6 signs a house is a bad flip — and how to avoid them

If you are a buyer in the real estate market, a flipped or recently renovated home can be very attractive. With a turnkey property, you can move in with little or no modification. Also, the house is most likely empty, so your move-in date may be short. But buyers beware: there could be costly problems behind the shiny updates.

First, how do you know if the house is a flip? Search the property data on the Dallas Central Appraisal District website (or the website for your county). You can also have your agent look up the home’s sales history. If the house was bought within the last 18 months, it is likely a reversal. This should prompt you to dig a little deeper into the history of the house to find out how well it’s been renovated.

A poorly executed refurbishment could be the result of a contractor cutting corners with cheap cosmetic updates and temporary repairs for complex plumbing issues. Real estate agent Stefani Myers has firsthand experience of dealing with a failure. (That’s actually what prompted her to become a real estate agent.) When she and her husband moved into a renovated 1970s house a few years ago, they encountered a number of problems. “Three months after we moved in, we’re noticing our floors are warping,” says Myers. “They are also brand new floors. It was one of the things that the investor had replaced. When we got there we found that the sewer was leaking because the house’s cast-iron plumbing was so badly plumbed.” The 40-year-old plumbing began to rot from the inside out.

Myers and her husband were also told that the house had recently had foundation work done, so they assumed any problems had been fixed. “We didn’t know that we should ask for additional documentation,” Myers shares. Even after hiring an inspector, no real foundation problems were found and the warranty was transferred. Had they asked they could have ordered a hydrostatic test before buying the house and ascertained the sewage problem. Instead, Myers received a $30,000 bill to repair the entire sewage system.

Furthermore, their inspector’s only suggestion was to ask for a new water heater. They did. What they didn’t know, however, was asking for receipts and pictures of the new device. “They replaced the water heater with an old one,” she explains.

Remember: a pinball player is looking for financial gain. If done wrong, the house becomes a money pit. But if done right, it could be a win-win situation. Real estate agent Angela Key has been renovating and exchanging homes for 25 years. She also represents buyers and sellers who have renovated homes for a profit. “An upside-down house is great for a buyer,” she says. “It’s move-in ready.” But like Myers, Key buyers urged to do their due diligence before making any of the largest purchases in their portfolio. Key, Myers and real estate agent Lance Hancock, who has helped clients buy and sell Flips, share their trusted advice to follow before making an offer.

Make sure you go through the house with a realtor.

Hancock points out that while listing the images may be pretty, the only way to find out if the materials used to finish the house are of high quality is to physically walk through the house. “Everything in a photograph looks new in an upside-down house,” says Hancock. “It’s hard to see the quality of it. So while the floors can look clean and appealing, when you actually step on them they feel sticky or not firm underfoot. This is a warning sign.”

A broker’s expertise can help you quickly determine if the flip is of good quality. “A real estate agent should understand the most important things: the plumbing, the foundation, the roof, and the windows,” says Key.

Myers also emphasizes that hiring the right real estate professional can help you avoid major financial missteps. As previously mentioned, Myers was new to the residential real estate business at the time and this was the first time she and her husband had bought a home. “We had no idea what was going on,” she says. “We saw this home and loved it.” Myers cautions buyers to make sure their realtor is familiar with refurbishments and new renovations. “If they’ve been in the industry for any length of time, they’ve experienced the right things to look for.”

Related: Experts break down the cost of a typical North Texas home renovation, project by project. Look at the person who flipped the house. Do they have a good professional reputation and solid reviews?(Getty Images)

Gather all information about the contractor or client, including recommendations.

“I’d like to know who Pinball is and a little bit about him,” says Hancock. “It’s important to know what else the investor or pinball player was doing in the area and if they have a reputable name.” The research phase is important: ask for recommendations, ask other brokers who have worked with them, talk to homeowners and check the contractor’s social media and websites for reviews. Another sign that a pinball machine is reputable is a clean and tidy site. “It shows a love of detail. That’s very important,” says Hancock.

Never progress without a full inspection and bug fix review.

“People get excited and buy emotions. That’s where some people get into trouble,” Key explains. “It is good to follow emotions. But follow your brain and not just your heart. Make sure you get a full inspection to protect yourself.” When Key is helping a client buy an upside-down home, she always urges her buyers to be prepared for something to come back in the report. “I’d rather it was brought to the surface now than as an afterthought. Everything can be repaired – for a fee, of course.”

And don’t forget to ask as many questions as you like. Sellers should disclose all information in their possession. “The more knowledge you give a buyer, the better informed they will be in making their own decisions,” Key emphasizes.

Myers recommends that clients always request receipts and documentation after the investor has agreed to repair or replace anything after inspection. “Make sure they take pictures and hire a certified professional to install it,” she says.

Have the pipes thoroughly examined.

As we learned from Myers’ story, you should always take the time to hire a professional plumber to run a diagnostic test. “A lot of the flips are primarily cosmetic renovations, so everything looks really good. It’s polished and clean, but there may be old cast-iron plumbing underneath the house,” says Hancock. He goes on to explain that a dirty construction site can also cause damage to water pipes.

“Dust and dirty rags can sometimes collect in the lines,” he warns. “Everything is fine for a week or two, and while the new owners are getting their washing machine and bathrooms up and running, the lines are clogged and they realize there is dirt in the line. Much of this can be avoided with a thorough sanitation inspection.”

According to real estate agent Lance Hancock, the quality of a home’s doors can say a lot about the quality of the complete renovation.(Getty Images)

When finishing the house, beware of unfinished or shoddy details.

Hancock’s warning signs of a poorly executed flip include details that appear unfinished or sloppy. “If you see windows that aren’t sealed properly, outlets that are loose, or gaps between outlet panels and tiles, to me it means people got through very quickly and weren’t there for surveillance,” he shares. While some fittings may vary depending on budget, he still recommends viewing the doors as a sign of investment in the property. “Cheap plastic multiwall doors increase profit margins but don’t offer quality to the user,” he says. “It says something about the fin.”

Key suggests looking at the caulking around the bathtubs, windows, and especially around the sinks. “If your kitchen isn’t sealed, water will fall back behind the sink faucet. And because you’re spraying and cleaning the dishes, the water gets back there and erodes the caulk,” she says. “If you don’t caulk it constantly, it could blister and you could see signs of unrest in bathrooms or kitchen sinks.”

Make sure the air conditioners are working properly.

The seller should disclose whether the units are new or not. However, if they are old, watch out for soot coming out of the vents. “If there’s soot, they don’t service their equipment,” says Key. Ask a heating and ventilation specialist to check the unit and filters.

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