Seven precautions you should take before buying a flipped house
A flipped house is one that is bought by an investor who does a series of quick remodels and then resells the house at a higher price, usually within a year or shorter.
The flipper’s usual objective is to spend as little as possible on the remodels and to complete the process as quickly as possible.
The amount of flipping seems to increase when the housing market heats up. That’s happening around the country – including Arizona.
An online real estate database, Realtytrac, reported about 8 percent of all homes sold in Phoenix were flipped in 2016. In other areas, such as California and Florida, the rate was 10 percent.
Should you buy a home from a flipper? Perhaps you may want to if it’s in a neighborhood where you particularly want to live or it has the view that you want or it has a great price.
But before doing so, here are some steps to go through:
1. Find out as much as you can about the seller-flipper and what his or her reputation has been in the real estate industry. There are builders and investors out there who do a good job and will back up their work to prove that.
2. Get an itemized list of what repairs and remodels were done on the house you want to buy.
3. Hire home and roofing inspectors with outstanding reputations to give the house a thorough going over and report back on any problems.
4. All plumbing or electrical work that was done on the property must be up to code and done with a permit. Any addition to the home needs a permit. You can go to the city or county planning department yourself to look at the permits just to be sure.
5. Insist that the seller fix or repair anything that doesn’t suit you in advance. Sometimes the seller will offer to include money in the contract for those repairs if you will do them later. In that case, you need to get estimates from contractors about what the repairs will cost.
6. Ask for manuals and warranty information for any new equipment that was installed, such kitchen appliances and heating and air conditioning systems.
7. Be sure that the title company checks on the property tax status of the house. Sometimes flippers “forget” to pay their taxes until they sell a house.
Above all, you need to be realistic about a house that seems overpriced and loaded with problems to fix.
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