Post # 1
We are about to put in offer in on a beautiful house. I am cautiously optimistic about it. The house we are offering on is obviously a flipped house–it was bought from the bank by an investor and remodeled top to bottom. Based on the labor and quality of materials in the house, the work looks to have been completed by a professional.
The house was not in a state of disrepair to begin with, but the investor has added a ton of cosmetic upgrades. The asking price is at the high end for the neighborhood (which is a nice but older neighborhood). Aside from the upgrades, this house seems to be in decent shape–relatively new roof, water heater, air conditioner, foundation repairs completed, etc. Obviously if the offer is accepted, we will have a thorough inspection and are prepared to walk away if serious problems arise.
Does anyone have experience with buying a “flipped” house? I feel like it has a negative connotation to it, but we really love this house. If you have any experience (good or bad!), please share.
Post # 3
As long as you get it checked over by your own inspector, I wouldn’t be concerned unless they are.
Post # 4
I did! I was looking for a completely remodeled house because I didn’t want to deal with upgrading myself. The house was bought by the previous owner 4 months before it was sold to me, and it was remodeled from roof to floor. I had a friend refer a house inspector to me to make sure all the work was done well and with good quality materials (and obviously that there were no major things wrong with the house).
Post # 5
My thing with flipped houses is you never know what they are covering up structurally with fancy cosmetic upgrades. Around here, flipping is big business, but the houses are also way older (like, a hundred+ years old) so the pipes and electrical systems are a big concern. Houses here often don’t have foundations unless they were put in long after they were built (to the tune of $75,000-100,000). I grew up in Dalls/Ft Worth, so that’s been a big learning curve for me as we’ve house hunted.
I guess I wouldn’t totally nix a flipped house, but i’d be wary. Don’t get gushy over the cosmetic stuff – make sure you get a rock solid inspection. Cosmetic stuff is easy to add later. It’s much harder to fix structural stuff.
Dallas/Ft Worth has a ridiculous amount of decent housing stock (vs here, where there’s no place left to build, and anything larger than a 2 bedroom is very very difficult to find). I’d probably pass and go with something that had a more concrete history if it were me!
Post # 6
@crayfish: This house was built in 1975–obviously there could still be tons of potential problems, but maybe not in the same range you would see on 100-year old houses (though here, built in 1975 is considered old! My Father-In-Law couldn’t believe we’d look at a house so old, haha.)
I appreciate the input! I am trying to not get too invested in it until we see an inspection. I guess all houses could be hiding potential problems, so we’re going to give it a shot. We really do love it but I also know we’d be okay walking away from it if we had to.
Post # 7
It wouldn’t bother me so long as a solid inspection showed the work was done well and they weren’t attempting to cover up any major flaws/issues. I’d rather someone else go through the reno for me and I get to enjoy the finished product.
My Mother-In-Law just sold her mom’s (DH’s grandma’s) old home to a company that flips houses. There is nothing wrong with the house – it just needs to be totally renovated because it is outdated. It still has the original kitchen (with functioning avocado green appliances)!
Post # 8
I’d be very clear with the inspector to give an estimate of the quality of the upgrades and renovations. We’ve had a few houses on our block flipped, and since I telecommute, I can watch the workers come and go all day long. The consistent theme I see is use of lower grade, cheaper materials: lower grade insulation, low-end cabinetry and fixtures for kitchen and bath, cheap paint, cheap thin carpet, low-end granite if they’re putting in granite. You get the drift. You may end up paying top dollar for a pressboard kitchen that looks gorgeous now and falls apart in 4 years, or stuff you’ll need to replace a lot sooner than if you’d renovated yourself and put in higher-end stuff even if it cost more.
Just one example: we recently had our kitchen redone and we picked a mid to high-end granite for the countertops. We picked our own slab from a granite distributor, and on their quality/price scale of 1-7 we picked a 5. It was cut in the warehouse and delivered in big slabs, the finished cut of each of the surfaces to be covered, plus the trim bits. The flippers across the street appear to have used cutouts/end bits from other slabs to form a counter-top, as their square footage and basic floor plan is the same as ours, but their granite showed up in sections rather than full surfaces; this is a lot cheaper because you’re basically using the leftover bits from someone else’s job, but it means more seams in the countertop which mean more upkeep in re-sealing, and more chance for water to seep through to the cabinetry. It also means the pattern might not be a dead match. In the grand scheme of things, it’s only about a $1500 price difference (at least on my job) to buy the full slab and cut from there, but a flipper doesn’t care about the long-term appearance and funciton. They care about $1500 more profit.
