Maybe It's Time for Home Flippers to Be Licensed.

By
Real Estate Agent with Bill Cherry, Realtor 0124242

 

 

 

I wonder if the NAR isn't past due in taking a position on how Realtors should represent flippers.

 

I frankly  believe those who do this kind of work need to be licensed, and Realtors have no business participating in the listing and sale of the products of those who are not licensed.

 

Those of you who have known me through the ActiveRain pages for the past nearly ten years, will recall that I personally did a great deal of property renovation, both residential and commercial, in Galveston and Houston.  Actually multi-millions of dollars worh.

 

I tell you this because I am, perhaps, more acutely aware and critical of the generally poor quality of work -- most not to code, and not permitted -- that many of today's flippers are guilty of than the average Realtor.

 

What if in advance of listing a property that would be defined as a flip, the owner was required to retain a licensed home inspector to provide a report similar, but more voluminous, to the Owner's Disclosure that is required in Texas?  That inspctor should be picked by lottery, to assure he wasn't the pal of the flipper or the agent.

 

That inspection report would be accompanied by the building permits that were pulled, and the names and licenses of all of the mechanical trades that worked on the project.

 

During the past ten days or so, along with clients, I have looked at more than twenty Dallas area home listings that were the work of flippers. 

 

While some were painted up pretty, had new kitchen cabinets and granite tops, a la HGTV, everywhere one could possibly put granite, the structural and mechanical work was obviously done by handymen rather than those with licenses. 

 

One $400,000 home burned to the ground the night it was completed by the flipper and listed with a fine and well-respected agent.

 

I honestly think that as it stands now, listing flipper products are a serious liability problem for Realtors.

 

What's your experience?

 

BILL CHERRY

Realtor Broker

Since 1966

KELLER WILLIAMS DALLAS PREMIER
Direct: 214 503-8563

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Ambassador
2,305,897
1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

Our market is not one that has many flippers in it.  Interesting point of view.

Jun 02, 2015 11:10 AM #1
Rainmaker
1,778,316
Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

I think the problem here is defining what a flip really is. If I'm living in my home and over a three year period I flip it for sale, is it a flip?

Jun 02, 2015 11:41 AM #2
Rainmaker
1,681,389
Larry Johnston
Broker, Friends & Neighbors Real Estate and Elkhart County Subdivisions, LLC - Elkhart, IN
Broker,Friends & Neighbors Real Estate, Elkhart,IN

Hi BILL CHERRY ,  I agree that something needs to be done in this area.  Thanks for bringing it to everyones attention.

Jun 02, 2015 12:00 PM #3
Rainmaker
393,656
BILL CHERRY
Bill Cherry, Realtor - Dallas, TX
Broker & Wealth Coach

My definition of a flipper is someone who buys a home for the purpose of quickly spiffing it up then selling it. Most of those I have encountered have no building expertise of their own and hire cheap inexperienced laborers and handymen to do the work. They pull no building permits , etc.

Jun 02, 2015 12:08 PM #4
Rainmaker
3,985,587
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Good point...builders have to be licensed, home flippers are close to being builders.

Jun 02, 2015 12:10 PM #5
Rainmaker
2,824,705
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Bill - You bring up a topic I hadn't considered before.  You may be on to something about licensing flippers!

Jun 02, 2015 12:44 PM #6
Ambassador
2,492,438
Fred Griffin Tallahassee Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Lipstick on a pig.  Get a home inspection.  Caveat emptor.   Use only licensed and insured contractors and companies.

You bring up a lot of thoughts on this one, Bill!

Jun 02, 2015 01:05 PM #7
Rainmaker
804,482
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Let the lawsuits begin! When flippers are help financially libel for their shoddy and, sometimes, illegal work and they feel the impact on their pocket books they will begin to turn our better products.

Jun 02, 2015 01:14 PM #8
Rainmaker
84,098
Ernest Villafranca
Better Homes and Gardens Real Estate - Oakland, CA
3923 Grand Ave. Oakland CA, 510-418-9443

Some of them had licenses but lost them because of shady dealings. And that's why they need a real estate agent.

(My friend told me a flipper is someone who resells in less than a year. Over a year he's an investor.)

