What you need to know about buying a flipped house
There are many reasons sidelined buyers are looking at the closing months of this year as a good time to buy. Here are a few of those reasons.
Mortgage rates are bouncing below and above the 3 percent mark, but it’s a given they will be higher next year. Seasonal slowing has taken the edge off the competition from other buyers. And although Inventory is tight, it’s a little better than it was this summer.
Buyers who lost out during multiple offers situations are also better versed on the market – especially on the advantage of narrowing their focus to the house flipping sector. However, while buying a flipped house has advantages it’s a purchase that should involve some extra diligence.
Flipping houses has evolved from a somewhat obscure part of the local housing market to the mainstream. Much of the public awareness and fascination can be attributed to HGTV. The other side of that coin is the role flipped homes have and continue to play in the local stock of affordable homes. It’s also a form of both passive and active income for entrepreneurs.
During the first half of this year, flipped house sales in the NE Tenn. and SW Va. market accounted for one-in-10 existing home sales. And half of those 472 flipped home sales so far this year have been in the $200,000 and below price range. The exception is the Washington Co. Tenn. market where the median sale was $216,250, which is still in the affordability price zone. That means flip sales have added to the existing home sales total and reinforced inventory in the price range attractive to both those shopping for affordable homes and first-time buyers.
Buying a flipped house is often a smart thing to do, but it – as previously stated – involves some extra caution to ensure that you’re getting the deal you hope you’re getting. So, it’s important to verify that it’s the deal you think it is.
The first thing to remember is if the property wasn’t the seller’s primary residence, start running your flipped house checklist.
Does the seller have a history as a flipper? There are good ones out there. Unfortunately, there’re some who are not so good. If the seller has flipped several homes, get the names of people who bought them and see how they feel about what they bought.
Get a list of what has been done to the home. With it, you can eyeball the improvements, open and shut the doors, and get a hands-on impression of the quality of the work.
It’s also a good idea to check that any necessary permits and or inspections were made. 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.
One of the best strategies is to hire an independent home inspector to double-check your inspection and to look for the things a professional is trained to do. A licensed, accredited, and insured inspector will go over the property and give you an itemized list of his findings.
With careful consideration and the help of professionals like a local REALTOR® and a home inspector, you can take advantage of the benefits of newly renovated flipped homes while avoiding most of the risks.
NETAR is the voice for real estate in Northeast Tennessee. It’s the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,500 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries.