A Flip That Might Flop

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

A Flip That Might Flop - 

It never ceases to amaze me what I'll find during home inspections and todays inspection was no exception.  Everyone knows that our housing market, like most markets around the country, is moving quickly for anything under $300,000. While interest rates start to "inch" up and inventory remains half of what it should be, buyers are forced to make quick decisions. 

Due diligence has never been more important than when you'reUpside down contract purchasing a home that is being re-sold as a "flip," a home that was purchased as a distressed property, remodeled, then resold at a profit.  At every turn, we (John Elson, Inspect it 1st) break out our magnifying glass to "unearth" what might be a defect, flaw, or some sort of history on the property.  This home inspection proved just that, a detective project for a Flip That Might Flop.

Part of selling a home in Arizona is providing the Sellers Property Disclosure Statement.  It is required by law to provide everything you know about a home during your ownership and at the time you purchased it.  Repairs, changes and modifications are SUPPOSED to be listed.  This is your "GET OUT OF JAIL FREE CARD."  

That being said, not everyone discloses what they know about the home they've purchased and are now selling, including quick resell homes, aka "FLIPS."  

This home is a FLIP that Might Flop.  What I mean is that the information provided about the history of the home is zero and there are numerous defects.  Researching old listings I can tell you that the garage used to house the laundry room, but it now includes the Master Bedroom and a Bathroom.  The back porch is now a Family room that used to have a window air conditioning unit on one wall.  Missing Insulation

These types of changes should be disclosed, but aren't always.  It's always a good idea to get a thorough home inspection and infrared thermography is very helpful as well.

With these images, and leaning up against a wall, we happened to catch that a piece of insulation is missing in what used to be the garage, but is now a master bedroom.  There is also a chunk of insulation missing where the window air conditioner used to be.  Working as a team, my home inspector and I provide as much data as we can.  Reviewing my laptop at the home for old listings, old information, and any data that might help to "unearth" defects is critical to a home purchase.  

 

Missing Insulation

We've also since learned that the extra ductwork added and square footage is not sufficiently cooling the master bedroom, bathroom utility room much less the family room.  We need a larger HVAC unit, among other repairs for electrical, plumbing, roofing and comletion of some of the changes. 

Negotiations are ongoing and I'm hoping to pull this together for my buyer as I hate see a Flip that Might Flop. 

If you're interested in buying or selling a home in the Phoenix Metro Area, give me a call

 

 

 

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Rainer
145,952
Andrew Payne Realtor® Richmond VA Homes For Sale~804-938-5257~
Coach House Realty - Richmond, VA
Richmond, VA, Real Estate, SRES®, NAR Green

Flips are good thing when they actually improve the property in a measurable way.  If the investors are just out for the greatest profit and minimal if any improvements (if necessary), then that tactic probably would be considered highly unethical by most.

Sep 04, 2013 07:38 AM #1
Rainer
324,357
Scott Larson
BHHS/Utah Properties - Park City, UT
Park City, Utah Real Estate News

Hi Jan, I hope you are able to work this out for your buyer but this really shows the importance of picking a knowledgeable Realtor to help with your home search.  I know you will give great advice to your client and find them a great home whether it is this one or something else.

Sep 04, 2013 07:41 AM #2
Rainmaker
976,985
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Andrew - Agree 100%.  This property is in much better physical condition than before, but it's what's underneath that concerns me. 

Scott - thanks for stopping by.  I'm sure you've seen this type of thing in your area and would give great service to your clients as well!

Sep 04, 2013 07:48 AM #3
Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

The property condition disclosure in MD is only required by sellers who have actually lived in the property.  In Virginia, the seller never has to disclose anything.

Interesting.

Sep 04, 2013 07:49 AM #4
Ambassador
2,840,416
Anna Banana Kruchten CRB, CRS 602-380-4886
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana!

Jan this past 6 years this has become increasingly more prevelent situations that we've run across hundreds of times.  We've  had to walk on many contracts due to the stuff we found out after the fact. What drives me nuts is the owner/agents that refuse to offer a property disclosure on their flips. We all know they know about the property as they were closely involved in the flip process. That's a walking lawsuit coming to call one day for some of them.

Sep 04, 2013 08:04 AM #5
Rainmaker
976,985
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Lenn - Interesting difference.  Here, they buy it they have to disclose "what they know."  So if they don't know, nothing to disclose. 

Anna - You're right! Crazy difference in our market.  On this one, I'm receiving a LBP but no SPDS.  And they are still working on the property!

Sep 04, 2013 08:13 AM #6
Rainmaker
537,437
Brian Sharkey
SharkeyRE LLC - Port St Lucie, FL
SharkeyRE - #SouthFloridaBroker

Jan, That's always a scary feeling when a flip, may flop. 

Sep 04, 2013 08:48 AM #7
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Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

Jan, Apparently they thought no one would be looking 'behind' the walls for potential problems. That infrared thermography tool is a must-have for an inspector by the way! I wish you the best outcome.

Sep 05, 2013 10:44 AM #8
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Rainmaker
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Jan Green

HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN
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