Flips And Renovations

FLIPS AND RENOVATIONS IN WASHINGTON DC

Exercise caution when considering DC home "flips" and renovations! They're are not new construction, though they're sometimes listed that way. Read on to learn about the pitfalls of both and what can be done to minimize risk. Be sure to reach out for help with your DC home search!

WHAT IS A DC 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 renovation–like us!–when purchasing a “flip.”

WHAT'S A DC HOME RENOVATION?

Renovation should restore 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 building dept. inspections on PIVS. 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 HOUSE FLIPS AND RENOVATIONS MEAN RISK 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 un-permitted 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/building department permitting and inspection rather than the much more rigorous building code new projects are expected to adhere to.

HOW YOU CAN MINIMIZE THE RISK WHEN PURCHASING A FLIP OR RENOVATED HOME IN DC

You can follow all the steps on this list and still end up purchasing a home with serious issues. We discourage the purchase of flips and added caution when considering a renovated home, 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;
Arrange a pre-offer general inspection, HVAC inspection and Roof inspection. Try to include a structural engineer's inspection for an opinion on the integrity of the foundation and any other components in question.
Check into the property’s permits and inspections history. You can find research resources and links on our Permits and Dept of Building pages, consult SCOUT (create an account if you don't have one). Then include a follow-up call to the Department of Building since all information still hasn't been uploaded to SCOUT (slowed by the recent transition). 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. Violations transfer with the property, making you liable.
Pay attention to the amount of time the flipper has owned the property. Did 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 past listing photos? These images may provide clues to the extent of renovations performed by the flipper. Compare them to permits.
Consider hiring a contractor to walk through the property with you and discuss the permitting history. Laymen don’t always understand what should be permitted.
Work with an agent like us who knows rehabbing/renovation and can guide you through the proper inspections and protections during your offer and transaction. While we won’t absorb liability for your due diligence or choices, we can be invaluable in providing insight and resources. Let us guide you through the steps.