House Flipping Shows Are the Current and Long Standing Rage on Cable TV but the Purchasers of Those "Remodeled Homes" Should Be Cautious & Suspicious

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A young couple from Illinois relocates to Washington DC and makes an exciting home purchase that becomes a nightmare. Gary Case owner of Signature Kitchens Additions & Baths in Rockville MD advises that home buyers should be very concerned if they discover the home they are thinking of buying is now owned or merely controlled by a flipper of houses.

dc remodel view of improperly sistered joists

See the improper sistering of termite damaged joist. Indicative of no permit and stupidity.

"The home resale participants; Realtors, Title Co., Home inspector & termite companies all enjoyed a transaction but no one protected Dave & Amanda from an unscrupulous flipper" said Gary Case owner of Signature Kitchens Additions & Baths

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Anyone with a remote control has seen the never-ending twists on the house flipping show genre. The shows promote easy money; anyone can do it, you the flipper will get rich in no time. But what about the buyers of the flipper's flip.

Here is an example of how wrong things can get for the buyer of a flipped house. An email recently sent to Gary Case said, “Just closed on a home on Capitol Hill SE Washington DC. We are seeking your expertise in re-thinking, re-designing the kitchen, dining space, powder room and upstairs bathroom.” We scheduled a meeting at our kitchen and bath showroom in Rockville MD to discuss their project aspirations. In preparation for the meeting Case, a licensed but inactive Realtor, pulled the listing and the tax record. The listing agent's remarks were "…a classic bath... newly remodeled home with modern kitchen. Dig the details.” The listing stated the house had been sold with "as is where is" contract terms. The tax record showed several transactions, the last less than one year ago.

The couple Dave and Amanda were from Illinois. They were excited to have moved to the District of Columbia and were now the owners of a home on historic Capitol Hill DC.

The house was built in the year 1900 as a carriage house; a house for horses and carriages. When Gary Case approached the house the first thing he noticed was the header row of bricks in the masonry. A header row or a course of brick is created by cutting the brick in half and then laying the brick short side out for an entire course. It’s an Architectural element sometimes denoting the start of a floor. This course was just a few inches above the ground outside of the house. When Dave opened the door it was necessary to step up 4" beyond the doors threshold. “Warning bells were ringing in my head,” said Case.

After a tour of the property, Case asked if there was a crawl space under the house. When the answer was no crawl space, Case said, “I think we should put a camera under this floor and find out what this kitchen is sitting on before we spend any money remodeling it.”

A week later the camera showed the floor joists sitting in the dirt. A 4 x 8 sheet of the floor was then removed to get a closer look. Case recalls, “To me it was like discovering a crime scene. Brand new, not pressure treated southern pine joists sitting in the dirt."

As part of a open floor plan kitchen family room design, a new concrete slab floor was proposed, and accepted by the owner and then the permit office.

Weeks later demolition began. The first floor and its joists were taken to the dumpster. When the drywall ceiling was removed, the next cover-up was discovered. The joists holding up the second floor were a hodgepodge of joist maladies; some were cracked clean through, some had been cut and sistered incorrectly, some were dangling short of a supporting wall to transfer their load. Drywall covered all of it up. “The second floor would sooner or later have fallen onto the first floor,” according to Case.

This story is important because a home inspector would not have found any of these issues. Dave and Amanda had the home inspected yet none of these problems had been found. The defects were all hidden. The only reason the defects were discovered was that the new owners wanted to remodel a below average DC kitchen and bath into a more open floor plan.

How do you protect yourself from this type of unscrupulous cover up?

If you are contemplating the purchase of a home you need to get answer to the following questions.

1.    Is the house being sold with a full disclosure of its conditions & defects or is it being sold in its as is where is condition? A house being sold with 'as is where is' terms is universally used by flippers. Such terms protect them from liability.
2.    Request a copy of the current tax record. Who owns the house according to the tax record today?
3.    Does the tax record owner's name match the owner’s name on the listing print out? Flipping house is about speed not quality. Often the property is back on the market faster than the county recorder’s office can record the deed.
4.    Is the tax record owner name a corporate name? Such as ABC Corp vs a person’s name? Corporations & LLCs (limited liability corporation) are legal entities and an acceptable means of avoiding personal liability.
5.    How long ago did this owner buy the house? If less than one year, then the house is likely being flipped.
6.    Is the tax record owner name & non-resident address similar to anyone’s name and address associated with the transaction? Many flippers are real estate agents.

If the listing says the house is being sold with 'as is where is' contract terms, the participants may defend those terms with expression such as these:
a.    The real estate market is hot. No seller wants to sign a disclosure and be at risk.
b.    The house is completely renovated. The developer or investor will only sell it with those terms.
c.    You can have a home inspection and the seller may elect to repair what is found. You can even cancel the purchase up to the home inspection expiration date but once through the home inspection the sale is 'as is where is'.

Ignore all such defenses. If the owner will only sell 'as is where is' then you must assume there are hidden problems.

Be cautious and remember the following:

The shows on house flipping are not talking to professional builders or remodelers. The house flipping shows are talking to, persuading and enticing people who:
1.    Want to start a new endeavor.
2.    Have no license.
3.    Have no experience.
4.    And they want to get rich the fast and easy way.

Keep the following in mind when you hear rational arguments to these cautions:
1.    Professional builders provide warranties and guarantees on the houses they sell. Why don't flippers?
2.    Professional Remodelers provide a warranty on their work for at least a year. Signature Kitchens Additions & Baths warrants its work for two years. Why don't flippers?
3.    Both builders and remodelers have long lists of past customers that you ought to be able to talk to. Why don't flippers?

To see the open floor plan remodel of this Capitol Hill DC home along with the gory before and fantastic after pictures visit Signature Kitchens Additions & Baths.

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Gary Case

Gary Case
since: 11/2009
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