I found a home I like - it’s a “Flip”.
I found a home I like - it’s a “Flip”.
What should I be aware of?
Hello, Home Buyer! Great news and an even better question! Home Flipping has been around as long as homes have been on the market. A Home Flipper purchases a home or property in disrepair for a discounted price, makes repairs, then relists the home/property for a higher price in order to make a profit. Not all Home Flippers are the same. Some are large companies who handle several flips a year and some are smaller and more independent, doing only one or two homes a year. Some offer warranties and some do not. The Home Flipper is often a savvy investor who knows their product and understands the market surrounding their listing almost better than anyone else and they also know their own ‘numbers’ – their purchase, repair and sale costs. They are often hyper-focused on the ‘bottom line’ and may not be easy to negotiate with.
The Home Flipper most likely has absolutely no property history available to them at the time of purchase. They investigate and evaluate the home to discover what they believe needs to be fixed. They may or may not catch everything. Most Home Flippers focus on health, safety and cosmetic repairs. That can include Septic and Sewer Systems, Heating, Cooling, Plumbing, Structural items such as Roof, Windows and Siding and cosmetic items such as Cabinets, Fixtures, Appliances and Floor Coverings.
Some Home Flippers apply for and pull permits from the governing municipalities/jurisdictions for their work and some do not. The ones that do pull permits must ensure the remodel is done according to the local governing jurisdictions codes and requirements, go through multiple inspections, and have all work signed off and approved prior to reselling. Home Flippers who do not pull permits often also remodel the home according to local codes and requirements, but no one is inspecting the work until your hired home inspector does that for you. We always advise our Buyers to include an Inspection Contingency in the Purchase and Sale Agreement in order to allow time for their own independent inspections. It is important to note that in each instance, it is the Buyer’s responsibility to research and inspect the property to the fullest extent they desire and ensure that they are satisfied with the home prior to signing off on the Inspection Contingency.
Purchasing a Home that’s been flipped can be wonderful for many reasons: its move-in ready: the home has been recently remodeled and features new materials which makes it feel as if no one else has ‘lived’ in the home yet. Most major systems, such as: roof, windows, heating and cooling, electrical and plumbing systems, have been updated, meaning less up-front maintenance and repairs once you move in. The home’s life has been extended, meaning you could have years of maintenance free living. You don’t have to be concerned about making upgrades when you move in. You can spend your time, energy and money on property upgrades for fun things such as patios, landscaping, fencing, gazebos, hot tubs or pools.
Flips aren’t for everyone. Some Buyers look forward to putting their own personal touches in their new home by making cosmetic updates. Some Buyers want a few projects to do in order to make the home more ‘their own’. Buying a flipped home means you pay a bit more - the home will be priced at the top of the market due to it’s like-new condition – almost everything has been updated and is new, so there is little unrealized equity. A home that needs updates will appreciate faster due to your ‘sweat equity’ returns when you quickly complete deferred maintenance projects and make your own cosmetic updates to an older, outdated home. Buying a home that has been flipped isn’t right for everyone. If it’s right for you, you’ll know!
At Wilcox Real Estate, it’s our mission is to provide our Buyers and Sellers with the very best Real Estate Experience through consistent communication and transactional excellence. For more details on Home Buying and/or Home Flipping and to schedule an appointment to learn more, please contact us at [email protected] or call us at 253-256-1721. We are so excited to work with you!