When inventory is tight and newly renovated homes are wooing prospective buyers, you need to take a step back and remember that the home you’re hunting for is a long-term investment. While futuristic appliances and gleaming hardwood floors may seduce you into making a quick offer, understand that there’s much more to a home than what lies on the surface.
Investors who renovate homes want to maximize their profit as quickly as possible. While many are upstanding folks, there are those out there who will cut corners in order to boost their return. Sometimes when a home is renovated, an investor will do a “lipstick flip.” Basically this means fixing up what’s cosmetic and leaving the rest as-is. Paint, flooring, appliances, fixtures… all may get a tune-up. But this doesn’t necessarily take into account foundation issues, leaks, plumbing problems, and work performed without permits.
Once buyers close on a home, they’re responsible for the home. This includes issues which may be costly to repair or remain simply unsafe for habitation. This is why it’s vitally important you take the necessary steps to protect yourself before signing off. Here are some tips to prevent the headache and heartache of a bad “lipstick flip” home:
- Do not waive the inspection. In addition to the usual areas, have inspections for exposed wiring in the attic and mold. Include a termite inspection.
- Ask for a complete list of all work done with receipts for the work.
- For all work done, make sure the seller used a licensed contractor.
- Ensure the work on the home passed inspection and is up to code. Request a copy of the certificate of occupancy.
- Ask the seller for a current disclosure statement, as required by law.
If the seller balks at these requests, it may be necessary to pass on the home. If issues come up during inspection, you may change your mind about the home, or you may negotiate for repairs or closing credits, depending on your agent’s advice.
Don’t worry, not all flipped homes are money pits. But as a trusted real estate advisor, I like to be certain my clients don’t get burned! Looking for a home? Let’s connect!