As we get closer to retirement, we’re spending some time keeping a close eye on the house listings in the areas (locally) that we’re most interested in. Based on property sales records, a lot of what’s on the market are flips (“completely renovated!”).
Any tips on things to look out for before getting as far as an offer and an inspection regarding red flags that the flip is a hack job?
I’ve very lightly played around in the space, my impression is in two parts: First, there is zero substitute for a “I know a guy/gal” when it comes to evaluating. Second, after years of dipping around on Zillow and getting rando agents, I wound up with one that actually added tons of value to the process, and if you can find that person they will have a cadre of First Point great tradesmen to use that cost as much or less, and don’t bullshit. That’s gold.
To the buying a flip, it all goes in reverse. Locally the flips went through two solid years where every single one used cheap gray laminate flooring, a bright kitchen, etc. which is already passe, nobody wants to live in a surgical theater. So when you see that, it’s worth thinking about what it costs to tear out. Then, keep in mind that the relatively big ticket items may or may not be up to date and may be considered by the seller as negotiating points. Your inspector might identify very old AC/HVAC, appliances, water heaters, roof, etc. and you might panic a bit. Probably these were known problems and the seller kept them in his/her pocket as chips for the negotiation. New paragraph.
When you realize what’s going on, then you realize that these are negotiables both ways and you can get value back out of the seller in order to close the larger deal. Some of it you can just let float for five years, while there’s an average for lifespan on AC/HVAC/water it’s an average; if the unit looks good and there aren’t any current problems you’re probably on the happy side of that and can negotiate for value while deferring replacement.
Where I would send up flags are the things you already worry about and know about; water ingress anywhere. Foundation cracks not remediated. Wall/ceiling movement signs. Everything else is usually replaceable and immediately apparent.
Thanks. Having looked at a crapton of online listings over the past year, “looks like a flip” is a common thought - and it has a lot to do with the flooring and kitchen choices. Thankfully, the super-busy multi-tone mini-subway tile backsplash seems to be going out of vogue.
What you say about the major mechanicals isn’t really any different than buying an owner-occupied home, except maybe a long-term owner is less likely to price the house as if the hvac were new while expecting to negotiate down to reflect its actual age.
I look at the sales history when I can (which will be always once we’re serious and have our realtor pull that data).
That’s actually what prompted me to post the question here. The site I prefer to use for just browsing does not include sales histories, so I pop over to realtor.com, which usually does. A listing the other day had not been updated yet on realtor.com and they still had the pre-flip listing up. It was pretty horrific, though you have to give credit to whoever was the listing agent for being honest enough to post the close-up photos of fallen ceilings and mold.
A good house inspector will catch these things, but there are a few things you can examine with a house you suspect is flipped:
- No/Inadequate insulation in the outer walls - ask for last years energy bills to give you an idea
- Foundation issues. Get into the crawl space and see what’s under there. Can you see repair history or water / staining? Is it post & beam or an actual foundation? If post & beam, look for shims / spacers added to the posts. A 6 foot level will give you an idea if the house is settling on one side. If the floor feels unlevel or sloping or had dips this is likely a problem.
- Inadequate electrical. Look at the service panel. Is it 100amp (ugh) or 200amp (Ok) (or better 400 amp?). A lot depends on square footage, but typically you want to see a LOT of breakers. Minimal amount of breakers can mean too few circuits. You’ll be fighting getting power where you want and tripping breakers.
- Plumbing - check water pressure. Older houses with steel pipe can have corroded / blocked pipes. Turn off the water at the main, drain the lines by opening up sinks / flushing toilets, then turn the water back on - how much sediment comes out?
Those are the main things I’d look out for. As you say, appliances, paint, flooring are just cosmetic.