Home Buyers Beware Of "Flipped" Properties
MIAMI (CBSMiami) – The real estate market is heating up these days as distressed properties that were foreclosed on or abandoned in recent years are making their way back to the market. But home buyers need to beware when considering a "flipped" home.
While many are real deals, others may not be a bargain when you look beyond the fresh paint or new carpeting.
It was a huge backyard and a big master bath that sold Marlene on a home when she was on the hunt for the perfect house, but she realized pretty quickly that her dream home came with a few nightmares.
"The dishwasher was installed improperly. The microwave blew up. There's a leak in the wall in the master bath next to the shower," explained Marlene.
It turned out Marlene's home was flipped, purchased by an investor, fixed up, and then sold quickly for a profit.
Flipping is up more than 50-percent last year, and recent trends show it's especially hot in higher end homes.
Daren Blomquist of Realtytrac says market conditions are ripe for flipping.
"There's a lot of distressed properties that these flippers can purchase up at a discount and then turn around and because of the rapidly rising home prices, catch that, that wave and profit," said Blomquist.
So who's doing the flipping? In addition to "mom and pop" investors, and construction and remodeling professionals, institutional investors backed by Wall Street or foreign investors are jumping in on the action.
"That's a new element we haven't seen before and is kind of creating an assembly line in some cases out of, out of flipping properties," explained Blomquist.
No matter who the flipper is, buyers like Marlene warn what you see is not always what you get when it comes these properties.
Bill Jacques, President of the American Society of Home Inspectors, cautions prospective buyers to beware.
"You never know if somebody's just going in and sort of putting in a coat of paint, putting in some new carpet, maybe putting in a new appliance. In a lot of cases there really needs to be a little more extensive work done," said Jacques.
Flipped homes should be checked carefully.
"With a flip, you want to have an inspector come in and pay very close attention to the quality of the work that's been done on that home," explained Blomquist.
Experts say be sure to check the 'bones' of the home, including its foundation, the framing and the crawl space. And despite these new warnings, "flipped" isn't necessarily a dirty word.
"These flippers pride themselves, many of them, in, in doing a great job," said Blomquist.
Jacques agrees.
"A lot of homes are really good deals. Everything's been done correctly. And then there are the homes that people just take short cuts," said Jacques.
It's also smart to get a home warranty in many cases. Marlene, regrets not doing that, since she says shortcuts are costing her money now.
"It sounded like somebody had taken the time to lovingly remodel it. Unfortunately, that was more, probably more our fantasy than the reality," said Marlene.
If you want to know if a home you're considering buying has been flipped, ask your realtor to check the sales history.
