Buying a flipped house: nightmare. This homebuyer discovered a host of expensive repairs right after moving into their new home.
Buying a Flipped House: Nightmare
Q: My question relates to buying a house that was flipped. I searched Ilyce’s website and only found articles for those who were flipping houses, not for buying what turns out to be a flipped house.
This past July, I went to an open house. This house was done to the nines (or so it appeared). I put in an offer that weekend for the full list price and an escalation clause to ensure that I was in the running. My offer was selected and we proceeded with the home inspection and termite inspection.
It was difficult finding inspectors where this home was located, so I was limited in who would respond. The home inspection went fine. The inspector noted that there appeared to be mold in the crawl spaces that would have to be remediated. The shower in the basement didn’t drain well but that wasn’t of concern to him. And, he noted that the water heaters would have to be replaced within five years.
We closed a month later over Labor Day weekend. We closed before the weekend to have the holiday weekend to move in. We did our walkthrough before closing without anything out of the ordinary other than a wasp nest that had formed in the bedroom window. My Realtor stated I could not have the seller take care of the issue prior to settlement.
What Happened When We Moved In
Shortly after we moved in, I called a plumber to adjust the water temperatures on the water heaters. When the plumber came to adjust the temperatures, he noted that the water heaters were too old and that they had to be replaced if I wanted hot water. Also, our area has hard water and a water softener would be needed to protect them. In addition, he found that there was still cast iron piping in the crawl space and it was leaking sewage (the mold was minimal and remediated but it was in the crawl space and I didn’t want to undo the remediation).
I had him replace both water heaters, the cast iron pipe and install a water softener at a total cost of around $20,000. A couple of months later, I smelled an awful smell in my kitchen, I went into the basement and found a major sewage leak and backup in the bathroom and adjoining room. The plumber came out and found that all of the pipes were clogged and that snaking them would not work. They would have to be flushed out but in doing that, they made the situation worse. My insurance is covering the repairs to the home, but a simple plumbing issue has taken up so much of my time and finances that I’m at the point of selling the house if one more problem arises.
What Do I Do Now?
Is there any recourse I have to make the seller responsible for these repairs? Since he allegedly spent a year fixing this house that was in foreclosure. Shouldn’t he have made sure that the pipes were updated and clean (or cleaned out) prior to putting the house on the market?
My belief is that when you buy any house, you should repair from the bottom up and he evidently failed to do so. I’ve also had electrical problems and none of the fireplaces are up to code and I have to have inserts installed if I want heat during the winter (one of the fireplaces is sucking all of the heat right out of the house and making my HVAC work double time).
A: Your house sounds like a money pit. We’re so sorry that you’re going through this but the issues you raise are helpful in an era where home flipping has once again become sport.
It’s interesting that you started your story by stating that the home you were buying was “done to the nines.” It’s so much easier (and cheaper) to paint (or paper) over a home’s flaws rather than address actual issues – and it seems to fool a lot of people, including professional home inspectors who should have known better.
What to Look for When Buying a Flipped House
When touring a house, Sam usually likes to start in the basement. That’s how he can tell whether a seller put money into the guts of the home as opposed to just those areas that are visible, like the living room or kitchen. It’s nice to have granite countertops and new appliances and it’s also nice to have new bathroom fixtures and cabinets, but Sam likes to see whether a seller has tackled the mechanicals or structural issues, including replacing the air-conditioning system, hot water heaters, pipes, windows, furnace, electrical supply, water supply, sanitary sewer line, and other components that many other people overlook when buying a fixer-upper.
Sam has had dozens of clients buy homes that have been renovated, updated, or gutted where sellers have made rooms look pretty but haven’t touched any of the fundamental items in the home. And, those buyers almost always find themselves facing expensive repairs and upgrades.
Some buyers seem to think that just because a seller is good at staging a home, they can automatically assume the mechanicals are up to date as well. But sellers have no obligation to update or renovate a home, or do more than they are legally required to in the contract. If the hot water heaters are old when you purchased the home, or the pipes are old, the seller has no obligation to update or upgrade them, just as you had no obligation to buy the home.
What a Proper Home Inspection Looks Like
We’re sorry that your home inspector didn’t identify more of these issues to you. Over the last 20 years, Sam has seen inspectors rely more and more on checklists and less on giving general information to buyers. It seems to us that many inspectors that only rely on checklists will only go down the list of items on those specially created lists and not deviate at all, no matter what the actual condition of the house.
We would have that the inspector call out the problem of the old mechanicals – but really, a good home inspector should turn every knob (including tub and sinks), test every light socket (to make sure it’s grounded), go into the crawl spaces and inspect the attic. An inspector doing a proper inspection should have told you that the hot water wasn’t working, or wasn’t getting hot enough.
Buying a Home in Foreclosure
The other red flag is that you knew the home was in foreclosure. Homes that go into foreclosure typically are owned by homeowners who can’t afford basic maintenance to the property. So, everything falls to the wayside, as they attempt to keep up with their mortgage payments. You should have been even more skeptical about the property upon finding out that it was a foreclosure flip.
On the other hand, we sometimes find it suspicious when a plumber comes to a new home and automatically starts to tell the homeowners that they must replace everything. While this may be true in some situations – like when you don’t have hot water – we also have seen some contractors abuse this situation. Maybe everything doesn’t really need to be replaced today.
How would you know? A second opinion. When Sam’s clients have gotten second opinions from contractors, it frequently turns out that the first contractor was trying to take advantage of the homeowner.
As far as going after the seller, we’re not sure what you can go after the seller for. You didn’t say that the seller lied to you or should have disclosed things that the seller knew were wrong with the home. You can sit down with an attorney that has experience with seller disclosure issues and see if you have a case. But if not, we hope you can still find a measure of peace with this property.