BUYING A FLIPPED HOME IN DC

DC home 'flips' carry a greater degree of risk for buyers.

What Is a Flipped Home?
A flipped home is purchased by a renovator and improved for quick resale. In order to make a healthy profit, the rehabber must keep costs in check and turn the property around in a short period of time to reduce overhead costs. For DC home buyers, the two keys to the seller’s success are often in opposition to quality renovation and DC permitting and inspection processes.
What Are the Risks of Buying a Flipped Home in DC?

Unfortunately, many flippers place their focus on cosmetic aspects of the home instead of its structural integrity or soundness of electrical, plumbing and mechanical elements. Their goals are speed and profit, not care and concern. And that’s the good news. Some unscrupulous DC and NVA flippers have been caught drywalling over serious structural issues that later became homeowner nightmares. While there are flippers do a good job, flips are an area of great concern for buyers and should be approached with extreme caution. Their popularity has exploded in DC during the past two decades, as have the number of serious construction issues and lawsuits associated with them. With little regulatory oversight for permitted and un-permitted residential construction in DC, bad behavior can be commonplace.

When buyers walk through an updated home, it may appear new. The problem is, they can’t see what’s underneath the newly-installed finishes. Inspectors can’t see behind drywall or beneath paint, flooring or tile, either.

And who are the sellers? Remember, anyone can flip a house–qualified or not. Permits may or may not be pulled, and in our experience, DCRA inspections are often ignored. Flips are classified as renovations rather than ground-up construction, so they’re subject to spotty DCRA permitting and inspection rather than the much more rigorous building code to which new projects are expected to adhere. Even more troubling, these properties are typically held in an LLC to limit liability, so there may be limited legal recourse if you experience problems.

Steps To Take To Avoid Flipping Nightmares

You can take all the steps on this list and still end up purchasing a home with serious issues, but if you must…

  • Understand that no action that you can take prior to settlement will guarantee that the flip you want to purchase is a ‘sound’ home;
  • Try to get a pre-offer general inspection, HVAC inspection and Roof inspection. If there’s enough time, add a structural engineer for an opinion on the integrity of the foundation;
  • Start by checking into the property’s permits and inspections. You can research on SCOUT DC and be sure to include a follow-up call to the DCRA since all information hasn't yet been uploaded to PIVS. Permits are required for many types of renovations and repairs. Inspections are required following completion of permitted work. Often, flippers pull a permit for a minor item, do major work, then forego the inspections. Make sure everything from kitchen and bath updates to finished basements, roofs, decks and fences were permitted and inspected by DCRA;
  • Pay attention to the amount of time the flipper has owned the property. Have they put it on market as a ‘full renovation in two or three months’ time? A short turnaround may indicate shoddy or incomplete work;
  • Have your agent look up the history of the home. How different does it look in the listing photos then and now? These photos may also provide clues to the amount and types of renovations performed by the flipper. Compare them to permits!
  • Consider hiring a contractor to walk through the property with you, note the recent renovations and updates, then research them through DCRA. Laymen don’t always understand what should be permitted;
  • Work with an agent who knows rehabbing/renovation and can guide you through the proper inspections and protections during your offer and transaction. While they won’t take liability for your due diligence or choices, they can be invaluable in providing insight and resources.

Expertise is one call away.

The Isaacs Team LLC

Realtors

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