Buyer Beware: Making Sure That Flip Isn’t a Flop
While it’s hard not to be blinded by the shiny updates of a newly renovated home for sale, you might want to look beyond those new counters or high-end appliances if it’s being flipped for a quick profit.
John Kolzik thought he’d bought his dream home – newly refinished with four bedrooms and sleek updates throughout – until rain began pouring into his basement four days after he moved during a minor storm.
When the water cleared, Kolzik and his partner found black mold covering the drywall in the basement and eventually mold was found on surfaces throughout the house. They learned the house had been “flipped” by unscrupulous sellers who’d also covered up cracks and tree roots in the basement’s cinderblock with drywall.
“It’s the worst thing you can imagine happening when you buy a house,” he told his local CBS station.
House flipping – made popular by shows like HGTV’s “Flip or Flop” and “Property Brothers” – involves buying a home that needs repairs before selling it for a profit. But with no TV cameras around to document their renovations, some sellers opt not to exercise due diligence when serious issues are uncovered.
“It’s literally putting lipstick on a pig,” Stephen Carpenter-Israel, president of Buyer’s Edge – a brokerage that only represents buyers – told CNBC. “They’re just doing cosmetic stuff and actually covering up problems, and that’s scary because it’s very difficult to figure it out.”
While the rate of homes flipped nationally continues to decline since peaking 10 years ago, purchasing a house whose sellers are looking for a quick turnover remains a “buyer beware” situation, according to Attom Data Solutions, a real estate listing and analytics company.
“Really, it’s that they’ll cover up structural problems instead of fixing them,” said Carpenter-Israel.
Before being purchased to be flipped, many of those houses sat empty on the market without heat or air conditioning for extended periods of time – often sinking into foreclosure. According to Attom, about 60 percent of all homes flipped in New Jersey in 2017 were purchased as foreclosures, one of the highest rates in the nation. The study also found that those flipped houses in New Jersey yielded the highest average gross flipping ROI nationwide, at 81.7 percent.
Because of their history of neglect, many flipped houses are susceptible to broken pipes or other types of moisture that encourage the growth of mold, potentially requiring thousands of dollars in remediation. Sellers looking to cut corners often opt for a fresh coat of paint as the cheaper and easier solution.
The kitchen’s new laminate flooring looks great but it might be covering old linoleum that contains asbestos. Also, the new vinyl siding could be hiding an original façade containing the toxic substance. Asbestos is fairly benign if left untouched, but if the new materials are not securely fastened they could break free over time, releasing its small fibers into the air. If breathed in, those fibers can become embedded in the lining of lungs, abdomen or heart and lead to the formation of tumors and increase your risk for diseases like lung cancer, mesothelioma and asbestosis.
To avoid buying a “flip” that’s really a “flop,” consider hiring a mold and asbestos specialist to inspect for hidden issues. Stock Environmental Consulting has over 20 years of experience and our experts can determine whether your potential new home is as shiny as it looks. Schedule your appointment at 732-383-5190.