I have discussed flipped houses in the past.
The whole topic has been building up pressure in my head like a napping volcano for quite some time.
It has finally melted through and flowed onto my keyboard–pushed to the surface by two nightmare flips in a row.
Given the number of TV shows about flipping houses and the avalanche of online information about how to go about doing them, it would be easy to conclude that flipping houses must be a GREAT idea! While I am sure that somewhere, there are good intentioned investors that are succeeding in saving houses from the bulldozer’s blade and turning them into something that any first time home buyer would fall in love with. Generally speaking this is not typically what happens.
This post is not about those rare exceptions. I say rare because of the dozens of flips that I have inspected, I have only found one (today as a matter of fact)—it had all permits for work done and signed off on by the city. While it had some minor issues, all in all it was a pleasure to inspect. Other inspector’s experiences may be different than mine–but not based on what I hear from other inspectors, most flips are less than professional nightmares.
The more common scenario with flips is that the house is fully remodeled, using the cheapest materials possible, with no permits. The work is “generally” performed by untrained, unskilled persons that are totally unaware of current requirements; which if they were aware of the requirements, they might at least been able to hide the fact that the work was done without permits. All of this conspires to make a report that is guaranteed to scare the pants of any first time buyer or even experienced buyer.
Regardless, these deals are wounded, maimed or killed, long before I show up on the scene of the crime.
It is pretty easy to tell a flipped house. If you cannot tell from the glossy HDR listing photos, you can tell by checking the assessors purchase history; or the Google drive-by pictures, date-stamped less than a year before the house was listed.
Inspecting these houses is almost always an “adventure.”
But I do finally have a solution to the problem.
Agents could merely put their foot down.
No permits, no listing.
Forget the disclosure statements (more accurately, “non-disclosure statements”). If one can get a sense that the house was purchased recently, and is now back on the market, a request for any and all permits for work done should be produced before the listing is accepted.
I know there must be reasons why listing agents might not like this idea, but I can’t think of any, at least any that has the best interest of a future buyer in mind–not to mention the best interest of the agent’s E&O insurance. Sure I know they are only really interested in the seller’s interest, but the buck does have to stop somewhere doesn’t it? Either that or I need to charge a LOT more money to do justice for my client, and why should they bear the cost of what a few permits could have avoided.
This type of generally shoddy work pushes the boundaries of “buyer-beware” into realms of unreasonableness.
By Charles Buell, Real Estate Inspections in Seattle
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