Don't Flip Out Over Your Next House Flip

Real estate Attorney Rick Carter and paralegal Kathy Holtshouser interview Steve Gary about flipping houses. There are pitfalls to watch out for and this episode of Real Estate House Party is a must listen to BEFORE you get your team together and attempt your first flip. Do permits need to be pulled? When do you need to get a certificate of occupancy? What are some of the hidden costs associated with Flipping houses? All these questions and more are addressed in this episode of Real Estate House Party!

Top tips when buying a flip:
If you are thinking of buying a flipped house you should…
1. Find out from the seller for references on who they have sold
properties to before and contact them.
2. Check the seller had masslandrecords or NH deeds and find out
who they have sold houses to before. Contact those individuals.
3. Sometimes you don’t know the property is being flipped. That is
why it is good to have a good buyer agent who knows the local
market.
4. Be careful of the FSBO flips. They might not be giving all of
disclosures normally given when there is a seller’s agent
involved.
5. It is preferable to purchase the property from someone who is a
licensed builder or had utilized the services of a licensed builder
in the renovations.
6. Find out from the town if a certificate of occupancy was required
for the work that was done. Towns handle the requirement of a
certificate of occupancy differently. A lot of times if it is a whole
house remodel and you move out that might require a certificate
of occupancy. But if someone lives in the house while its being
remodeled some towns may not require a certificate of
occupancy.
7. Make sure you have the seller sign something at closing saying
that there are no potential mechanic liens for the property due to
sub-contractors not getting paid.
8. Find out what work was done. See if you are getting any
warranties for the products installed.
9. See if permits were pulled. What are those permits pulled for?
Are the permits closed out?
10. If you are buying a property that was foreclosed by a
lender make sure you do a mold and termite inspection. That
property might have been sitting there for a while.
11. If the buyer is procuring mortgage financing to buy a
flipped property there may be added mortgage requirements. If a
flipped property is being sold within 90 days you might have to
have a couple appraisals and inspection of the property. The
seller might have to pay for the work required by the FHA loan.
12. You might want to put some money aside for unforeseen
issues.
13. Be on the lookout for telltale signs of rushed worked such
as:
- Light switch plates that aren’t properly placed.
-Crown molding that isn’t completely matched at the
corners.
-Gaps between the countertops and the wall or with the
bathroom tile.
- Doors or cabinets that don’t close correctly
-Heating or bathroom vents that do not go anywhere
14. Remember most flippers have not lived in the property. So
even if they aren’t unscrupulous they might just not know that there are issues with the property. Do a thorough inspection of the
property.