A flipped home can be great find or a money pit
Unless you are a cash buyer, there is no way around the fact that things can be tough in today’s housing market – especially if you are a first-time buyer or looking in the $200,000 or under price range. That is why some buyers are looking for flips the way buyers used to look for foreclosures several years ago. Make no mistake about it; a flip can be the best or the worst of housing finds.
The first thing we should establish is just what a flip is? It is a property that an entrepreneur has bought, upgraded, and put back on the market. HGTV and other reality TV shows made flips famous. Much – or most – of what is seen on these programs is oversimplified or scripted. In other words, most of it is fake TV.
Flips are a big deal in the Tri-Cities region. They account for one out of every 10 existing home sales. They are a prime source for affordable homes. During the first nine months of 2019, there were 469 flip sales in Carter, Greene, Hawkins, Sullivan, and Washington counties, according to Attom Data Solutions’ quarterly flip report. There were probably a few more because some area counties did not have enough sales to be included in the Attom analysis. The annual 2019 numbers have not been released yet.
There’s no doubt about it. Buying a flipped home can be a smart move, but it involves extra due diligence to ensure you’re getting the deal you hope you are getting.
Here are some pointers from local flippers and REALTORS® who have seen to good, the bad, and the ugly of flipped homes.
- Does the seller have a history as a flipper? Ask for the names of people who bought a home from the flipper. Talk to them.
- Get a list of what has been done. With it, you can eyeball the improvements, open and shut the doors, and get a hands-on impression of the quality of the work.
- The “what has been done” list is also the gateway to check that any necessary permits and or inspections were made. And don’t overlook the need to confirm that the folks who did the work had any or all of the licenses required. The seller should have copies – most do because it moves the process along, and they’re interested in selling the property as quickly as possible to recoup their investment.
- Buyers should also hire an independent home inspector. A licensed, accredited, and insured inspector will go over the property and give you an itemized list of the findings.
Flipped homes are an important part of the local housing market because they take homes where maintenance has been neglected, that are dated and need a facelift – or more – and get them back into the housing inventory. A good flip can mean a good deal. But a poor flip can be a money pit for buyers who do not do some extra due diligence.
NETAR is the voice for real estate in Northeast Tennessee. It’s the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,300 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports, and the regional market analytics are available on the NETAR website at https://netar.us/voice-real-estate-northeast-tennessee.