Reader Question: We bought our current home a year ago. We realize houses and their systems are always wearing out, but in this house, it feels like the repairs and replacements are inordinate. The latest example is electrical. The electrical panel box was new, but we have had several electrical issues. The home inspector said electrical was satisfactory. An electrician determined the house had 60 amp service to a 100 amp panel and said whoever did the work must have known. Now we have to re-do the wiring to the house. All these “repairs” since we closed are over $5,000.00. We suspect the seller was a corner-cutting home flipper. How can we identify a flipped home?
Monty’s Answer: Besides a home flipper, your description could point to a home seller who knows little about how a home and its components work and watched too much do-it-yourself television. It may be a home seller that knows precisely how a house works and knows how to cut corners. Another scenario is an uninformed homeowner that hired dishonest or unqualified contractors who took advantage of them and indirectly, you.
Seven tips to identify a flipped home
- A vague seller condition report – vague or perfect on a recently purchased home.
- Term of ownership – If the seller has owned the home for less than 18 months..
- Talk to adjacent neighbors – some neighbors are very aware of neighborhood activity.
- Seller name – If the seller is a corporation or a limited liability company.
- Municipal property records search – multiple properties under the sellers’ name.
- No records of service work – receipts, invoices or contractor information absent.
- Financial institution past owner – suggests a troubled history in a prior owner.
A new type of home flipper
A relatively new method for a real estate company to gain market share in some real estate markets is to promote the iBuyer concept. Their pitch is to buy directly from a home seller to avoid the hassle of selling. They state they pay a fair market price, fix up the house with their contractors, and then resell it. They charge a hefty “service fee” instead of a commission and they charge for repairs. Real estate companies have noticed and moved into iBuyer type marketing to protect their market share. The result is a proliferation of iBuyers (flippers) in some markets. Here is a link to an article that discusses traditional house flippers at http://184.108.40.206/sell-home-flipper/
The not-so-transparent home flipper
These flippers do not openly disclose they are flippers. These folks are why house flipping has acquired a questionable reputation. If questioned, many will reveal the house is a flip, but many will not. Some flippers will move into the house and fix it up while they occupy it. Flippers often find their leads through working in real estate related businesses. Some home inspectors, real estate agents, and building trade contractors will buy a home if they can turn a healthy profit. It is not always easy to identify flipped houses. Do your research before deciding to buy a home you suspect is being flipped.