When Flips Can Flop


It wasn’t that long ago that the term “flip” didn’t exist in the real estate industry. They were called remodels and most were done by homeowners on their own properties. Nowadays everyone knows that the term means that the property was purchased by an investor who is trying to make the most amount of money with the least investment in the shortest amount of time.  Doesn’t exactly inspire confidence in the quality of the job, does it?

In our area, flips are a very mixed bag. We’ve seen the good, the bad and the downright ugly! Sadly, the good ones have been rare. There have been some and the point of this post is NOT to try to convince the public that buying a flip is always a mistake. There are responsible people who genuinely try to put out a good product. But in our experience, more often than not, the people involved may have been well intentioned, but did not have the knowledge necessary to do the job right. Following are some of the most common mistakes that flipper make.

Not Having an Inspection Before They Invested

THIL_BigMistakeMany investors pay cash for a property. While this can help speed the closing process along, there are certain safeguards that can get bypassed. Such as a home inspection. Even one major repair that was not accounted for in the sales price can have a disastrous affect on their profits.

We recently did an inspection on a flipped property that was very well done on the inside, but the roof was toast. Additionally, this was not mentioned on the Seller’s Disclosure form. This means that either the investor did not know about the condition of the roof (bad news for the seller), or the condition was known and intentionally left off the form (bad news for the potential buyer).

Other commonly overlooked, but costly repairs can include a sewer line in need of replacement, foundation issues, electrical issues both outside and inside the home and slab leaks or other major plumbing repairs. Not to mention optional systems like a well or a septic tank. And have I mentioned termites?

Not Using Licensed Professionals

THIL_QualityControlThe most obvious signs of substandard work can be apparent. Inexperienced DIY warriors usually leave similar telltale indications. Crooked grout lines or floor tiles that are not level are some of these signs. Obvious drywall patches or poor quality paint jobs can be others. Wood laminate floor installations are often pretty rough.

I wish I had a dollar for every time I had tested a tub or shower that had a leak that was running back down a plumbing fixture and into the wall behind it. Or when I’ve found a water heater in a garage that was not on a platform at least 18 inches high, to avoid combustion of any fumes from combustible materials stored in the garage. Two words: Ka Boom.

I wish I had a dollar for every time we have gone into an attic to see electrical connections that have simply been wire taped together, outside of a junction box. At worst, it can indicate that an unlicensed person performed the work.  At best it means that a licensed professional was used, but neither that professional or the owner ensured that the next common mistake was avoided…

Not Pulling Permits 

THIL_Frustrated3There are many reasons for permits to be pulled with your local municipality. For example, did you know that part of the cost of the permit pays for an inspector to come to the property to ensure that the work that was done meets the building code? Additionally, if there is a problem with the work that was done by a licensed professional, their insurance will not pay unless local codes were followed, and that includes pulling a permit! No permit = no payout.

Lastly, being able to show that all permits were pulled and all inspections were passed tells prospective buyers that the seller cares about quality and safety, and cares that the work that was done meets the building code, which in reality are minimum safety standards.

This is not to say that every aspect of a flipped home is required to meet the most current building code. Here’s how it works: Once a system has been touched, it has to be brought up to the most current code that has been adopted by the city in which it is located. But a home that has an updated electrical system may not meet the most modern framing requirements. A house that has updated plumbing may have bedroom windows that do not meet current emergency exit requirements.

THIL_ConfidentSo, don’t necessarily fear the flip. Just know what to look for, know what questions to ask and definitely get a home inspection!

Thanks again for stopping by. I’m always happy to have my readers Pin, Like and Share in their favorite social media. You’re always welcome to send my any questions you may have using the contact form below. Thanks for your time and I wish you a safe and happy home!

3 thoughts on “When Flips Can Flop

  1. I have inspected several flipped homes lately and none were good. I have a standard comment in my inspection software about this house was recently renovated and due to the numerous concerns listed in the report that goes about like this: It appears that no permits were issued for the work. Recommend following up with the appropriate building officials, and if permits were not issued, that all work by reviewed and approved by the building officials. As a home inspector we are often encouraged to not use the code word and talk about code. We generally have no legal authority to enforce code. But when it shows so obviously that code was ignored do not be afraid to call it out. One way to say code with out using the actual word code, is to say that this ____ does not meet current building standards, or as my earlier comment, call it out as needed to be verified as correct by the appropriate local building official. In my area the lack of available housing for sale to meet demand means that flippers fell that they can get away with bad building habits and I think as a home inspector we need to do our best to let them know that someone else is watching.


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