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Tuesday, July 15, 2014

Is a "Flipped" House the same as a Rehab?

Congratulations! You’ve found the perfect home. And also discovered
it’s a “flipper.” Is this a problem?

“There’s a wide gulf,” said Nikki, “between flippers-- we call it the
F-word—and investors who take on the serious rehabilitation of a home
that needs repairs and upgrades to make it market-ready. Because
flippers are driven by time and cost containment, they usually
consider it too expensive to investigate a home’s hidden quirks and
flaws. For flippers, the changes are mostly cosmetic, and carried out
using the cheapest workmen and materials.”

Rehabbers are a different breed. They’re often established companies
with a reputation to uphold, and they take pride in their work. While
flippers will sacrifice the unique or historic features of a home, to
give it a vanilla, please-everyone look, rehabbers search out ways to
enhance these features.

Rehabbers may be individual investors or corporations, but when they
put a home on the market, they can supply interested buyers with
information about the work they completed. Often, that may include the
names of the contractors and inspectors used, their license numbers
and even work history, as well all permits when they were required.

To go back to our opening, what fears would a flipper generate? That
the owner hasn’t lived there? That the plumbing and septic systems
hold nasty but hidden secrets? That the flipper used cheap materials
that won’t survive a couple of winters?
“These are all legitimate questions, and a reliable agent will make
sure you get the answers,” said Nikki. “If the seller can’t come up
with a summary of the work he’s had done, the inspections, and
corrections recommended in those inspections, it's wise to probe

"But if your queries are answered in detail, you know this house was
repaired and modernized by people who respect the property, who live
up to the full disclosure law, who offer warranties and make good on
them. Many wisely offer generous home warranties to help address any
unexpected surprises."

When investors of any stripe buy a home to resell, they know exactly
what price-tag it will carry when it goes back on the market. The
problem with a casually flipped house is that it may sound like a
bargain initially, but the buyer often ends up paying thousands more
to correct a hidden defect that the flipper never investigated. The
full disclosure clause applies only to flaws he knows about.
Rehabbers have generally taken the time to investigate the home's
systems and structure and have corrected defects they identify,
offering a more reliable choice for the new owner.

In appearance, flipped homes and rehabs all look great, sometimes
better than new. Only the paperwork will tell you if this is the home
of your dreams—or a potential nightmare.

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