What You Should Know Before Buying a Returned Home Seattle weather


The house flipping business occupies an important place in the American public imagination. Between the reality TV shows about the practice and the infomercials that promote it as a get-rich-quick scheme, almost everyone is familiar with the concept of buying, renovating and reselling real estate quickly at a profit.

But is moving house a good deal for those who end up moving in for the long haul? And if you’re looking to buy one, how do you know if the pretty house with new paint and granite countertops is a good deal or a lemon?

“There is nothing wrong with buying a returned home,” said Chris Egner, a New Berlin, Wisconsin-based renovator and president of the National Association of the Remodeling Industry. “You can buy an old house and hire someone to renovate it, or you can buy one that someone else has remodeled and it’s already done and ready to move in. The caveat is that like any other business, there are people doing work who are not qualified to do it. “

There are strategies new home buyers can use to determine if the home they are looking at has been returned and, if so, if the work has been done by quality contractors.

Find a flip

Once a potential owner identifies a home they like, the first step is to determine if it has been returned. There are several ways to do this.

The first question is: does anyone live here?

“Typically, a flip will usually be vacant,” said Bruce Barker, North Carolina-based home inspector and president of the American Society of Home Inspectors. “A flip is going to have fresh paint, at least on the inside. Probably a new carpet, probably granite or quartz counters and a new sink in the kitchen. [but with] old wardrobes. It’s almost a dead gift. “

Of course, not all vacant homes are flips. A second way to check is to see when the house was last sold, which can be done by checking with your local government or sometimes by checking real estate websites like Zillow and Redfin. If the house was sold less than six months ago, chances are it has been returned.

Although Egner works in the home improvement industry, he is also warning consumers to beware of shoddy work and corner cuts with knocked over homes. Often times, it’s the work that consumers don’t see – the plumbing, the wiring inside the walls – that will cause problems if a flip hasn’t been done professionally.

If it appears that renovations have been done on the house before it is put on the market, potential buyers should always check to see if any permits have been obtained for the work, which can also be done through your local government.

If a returned home doesn’t have a permit, it may be a sign that the job was done as a DIY project. More importantly, it probably also means that the job was not professionally inspected.

the hunting house

Are returned homes a good deal for the buyer? It depends on many factors, according to Len Sarvela, a real estate agent based in Duluth, Minnesota, of Real Estate Masters.

“Many homes knocked over are wonderfully made, with permits underwritten, at fair market value and a lot to the buyer,” said Sarvela, an agent for the National Association of Realtors. “But with the market we have now, with a shortage of inventory, buyers know what their money is going to get them.”

Sarvela advises comparing the sale price to what the house was last sold for, which is usually a matter of common knowledge, especially if it was last sold just a few months ago. Does the work done since that day really justify the price hike?

“If the sale price doubles, there’s better that there is a pretty good rationale based on the materials and equipment that has been put into the house,” Sarvela said.

Typically, a buyer can tell what has been remodeled in an overturned house. New countertops, sinks, tiles and other items usually stand out a lot since the house itself is older. From there, a buyer can analyze and decide if this new equipment justifies the price hike.

Often times, a buyer can find older photos of the home they are looking at online from their pre-flip sale.

One of the main advantages of buying a renovated home is that it is often ready to move in and will not require major work immediately. The downside is when that promise turns out to be false – if the buyer moves in to find out that the roof needs replacing, or the bathroom doesn’t have a vapor barrier and mold is growing.

“Ask the buyer’s agent if he has experience with homes that have been returned,” Sarvela said. “And ask for it early in the process. “


Once you’ve decided that you are serious about a home and are ready to commit to buying it, one of the most important remaining steps is getting a professional home inspection.

While this process is optional and can be costly, inspections can ultimately save the buyer money by catching issues up front and asking the seller to cover the cost of repairs. If enough issues are detected, the inspection may even cause a potential buyer to walk away.

“I inspected a house last week with new paint on the inside, new carpet and kitchen countertops, but they hadn’t changed the bathrooms,” said Barker, the home inspector. “The water heater was older, the HVAC was older, the roof covering was at the end of its life. This is the kind of thing some fins will do. you start to dig into the details, that’s when you start to find things that are causing trouble. “

And the same level of control should be applied when finding the person who will inspect the home.

“When looking for an inspector, you definitely want to look for things like years of experience, certifications, and a license if they’re in a jurisdiction that allows inspectors,” Barker said. “Years of experience is about the only objective standard you can follow. If you’ve done enough inspections, you’ve seen most of what you’re going to see.”

Ideally, an inspection will be a straightforward process that detects only minor issues. Either way, it’s better to be sure than to find out after the fact.

“Essentially, what you buy with a home inspection is peace of mind,” Barker said.

Get a mortgage

The mortgage loan process should begin before a buyer even looks at their first home.

“We want to make sure buyers can get pre-approved for a loan,” said Emanuel Santa-Donato, vice president of capital markets at Connecticut-based Better Mortgage. “The first step is to identify what you can afford.”

While the two don’t seem to be related, a reverse home can become a problem when getting a mortgage. For buyers using a loan guaranteed by the government through the Federal Housing Administration or the Department of Veterans Affairs, homes cannot change owners within 90 days of the previous sale.

“If it’s a really quick flip, the FHA won’t be an option,” Santa-Donato said. “It increases to 180 days if the value of the sale doubles.”

For conventional loans, there is no set rule, as each lender will have their own criteria for what is allowed. Santa-Donato said most banks include a 90-day restriction, but not all.

And if the quality of the renovations is poor, it can also affect a buyer’s ability to secure a mortgage.

“If the kitchen isn’t finished, you can’t loan the house,” Santa-Donato said. “If you have exposed wires, you can’t lend on the house. That’s a pretty clear health and safety bar that comes out of the appraisal process. If some obvious things are missing, a loan can’t. be done.”

While a turnaround of less than 90 days may be a harbinger of work that has been done quickly and possibly at a lower quality, in the hot housing market of 2021, many buyers are always ready to take a look. Some lenders, including Better Mortgage, will make cash offers on behalf of clients, arrange for them to rent out the house, and then officially get them to take out a mortgage after the new 90-day window closes.


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