Buyer Beware! What House Flippers Don’t Want You to Know

What House Flippers Don’t Want You To Know

Poor workmanship, questionable materials, and inexperienced contractors are just a few of the factors you need to be aware of when purchasing a property from a house flipper. Today, we will discuss what you need to look out for and which questions you should be asking to avoid major regret and financial loss.

Buying a home that has been extensively remodeled by a house flipper can be a great investment opportunity, but it can also be risky. I’m here to help you know the questions buyers should ask, but rarely do when purchasing a heavily remodeled home.

Why Do I Need To Worry About Recent Remodels or Flipped Homes?

I’ve been seeing more and more investor remodeled homes selling for shockingly high prices throughout the Pasadena area. This makes me very worried for local home buyers, and here’s why:

An investor’s sole objective is to make as much money as possible, as quickly as possible. Low-quality contractors often tend to be the ones doing the work, and they’re likely cutting corners for the sake of speed and to cut costs.

While the materials used might look great, they tend to be flimsy and cheap upon closer inspection. Most homebuyers simply don’t know the difference, and why should they? They’re not experts on construction quality or best practices. Because the home looks beautiful in the online photos, many buyers assume the high asking price is a reflection of quality. Unfortunately, that assumption is often miles from the truth.

Don’t assume that all investors and contractors are bad or are cutting corners, however. Some local investors have earned a wonderful reputation for building quality homes with skilled contractors, but as house prices continue to climb year after year, fly-by-night investors are jumping into the market more than ever.

This is where things get concerning. The last thing any of us want is for a home buyer to buy a house that looks great on the outside, but is actually a ticking time bomb of construction defects and shoddy workmanship hiding beneath the surface.

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What Do I Need To Look Out For When Buying a Remodeled Home?

Homebuyers are at a real disadvantage here. The sad truth is, most agents don’t know the right questions to ask to really dig deep on the quality of a remodel, and even if they do, there’s no incentive for them to go the extra mile and look for hidden problems when their client has already fallen in love with the home.

It is not just about the money. Regardless of financial incentives, I believe in treating clients the way I would treat my own family. So here are the steps I advise my buyers to take when vetting a flipped home:

  • Ask the seller to provide you with a name and license number for their general contractor.
  • Have an attorney run a search for closed or pending litigation against that general contractor for construction defects. Check to see how long the contractor has been licensed as well. Ideally, they’ve been active for many years with little to no litigation. If not, you can consider that red flag number one.
  • Ask for the names and license numbers of all the major subcontractors who worked on the home. These would include the contractors for electrical, plumbing, roofing, concrete, drywall, et cetera. If the seller tells you the general contractor is the one who did all the work normally done by specialty subcontractors, you can consider that red flag number two.

Of course, you’ll do a general inspection, but this tells you very little about the underlying quality of the home’s build. Remember, the inspector can’t look inside the walls. I recommend hiring an experienced general contractor as a consultant to review both the architectural and structural design plans. Also, have them on-site to investigate the property at the same time as the general inspector. This will give you a much better picture of the property’s overall build quality.

If everything to this point seems satisfactory, there’s one more step I highly advise, and this is the most important of all:

Require the seller to provide the name of the insurance company and the insurance policy number for the general contractor and every subcontractor. 

Here’s why that’s so important:

If poor workmanship causes damage to the property in California, the contractor’s insurance carrier is liable for the cost of repairs for 10 years. If years down the line, your roof starts to leak, and you don’t know who the roofer was or what insurance company they had, then you’ll be at a huge disadvantage here. That’s just one example of hundreds of things that could go wrong due to poor construction quality.

If you’d like further guidance on how to protect yourself when purchasing a home, whether a flip or otherwise, please feel free to reach out any time. Our number one priority is to take great care of our clients. Knowing we’re helping them find a well-built home is just the beginning.

Eva Lin

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