Not a week goes buy that I don’t hear the statement ” This should be an easy inspection because the house was flipped and everything is new“. Nothing could be further from the truth. In fact I cringe when I hear this because I know these homes can have many masked problems. Advertisers have know for decades that it’s all about the packaging and not the contents. So much so that they spend more on the package than the product they’re selling. It’s not much different with “flipped” homes, In fact flipped homes have more complications because of the inherant problems associated with “flippers” trying to turn a profit. When thousands of foreclosed homes flooded the market during the real estate bust of the late 2000’s, many of these homes have been snatched up by everyone from the weekend warrier investor to the mega-millionare investors. Now the market is flooded with flipped homes and a significant portion of our Virginia Beach, Chesapeake, Norfolk and Hampton roads home inspections are of flipped properties. Ironically, back in the 90’s we refused doing inspections on foreclosed homes because they were to probelmatic and could be a huge liability for us and the buyer. Things are a little different now because these buyers expect to have problems and are willing to take the gamble if they can crunch the numbers and turn a profit.
Crunching the numbers and turning a profit is the root problem. Banks, Hud, VA have become experts in pricing these properties just below the so called market value. It seems that they are right on target on figuring out exactly how much a property is worth and the minimum amount it will cost to bring it back to a level of good repair and market value. The problem is there’s not much margine for profit. All the other fees that investors incur including real estate commisions, closing cost, appraisals, inspections, etc. are not figured in by the banks. So where does that money come from? CUTTING COST. By using low end contractors and only fixing up the cosmetic items. It’s amazing how a pooly installed tile floor, cheap stainless appliances and low end granit counter tops can transform a house at a relatively low cost. But what about the drafty windows (nicely covered with blinds), lacking insulation, aging roof, Antiquated HVAC systems, rusted pipes, unadequate electric service and wiring? These are all very significant exspenses that can save an investor tons of money and be passed along to the unwitting buyer who is blinded by the Amercian dream stardust of home ownership. Two weeks after closing they have washed the stardust out of their eyes and suddenly realize they are upside-down because the major repairs will cost far more than the house is worth. This is a whole new version of the upside-down home value and may likely lead to a second wave of foreclosures. But the lure of easy money marches on and I’m afraid the cycle will continue.
House “flipping” can mask problems. Rapid appreciation of real estate values tends to make speculators out of otherwise sensible people, and can turn investors and contractors into “morally challenged” opportunists. Or downright sharks. There’s nothing wrong with home renovations and re-sales that turn a profit, but too often a quick-buck mentality is what drives the agenda, and the house will get merely cosmetic rather than genuine improvements. If you know or suspect that a home has gotten a quick renovation by an interim owner before being put back on the market, you and your inspector should be especially vigilant about spotting any shortcuts in the work.
Despite the potential setbacks in the inspection process, finding a good home inspector in Virginia Beach, Chesapeake, Norfolk or anywhere in hampton roads does not have to be a blind gamble. There are some good inspectors that are willing to slit their wrist and jump into skark ifested waters for you. There are many reliable methods for hiring a good qualified inspector in Hampton roads. Research them online, check Angies list, Read their reviews at Google, see what their other customers are saying, look at their actual reports, talk to friends and co-workers, Interview inspectors and most of all do not shop for the lowest price. Good or bad, most inspectors know the value of thier service.