National Real Estate Organization Warns Buyers of Potential Pitfalls of Flipped Homes

AVONDALE, ARIZ., Feb. 28, 2017 (GLOBE NEWSWIRE) -- Every year buying a home becomes a reality for thousands of people throughout the United States. Whether a first home, an investment opportunity, or a second home, home buyers have many options and things to consider throughout the process.

One of the increasingly popular purchasing options has become considering a flipped, or distressed property.  The attractiveness for many people is the opportunity to purchase a home with many new features such as appliances, HVAC systems, paint, flooring, etc.  Although this approach might seem like an attractive option to save on short and long term home improvements, the National Association of Exclusive Buyer Agents (NAEBA) warns there are potential pitfalls associated with pursuing a flipped property.

For many sellers of flipped properties, the popular approach is to invest as little as possible to maximize their investment.  Justifying the return on investment varies from seller to seller, but the general idea is to minimize out of pocket expense when considering home improvements.  This approach within the real estate industry is known to some as "lipstick on a pig" work.  A recent survey conducted by The National Association of Exclusive Buyer Agents (NAEBA) to its membership base illustrated potential pitfalls that need to be considered when evaluating a flipped property. Such pitfalls included:

  • Visual upgrades - Whether the work done was merely cosmetic and the quality of the work, i.e. flooring, counter tops, paint, etc., especially in the areas of plumbing, electrical, roof, appliances.
  • Condition of home before being flipped - How much the seller bought the flipped home for, how much they put into repairs, and how much their asking price is compared to actual market value. Structural updates, like windows or the home's mechanical systems, are usually not touched since the cost to update can be expensive.
  • What permits were requested and issued - Many home repairs require permits. Request updated disclosure statement from the seller and list of work done including receipts, warranty information, i.e. water heaters, plumbing, electrical, HVAC, etc.

NAEBA recommends that home buyers considering a flipped home ensure that they have qualified professionals on their side. First and foremost, an Exclusive Buyer Agent will look out for the buyer's best interests pointing out the potential pitfalls, helping buyers avoid them, and educating buyers on ways they can research to protect themselves. An Exclusive Buyer Agent will also recommend a qualified home inspector to assist in the process. In some cases, buyers may also wish to consider working with a real estate attorney to help the buyer review all title work done on behalf of the seller.  This review may uncover title insurance defects such as a mechanic's lien for unpaid work done on behalf of the seller.

To request an Exclusive Buyer Agent please visit or call 1-800 986-2322.  

The National Association of Exclusive Buyer Agents (NAEBA), created in 1995, is an organization of companies dedicated to representing only buyers of real estate. NAEBA member brokerages do not list homes for sale and never represent sellers. This restriction to one side of the real estate transaction avoids conflicts and ensures that the interest of the home buyer is protected at all times from house-hunting and negotiation to inspection, financing and closing.


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