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Buyer Beware – The Flipped House

BEWARE THE FLIPPED HOUSE… With the number of investors in our market, both savvy professionals and DIY lovers of reality TV, we are uncovering a new set of problems for buyers. Several stories I’ve heard recently are quite disconcerting. Some of these issues could have been avoided with seasoned, professional representation and some maybe not. One buyer bought a house where an investor had come in and replaced everything, flooring, paint, counter tops, bathroom, all the way. Some investors are thorough, some are doing it as cheaply as they can. In this scenario upon further review, the air conditioning was never touched and did not work properly, the kitchen range had no outlet and could not be plugged in, the toilet backed up into the tub on first flush, and the foundation warranty they thought they were getting was non existent. NOT because they could not transfer it, but because the work had not been done, was never paid for and nobody bothered to verify this fact.

In this scenario, EVERYONE gets sued, starting with the seller and including both agents and the brokers. The inspector pointed out these problems, but the agent did not review the report with the buyer and explain what it meant. They were either too new to know the truth, or too scared of losing the deal to tell their client the truth. The client only saw the report on a cell phone. It is quite difficult to properly review a 32 page inspection report on a cell phone. The inspector did not review the report with the buyer and the buyer did not attend the inspection. Most buyers defer to their agent in these matters anyway.

The bottom line is so many investors have bought and flipped so many houses that it’s hard to know what you’re getting. They can cover up cracks from foundation shifting, and basically put “lipstick on a pig” to make homes attractive while they leave structural issues, a/c and other serious problems untouched. A seasoned agent with a seasoned inspector are your best line of defense. If you are out looking at homes, keep this information in mind so you may be thorough in all your research. If there is doubt, red flags or the seller seems to be hiding something, chances are good they are and you should conduct more research and be ready to walk away. Always, always verify information prior to closing and remember you have 3 days to rescind ANY real estate transaction after closing!