Should I buy a flipped house?

Question

I'm a young single mom so this house will be for my 6 year old son and I. It was a bank owned property then flipped.

I showed the house to my parents and they loved it so i placed an offer and had it inspected thinking I was getting a great deal.

The inspection came back with a pretty good list of things to fix up. Its a 1957 house so most of the things are pretty common. But it was as if they started flipping it and then got tired and decided to just sell it. They didn't do anything outside, only inside. kitchen was poorly painted as if they were in a hurry. It has new bathrooms, but the toilets and sinks are loose & not put in properly. Cosmetically it looks great and the issues are not too major but they add up and take up all my money that I have saved to furnish the home.

We found a couple suspicious things during the inspection. They are little things but now I'm really scared about buying this house wondering what else they are covering up. Is this a good idea?

The major problems with it are electrical (loose breaker box, and the wires are not grounded.) They put in 3 prong outlets but they shouldn't have. There are also issues with the window wells, some mud jacking on the back porch, and the garage/driveway are cracked pretty bad.

It also needs a fence on one side, new fridge, humidifier that's attached to the furnace does not work, there's a swamp cooler but nobody knows if it works, etc...I just don't have extra money to fix it up in the long run and feel like this isn't a good decision I guess mostly because of trust...I don't trust the seller. Maybe I should back out :( I really don't want to and people tell me that these are normal things with old houses. But maybe i'm not ready to buy a house? I make enough $ but am not able to fix things myself or spend all my extra money on contractors. I thought I was getting a house that already had everything done to it.

Roof is good, inspector found no water damage, and the foundation of the house is good and level just not the attached garage/driveway

Answer 1

Decline your initial offer and then make a new offer that takes into account the cost of repairs. Then the ball will be in the sellers court.

Answer 2

Well. it just sounds like the people who were trying to fix it up really didnt know what they were doing. Houses built in that era were usually built very solid and I would say its most likely a steal. But the electrical really is a drag. Perhaps you know someone handy to fix it? If not then look around for a good hanyman locally that does that work all the time on the side. I would say buy it if the roof is good, if there is no water damage in the house, and if the foundation is solid. Heck you can find NICE furniture almost/ if not bran new at the thrift store! So take some of your funds and fix the place up. Sounds like it just needs some loving care :) Good luck with your new sanctuary :)

Answer 3

I think you have just answered your own questions. Your gut tells you that you do NOT trust the seller and if that is the case GET OUT OF IT or you will regret this. I am a Mortgage Advisor and a Realtor - DO NOT EVER let anyone push something like this on you. Your GUT says dont do it and you need to stick with that feeling. Find another home as there are several out there. You need something that YOU FEEL is safe not just for you but for the children. PROTECT THEM - you mentioned electrical and the lack of grounding and thats enough for me to say NO WAY!! You need furnishings and that should take precedence over FIXING up this property.

Please do me a favor and look after the best interest of your son and your self. I am in North Carolina and if I can be of assistance see my sites listed below.

Answer 4

There seems to be opportunity here. You should now have the ability to drive this transaction. First, get a competent Residential Remodeler (renovator) to give you an estimate for the needed repairs. Next, have a real estate agent to get you a market sales analysis value of this property. Now you have 2 things, The value of the property, and the cost of repairs. Subtract the cost of repair from the sale value of the property. You should also include the cost of holding the property while the repairs are being done from the sales value. Next, as you are going to have to deal with the very many issues that go along with renovating a residence I feel that you should subtract an additional 5 - 20 % from the value for your time and decisions. When you have made all of these reductions make another deduction intended to give you room for negotiation. If you leave room for negotiation it makes the seller feel as though they negotiated themself a raise over your offer. And they will not feel as though they left money on the table and you actually purchased the property for what you factored in. One very important thing to keep in mind is (DO NOT BECOME EMOTIONALLY INVOLVED WITH THE PROPERTY) meaning do not love this house. Houses are an investment that can be tapped later for needed and necessary items. If you can purchase with instant equity that is good. After you have the house there will be plenty of time to fall in love and out of love with it. The important factors are a competent professional remodeler, these are hard to find, market sales analysis, any realtor can get comparable sales. On the repair bid estimate it would be healthy to try to get 3, then question each one on the various cost differences that all estimates contain. Remember the best return on your renovation expenditures will come from the monies spent in the Kitchen and Bathrooms. A good repair estimate bid will take some time to compile. If a contractor walks in and gives you an estimate on the spot, inform him not to return. I deal with investers who want for me to give them an estimate the same day I see the house and they do not like the price I give them at this point, I always go high. I know of other contractors who go low to get the job, then unknown expenditures occur causing the job cost to go up. So be careful. Also, Remodeling/Renovation is more expensive than new home construction account of tear out and debris hauling, dump fees, etc... What I'm trying to do is help you make as well an informed decision as can be had. However, I am not able to communicate as much as is needed here. Another, ooption for you is to find another investor whom will purchase the house, renovate it, and sell it to you for a flat fee simple.

Answer 5

If you were my client, I would ask you what you wanted to do. It seems to me that you found a great investment home because there's lots of things a do it yourselfer could fix to sell the home at a profit. But it sounds like you weren't seeking an investment property, rather, you were looking for a good price on a residence. So I believe this home is a mismatch for you and your son. One thing to consider is that you can decide to purchase the house as an investment and either lease option it to a handyman or since you bought it at a discount, you can re-sell it for a slightly smaller discount to a buyer looking for a fixer. If you're working with a realtor you trust, seek their advise. If not, I suggest you get one fast! As a buyer, you usually won't pay for the agent's services.

Answer 6

You would probably be better off buy an unfixed up 1957 house from someone who has been living in it. Check out what else is available in the neighborhood. In should cost less or if it has been updated by the owners the work will probably be of better quality. A fix that is not done right is more trouble that the old original.

Answer 7

In fact, you are 100% correct. It sounds like the current market in your area, with houses selling for 20k less, do not warrant that price of $134,900, nor will it appraise for the $134,900 he is asking. Maybe this could have been a realized "flip" last year or the year before, but hard to do now. In any event, it is a good idea to be sure that whatever contract you enter into has a "appraisal contingency" whereas you would not obligated to continue with the purchase if the value of the appraisal comes in below the purchase price. Hope this helps

Answer 8

When buying a house you should trust your instincts. You seem very hesitant about this house and with good reason. If you can't afford the repairs - I would back out. You may be able to use the inspection report as your reason for backing out and get you earnest money returned. But you must be very careful when you back out - I suggest you talk it over with your Realtor.

Answer 9

In some states the flipping con is ILLEGAL others not yet,,, why pay someone triple money for 10% expense and 3 wks labor? thats not a good investment. best bet go find your own real deal and forget the flippers their only goal in life is to be the best fast buck artist and nothing else~