Photo by Emily May, acquired via Flickr.com

Flip Buyers, Beware!

Posted March 17th, 2016 under pitfalls, smart buying.

Buyers today need to be aware of the risks associated with buying a “flip” (a home that an investor buys and renovates so they can sell it at a profit).

When a home-owner renovates their home for their own pleasure, they will usually do it to the best of their ability, and won't knowingly cut corners. They want the same thing as you, the next owner: a home that's great to live in.

Meanwhile, an investor renovates for profit only. They want to dazzle potential buyers with a home that looks as bright, clean, and new as possible. That doesn't always mean top-quality materials or professional work, it's all about appearances.

If you're considering buying a flip, here are some of the risks, and steps you can take to protect yourself:

• Layouts that have been converted to an open concept are risky. How do you know whether the removed walls were load-bearing? I recommend you find a home inspector with experience in construction to review the renovation.
• Any new electrical work, such as modern recessed lights, should come with a certificate from the Electrical Safety Authority (ESA), or at least an invoice from a qualified electrician. Amateur electrical work can create a safety and fire hazard.
• New kitchen cupboards might be either wood or cheap composite with plastic. Ask the seller, but also check by looking at the cupboard doors: if you don't see seams where the vertical and horizontal edges meet, it's not wood. (Wood doors are always made from separate pieces that are joined.)
• New flooring might be solid plank hardwood, engineered hardwood, or cheap laminate. Ask the seller, but also check by looking at the edges where the heating ducts are cut out. Any type of flooring can be okay, but the difference in cost is huge and you should know what you are paying for.
• If the basement has been renovated, you will have literally no way of knowing if it has a history of moisture problems. This is a significant risk of buying a flip, and there's no good solution.
• If the home has new windows, ask what kind they are, and ask to see the invoice. There is a wide range of prices, and like flooring any of them can be fine, but you need to be aware of how much value the windows are adding.
• If a bathroom has been remodelled or any new plumbing done, be sure to ask for the plumber's invoice so you know the work is professional. Amateur plumbing work can cost you thousands if it results in flooding later.

In general, never be afraid to ask exactly what changes have been made, who did the work, and which materials were used. Use the same scrutiny you would for a renovation being done to your own home—because that's essentially what a flip is, a “pre-renovated” home.

One of the best precautions you can take is to have the home inspected by a home inspector of your choice, whom you trust.

Flips often look very attractive compared to other nearby homes. Just remember that you are buying from someone who is there to make a profit, so make sure you protect yourself.

Want to know more about protecting yourself when buying? Just ask me, I'll be happy to help.