- Updated. You’ve been wanting to get rid of the orange and olive kitchen wallpaper for awhile now, the flipped home has it done for you! Usually they are painted in neutral tones and up to date countertops and flooring choices.
- Motivated. Investors like to sell quickly. Go in with your pre-approval letter, ready to close and you will have more negotiating power than with a seller who isn’t as motivated to sell quickly.
Repair list. We want to believe everyone is trustworthy, but beware of the novice, quick money investor who may cover up problems instead of fixing them. Ask for a list of repairs made. A good investor will be proud and happy to share the updates they have made.
- Cover ups. Ask if termite inspections were performed or if the seller has had a “pre-inspection.” Watch for quick fixes such as rotted wood that has been painted. Or more concerning, mold that has been painted over.
- Equity. You won’t be able to add to the value of this home by updating it for a few years. If you are a Handy Andy and like to rip up linoleum and install hardwoods, hoping to sell your home for more than you owe in a few years, a flip may not be your best choice.
- It’s easy to fall in love. Staying in love is harder. Don’t be so taken by the shiny granite and plush carpets when you buy a home that doesn’t fit your needs. The counters and carpets will become dated and worn eventually. More importantly, is this home the location, floor plan and price that fit your needs?
- Investors’ mottos may just be “the grass is always greener.” When the neighbors are standing with their hands on their hips shaking their heads, walk over and talk to them. Ask them what they know about the house. They may tell you it had a fire, the construction crew complained they weren’t paid, or this investor loves our city and is improving homes everywhere.
- Get a home warranty. Often times investors will include a one year home warranty with the sale or you can buy one for yourself. Warranties vary, but can cover expenses of various big ticket expenses such as air conditioners and roofs.
- Use a Realtor. Can construction liens be filed if the investor didn’t pay the contractors? Can this home be sold in less than 90 days? Is the new bedroom permitted? A Realtor can guide you through the purchase.