Flipped home can be a good buy, or a money pit
Jan Stapleton - 2023 NETAR President
Unless you’re the type of buyer who’s sitting on a pile of cash, there’s no way around the fact that things can be tough in today’s housing market. That’s especially true if you’re a first-time or affordable home buyer. That’s why some buyers are looking for flips. And 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 is a flip.
Basically, it’s a property that an entrepreneur has bought, upgraded, and put back on the market. HGTV and other reality TV shows made flips famous. But much – or most – of what is seen on these programs in not fact-based. It’s about entertainment.
Despite what the program titles imply reality tv is rarely reality.
Flips are a big deal in the Tri-Cities region. They account for one out of every 10 existing home sales in several counties. That’s a bigger inventory contribution than the new home industry, which accounts for about 2 percent of sales. And they are a prime source for affordable homes and workforce housing in the $150,000 to $200,000 price range.
Last year was a banner year for flip sales. The number of sales jumped during the past two years because half of the filp sales were squarely in the affordable range. The highest median sales prices in the last quarterly report were in Washington, Co. TN ($230,000) and Washington Co. VA ($216,000). The most affordable was in Bristol VA ($148,000) and Hawkins Co. ($154,000). Remember, the median sales price is the point where half the sales were for more and half were for less. It’s the middle price point of the market.
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’re getting.
Here’s some pointers from local flippers and Realtors® who have seen the 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 – many 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 and insured inspector will go over the property and give you an itemized list of the findings. And if there’s anything even remotely suspicious, don’t hesitate to seek the next level of expert to check out the work.
Flipped homes are an important part of the local housing market because they take homes where maintenance has been neglected, ones 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 don’t do some extra due diligence.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us