Flipped houses for sale have been an increasingly popular option for buyers who want a move-in-ready home without having to tackle any renovations or upgrades themselves. These properties have been purchased and revitalized by investors, who aim to sell them quickly for a profit.
If you’re looking for such hidden treasures, you might wonder if buying one is the right decision. To make an informed choice, you must understand the key factors to consider before purchasing a flipped house.
Let’s walk you through everything you need to know before buying a flipped house and finding the perfect move-in ready home that fits your budget and needs.
Should you buy a flipped house?
When searching for a new home, you may come across a property that has been flipped by an investor. House flipping is the practice of buying a property to increase its value through renovations and improvements before selling it for a higher price. In the United States, house flips accounted for almost six percent of total home sales in 2020.
So, should you buy a flipped house? It’s important to note that home flipping is driven by the goal of generating a fast return on investment, which means the quality of the renovation can vary based on the flipper’s expertise or the competence of their contractors.
Before making a final decision on purchasing a flipped home, It’s crucial to weigh both the benefits and drawbacks.
Pros and Cons of Buying a Flipped House
Let’s take a look at some of the possible risks and advantages of buying a flipped house:
Benefits of Flipped Houses
Whether you’re looking to relocate to be close to your relatives or searching for a home near your new job, considering a flipped house might be for you. Here are some of its potential benefits:
1. Updated Interiors
Flipped homes are typically newly renovated. Flippers often focus on updating things that make the home more desirable and profitable, such as the design and appliances.
Flipped houses offer a more cost-effective option than newly built homes. As they are typically move-in ready, you can avoid the time, effort, and expense of making repairs, such as fixing electrical and plumbing issues, installing new appliances, or repainting walls.
3. Fewer Contingencies
With flipped houses, there’s no need to wait for the previous occupant to vacate the property. Investors often do not live in the homes they flip, so there will be no delay in making the house available to new buyers.
Downsides of Flipped Houses
Purchasing a flipped house comes with its own set of risks, as with any big investment. Here are the potential risks of flipping houses that you should be aware of:
1. Surface-Level Upgrades
While the house may seem new and shiny on the outside, it’s crucial to ensure that the renovations adhere to local building codes and standards. Some house flippers are skilled in their work, but it’s also possible they simply cover up existing problems with cosmetic upgrades.
2. Overlooked Details
The speed of the flipping process can sometimes lead to minor oversights. Identifying these hidden problems can be challenging, even for the most experienced homebuyers.
3. Non-Permitted Work
While the house might boast new electrical work and state-of-the-art appliances, it’s possible that the permits for these changes were not obtained. As the legal owner, you’ll be responsible for bringing your home up to code and paying for necessary changes after you move in.
What To Know When Buying a Flipped House
The key to fully enjoying the benefits of flipped houses while minimizing potential risks is to be well-informed and find the right property that meets your needs and standards. To get started with the buying process and obtaining your dream home, here are five tips for buying a flipped house:
1. Investigate the renovations.
Before purchasing a flipped house, research the property records to determine the extent of the renovations done. This information can help you understand if the house is worth its asking price, considering the materials used and the upgrades done.
2. Verify necessary permits.
Ensure the house has the proper documentation and if any outstanding fees are settled to avoid legal trouble after the purchase. To do this, visit the city’s website where the property is located, or reach out to the building or development department for information.
3. Hire a qualified inspector.
It’s essential to hire a reputable third-party inspector to assess the critical components of the property, including the heating and cooling system, drywall, electrical wiring, and plumbing. An experienced inspector can identify any signs of cost-cutting measures or potential issues that may not be immediately apparent to the untrained eye.
4. Research the contractor.
Ask your real estate agent for the name of the company or companies that performed the construction, and research their work history. If the owner did the renovation themselves, ask for examples of their previous work.
5. Make a viewing checklist.
To ensure that you are not missing any signs of subpar workmanship in a flipped house, create a comprehensive inspection checklist to bring with you during your viewing. Focus on areas commonly overlooked by unscrupulous house flippers, such as windows and doors.
Flipped houses offer a convenient and cost-effective alternative for buyers looking for a move-in-ready home. The key to reaping the benefits of these properties lies in being informed, performing due diligence, and finding the right one that meets your needs and standards. By being aware of what to look for, you can minimize potential risks and ensure that you’re getting the best value for your investment.
Get started in purchasing your dream property with Cedar Home Loans
Whether you’re a first-time buyer or a seasoned investor, purchasing a flipped house can provide you with a renewed sense of comfort and security and the satisfaction of knowing that you’ve made a sound investment.
The first step in purchasing a home, flipped or not, is obtaining a mortgage. Cedar Home Loans is here to help you navigate the challenges of applying for mortgages. We offer Colorado home loans and mortgage solutions tailored to your needs and investment goals. Reach out to us for more details.