Jun 02, 2015 01:44 PM #9
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

BILL CHERRY I ditto Larry Johnston that something needs to be done. I'm not a licensed contractor, I have not flipped homes as a business, but when I take buyers to see flipped homes and look at the sales history, I am smh. I'm not against people in business to make a profit, but shoddy to hardly any work done at all as a result should not be tolerated. Yes, I think REALTORS® should have some liability and your points are well taken.

Work done by a handyman does not qualify as licensed contractor work. A home in my own neighborhood that was flipped, flooded within a week of being put on the market (I wasn't the listing agent) because new toilet valves were not installed correctly. Probably thousands of dollars of damage, I would imagine. If it were a licensed plumber who installed them, instead of a handyman, might be a different story. 

Jun 02, 2015 01:52 PM #10
Rainmaker
828,472
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Bill - I personally do not think Realtors should have anything to do with the liability of a home flipper. We are not liable for other home owners who do some incredible things to their homes, and we are not home inspectors.

With that said, it would be nice to have some regulations on flippers themselves to ensure their work does not hurt the value of the home more than it helps.

Jun 02, 2015 02:04 PM #11
Rainmaker
2,017,725
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Look over what you buy... before you let go of the dollar. You don't need a law to fix it, you need families that teach you that growing up. Buyer beware meant open your eyes, do your home work.

Jun 02, 2015 08:27 PM #12
Rainer
606,566
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

You really have some great points on flippers.  While most flippers do it right ethically, there are many more that do a sloppy & poor job and bilk sincere buyers out of money but peace of mind!!!

Jun 02, 2015 09:08 PM #13
Rainer
442,694
Raul Rodriguez
Covenant Partners Realty - San Antonio, TX
Looking out for the client's interest and not my p

Dealing with an investor that is doing repairs and I am telling him to use licensed contractors. Two years later we have an amendment to repair items on the inspection report. I says to him get your licensed contractors to do the work so we can show proof of repairs...you guessed it, none are licensed! OE VEY!

Jun 02, 2015 09:44 PM #14
Rainer
17,471
Charles Gilbert
Colorado Hot Properties - Colorado Springs, CO
Serving Pueblo, Colo Springs, Castle Rock, Denver

There needs to be a balance, however, I don't agree with licensing and regulating people to death.

Jun 02, 2015 10:40 PM #15
Rainmaker
393,656
BILL CHERRY
Bill Cherry, Realtor - Dallas, TX
Broker & Wealth Coach

The rationalization of the necessity of licensing is the reason we, as real estate professionals, are required to be licensed. Buyer beware is why we have home inspectors. But why should a buyer have to pay an authority to know whether the work that was done was to code and was permitted? In other words, to discover all of the hidden lies?

Jun 02, 2015 10:49 PM #16
Rainmaker
393,656
BILL CHERRY
Bill Cherry, Realtor - Dallas, TX
Broker & Wealth Coach

The rationalization of the necessity of licensing is the reason we, as real estate professionals, are required to be licensed. Buyer beware is why we have home inspectors. But why should a buyer have to pay an authority to know whether the work that was done was to code and was permitted? In other words, to discover all of the hidden lies?

Jun 02, 2015 10:49 PM #17
Rainmaker
680,255
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

I've represented hundreds of flip properties for investors over the years and I've personally completed dozens of bank owned rehabs myself. Some flippers do good work and other do not. I make sure all proper disclosures are made in the contract regarding the work that was performed. A buyer has an inspection period to hire their own independent inspector who will go through each home in great detail to educated the buyer on any problems they find and if at that time the buyer is still comfortable in purchasing the property then that's up to them. The only time a flipper or agent should be held liable is if gross negligence or purposeful deception can be proved and that would be up to a court to decide. 

Jun 02, 2015 11:50 PM #18
Rainmaker
719,234
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Bill, I think you are dead wrong on this one. Any time someone buys real property they MUST do theoir due diligence. There is no substitute for that. If the inspection revewals shoddy or non-compliiant or permitted work, the flipper will be penalized by either the price or the cancellation of the sale.

Bill Roberts

BTW If they do more than 4 or 5 in a year I think some form of licensure would be in order because they are a dealer.

 

Jun 03, 2015 12:53 AM #19
Rainmaker
4,451,648
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Bill, we are seeing LOTS of flipped homes in Denver too, and so many are poor quality.  

Jun 03, 2015 11:33 AM #20
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