I have been on two sides of the coin: I have been a real estate agent representing investors who flip houses, and I have represented buyers who want to buy flipped homes. And, having been on both sides gives me a unique perspective when helping to guide buyers in asking the right questions prior to buying flipped homes; questions that every buyer should ask before they buy any sow’s ear that may have (potentially) been dressed up to look like a silk purse.
Question #1: What kind of history is there on this property?
Buyers should know how many times the house has been sold, as well as what it sold for. Being a seasoned real estate professional, this is easy information for me to obtain. And, living in a full-disclosure state, like Texas, only protects the buyer even further. However, before buying a flipped property, my best advice is to find out as much history on the house as possible.
Question #2: What is new in this house?
I have seen great investors make structural repairs and update the home cosmetically for a sale. I have, also (unfortunately) seen sellers who don’t make necessary structural repairs and who only do a quick cosmetic fix in order to turn a fast dollar. It’s important for buyers to get a list of everything that was done or updated in a property before making an offer – especially on a flip.
Question #3: Can I get repair receipts or invoices?
Generally, great investors have no issue sharing information with buyers, including what the projected costs are of heating and cooling a home – especially when they are connected to a great real estate agent. However, it never hurts to ask if it isn’t offered upfront.
Question #4: Can I hire my own inspector?
Even if a home looks brand new, and even if the seller has paid for a home inspection upfront, my advice is never to rely on this information alone. I would always counsel buyers to get their own independent home inspection to make them aware of any unseen issues in the property and negotiate those repairs prior to closing, or (if the repairs were substantial) to walk away from the deal before they lost their earnest money.
Question #5: Are there permits?
When it comes to updates or repairs that are any more complex than surface cosmetic changes (think paint and wallpaper), permits are required. If an investor of flipper doesn’t have them that is a red flag. Homes that do not meet current building code can be more expensive to insure than the homes that do. If permits were not obtained, make sure to get a home insurance quote before putting in an offer on a flipped house.
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