Home "flips" and renovations are not new construction. They differ in a variety of ways, and each has its own set of pitfalls.

What Is A House Flip?

“Flips” are homes that have been purchased by a rehabber and “improved” for quick resale. It’s important to know that these homes are not new construction and do not carry the same warranties and protections. We caution our clients to be wary of these types of home purchases.

Unfortunately, many flippers focus on the cosmetic aspects of the transformation rather than the integrity of the structure and mechanical systems. These are the most costly components of a home. Flippers’ goals are speed and profit. Repair time, proper permitting, DCRA inspections and use of well-trained and licensed labor are too often casualties of the ‘bottom line.’

Be sure to work with a real estate agent experienced in construction when purchasing a “flip.”

What Is A Home Renovation?

Renovation restores a property to a good state of repair. Homes that are run down, even dilapidated, can be rebuilt structurally and mechanically. When considering the purchase of a renovated home, be sure to have a general home inspection and an evaluation by a general contractor you trust. You might also want an inspection by a structural engineer. Check to make sure all improvements comply with your local building codes and investigate permits and inspections by your building department. Renovated homes are sometimes only updated cosmetically, with some cosmetic updates overlapping into work that requires permitting. It should not be assumed that use of the term “renovated” means that a home has been mechanically or structurally updated. The terms ‘renovated.’ ‘updated,’ and ‘remodeled’ are often misused and this can be misleading.

Why Are house Flips And Renovations Risky For Buyers?

The riskiest thing about flips and renovations is the unknown. 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.  Some unscrupulous DC flippers have been caught drywalling over serious structural issues that later became homeowner nightmares. While there are flippers who do a good job, the quality of work is an area of great concern for buyers and should be examined very carefully. The popularity of flips and renovations has exploded in DC during the last decade, as have the number of serious construction issues and lawsuits. With little regulatory oversight for permitted and unpermitted residential construction in DC, bad behavior can be commonplace. Remember, anyone can decide to start flipping houses, whether they are qualified or not. Permits may or may not be pulled, and in our experience, DCRA inspections are often ignored. Often, property titles are held in an LLC to limit liability, so there may be limited legal recourse if you experience problems. 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 new projects are expected to adhere to.

Steps To Take To Avoid Flipping And Renovation Purchase 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.
More Resources

Expertise is one call away.

The Isaacs Team LLC


Share this!