So hire an inspector who will catch these things. They can end up being very costly in the long run.
Post # 9
@Mrs.KMM: I can actually see the old pictures on RedFin of when it was sold to the investor–it doesn’t look bad, just outdated and maybe not as nicely finished out as the other homes in the area. It would be my dream to just move into a house like this with everything just the way I like it, so fingers crossed it is not too good to be true!
Post # 10
I agree with PPs – just make sure you have a thorough inspection!
My dad and brother have flipped a few houses – it can be challenging, especially when you are within a city with strict construction/inspection codes.
My FH just bought us a house that was built in the early 80s. It has a blue tub and white/blue marble counter top. The kitchen was complete with plenty of wallpaper haha… We are doing the reno’s ourselves. I wouldve loved to have bought this house post flip! haha…
Post # 11
We bought from people who bought from flippers. They were only here for 6 years. A lot of electrical stuff came up during the inspection. But our inspection was solid. Nothing that the sellers didn’t take care of.
With buying from investors, be prepared to fight. Around here they don’t help buyers they just ant their money’s worth
Post # 12
@MASPA: I feel like the investor might have cut his profit margin too thin (maybe overdid the house for the market) and I’m afraid they won’t budge much on the price. Their realtor said they are highly motivated, it looks like they have been carrying the property since June and it has been on the market about 85 days, dropped the price about 10,000.
The house is beautiful and it has not had any other offers, so I think they are still asking too high. I’m also a bit concerned if the house appraises low and the seller is not willing to work with us.
Post # 13
If you lived in near me I would think you were buying the house we looked earlier this fall! My husband and I were very close to putting in an offer on a flipped house. At first visit it looked great we loved the layout and finishing touches he did. The more we looked into the more we found flaws. He priced himself out of the neighborhood we were looking at. To keep the price reasonable he did high end in some areas and really cut corners in others. In our case the kitchen was beautiful but the windows were orginal (1940s house). The bathrooms upstairs was tiny but he decided to give the master bedroom a walkin closet that was massive along the same wall instead of making the bathroom bigger or adding a second one that space.
I would recommend visitng the house more than once to make sure you dont miss anything. See if the invester can be there to explain exactly what they did. If you know someone in the home construction buisness bring them and see what they think he put into the house so you can better judge what price you will have to pay. And he did price himself out of the neighborhood dont settle you will find something even better! We did and are about to close on a house we love so much better than the flipped house!
Post # 14
We fell in love with a flipped house last year. It helps that we both worked in home improvement and knew all of the products he chose were good quality, and we looked at the house three or four times. Unfortunately, the closests were TINY, and my job never hired me in so that we could make an offer on it, and it sold.
There’s another house that we’re looking at that’s a flipper, but this guy (different guy) didn’t try to put much money into it. He chose pretty blah flooring and left all of the brass fixtures, had them paint cheap slab doors gloss white with brass knobs, etc. It wouldn’t take much to change out the things that we really don’t like, and aside from it being on the small side, it does have everything we want, and is below our price range.
Post # 15
You mentioned that the price is high for the neighbourhood. Do you see prices going up in the future? I’ve heard that it’s better to have the worst house in the best neighbourhood rather than the best house in the worst neighbourhood. You don’t want to lose money on fancy cosmetic upgrades. As everyone else has said, make sure you get a thorough inspection completed on the property.
Post # 16
UPDATE: we did go ahead and put an offer in–I am hoping it all works out! We have visited the house twice and loved it both times, even with a more critical eye. We brought my ILs (FIL was extremely skeptical when we described it) and they both loved it as well.
The seller already countered our offer and it seems like the he is very motivated…it’s looking likely we can come to a mutually agreeable number. Their first counter number was what our realtor felt was a fair price for the house, so I think we will still end up with a good value for this neighborhood.
The seller’s disclosure included the receipt and lifetime warranty for the $6k repairs the investor completed on the foundation. Our realtor said that’s actually a good thing for us–we knowthe foundation been overhauled which minimizes the risk of us running into other unknown foundation issues (which are very common in our area due to the soil).
We’re doing an FHA loan and I think if the home is truly overpriced, there is a chance it will not appraise for the value we agree on. Our realtor also thinks this could work to our advantage and in this case, the seller would probably drop the price to whatever the appraisal dictates. We just have to hope they don’t make their concessions (closing costs) contingent on the appraisal.
Thanks to everyone for your input! We have thought a lot about this and I’m still feeling very optimistic at this point.