Buyer Beware of that Fix and Flip!

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Real Estate Agent with Value Added Service, 602-620-2699 SA5376460000

Buyer Beware of that Fix and Flip!

Recently, a client referred her daughter to me for a home purchase.  I was elated to help this young lady purchase her first home.  And because she is the same age as one of my daughters, it was even more special.

The home that she selected is a "buyer beware fix and flip."  This type of home is typically bought as a foreclosure by investors, cleaned up and painted, and relisted for sale.  There is little disclosure with this type of purchase and it is "caveat emptor" deluxe.

We processed the sale of this "buyer beware fix and flip" and all went according to plan, including coordinating funds for a new roof.  This was a foreclosure, fix and flip type home that was being resold by an investor.  On these types of homes it's a good idea to inspect everything with the idea you are learning about the home because there is no one to tell you about it.  I have an awesome home inspector who goes above and beyond, climbing into 150 degree attics, walks tile roofs, and uses extra care with foreclosures.   

My previous blog detailed that it’s imperative to inspect these homes to the NTH degree, and this inspector inspected it.  These homes are “As Is” and we have no history from an owner, no keys, not a thing to tell us how the home was maintained, or IF it was maintained.

Today, I heard from my buyer two weeks after closing that Attic leakshe plugged in the soft water system and inadvertently caused a flood.  Imagine not knowing that there was a hole in the line in the ATTIC of the home!!

Needless to say there is a lot of damage.  My heart goes out to this young lady who had no idea that the soft water system would leak though-out the attic when she plugged it in for this "buyer beware fix and flip" home.

This soft water system is outside the scope of the inspection and not included in the report or the remarks.  It’s difficult to explain the exact lesson here, except to say that buyers need to be cautious with anything related to water in a home.  Review your inspection carefully before altering anything in a home.  And make sure you have good homeowners insurance and a home warranty plan.

 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Sajy Mathew 08/08/2012 02:15 PM
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Rainmaker
177,562
Erv Fleishman
Realty Associates - Boca Raton, FL
Luxury Prop Specialist Realty Associates

the same would apply to any home purchased. If it is outside the purview of the inspection, you don't know if there is a problem. 

Aug 08, 2012 01:58 PM #1
Rainmaker
977,560
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

You're right Erv.  The minute she plugged that system in and it started to recycle, there was a problem.  Problem is, nobody knew it.  Wish I had the pic of the ceiling that caved in!

Aug 08, 2012 02:01 PM #2
Rainmaker
558,303
HGNL Digital Marketing Agency
Detroit, MI
We are a full service real estate marketing agency

Hi Jan,

I'm so sorry to hear about your buyer.

Hopefully it’s taken care of quickly.

All the best for the rest of 2012!

 

Aug 08, 2012 02:09 PM #3
Rainmaker
820,770
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

UGH, Jan  - what's scary about this - you don't know if the "fix and flipper" saw it an just painted over.  But, of course, they have "no knowledge."  Personally, I'm still requiring a SPDS with the investors.  They KNOW if they had to fix anything or they know if the previous tenants had any issues.  Escaping seller disclosure is a cop out and I think we all need to stand up against the investors AND the banks!!!

Aug 08, 2012 02:20 PM #4
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Rob Lang
At Home Kansas Team Powered by Keller Williams Partners Inc / www.AskRobLang.com - Lawrence, KS
Local Expert in Lawrence Kansas Real Estate Homes

Wise counsel Jan!  Got to keep an eye out for water leak potentials which lead to mildew, mold, and all sorts of other damage.

Aug 08, 2012 02:24 PM #5
Rainmaker
4,066,666
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Jan, great post, and definitely buyer beware!   I have shown many flips lately, and the work has been quite shoddy!   One earlier this year that looked so good on the exterior, but upon inspection, so many major items were wrong, and buyer opted to terminate.

Aug 08, 2012 11:01 PM #6
Rainmaker
977,560
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Joan - So sad that the sellers are only doing cosmetic work.  It's frustrating for us buyers agents!  Thanks for commenting!

Aug 10, 2012 03:55 AM #7
Ambassador
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Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

I have to admit that most people who buy homes at foreclosure do not touch the soft water system. They figure most people do not use them. I have my home inspector check everything in the house including the soft water system before we put it on the market. We fix the punch list to make all parties happy.

Aug 11, 2012 12:45 AM #8
Rainmaker
977,560
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thanks for commenting Harry.  Glad to hear that you guys are ethical and work to "fix" what is going in inside the home before listing it for sale.  This scenario has gone completel haywire.  This poor girl had no idea that simply plugging in a soft water loop would be a bad idea.  I feel horrible for her.  Today I'm checking in with her to learn if homeowners insurance will cover any of the damage, which runs in the attic to about 4 rooms.  Crazy!  Have a great weekend!

Aug 11, 2012 02:11 AM #9
Rainmaker
438,571
Debbie Cook
Long & Foster Real Estate, Inc - Silver Spring, MD
Silver Spring and Takoma Park Maryland Real Estate

Excellent advice!  Too often fix and flip means QUICKLY gloss over with shiny new stuff , paint over. 

Aug 13, 2012 03:31 PM #10
Rainmaker
977,560
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thanks Debbie!  I appreciate your comments.  Sorry for my tardy response, but I've bought a home and moved yesterday.  I too, bought a flip!  The next title of my blog.....

Aug 15, 2012 11:37 AM #11
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Rainmaker
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Jan Green

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