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We're planning to buy a house that was foreclosed/auctioned before. By this I mean, a company/agent bought this house that was under auction couple months ago and fixed it completely inside out and reselling it now. The house is completely redone and looks like new and everything is replaced. Is it ok to buy this house and are there something that we need to look for?
You need to find a very good and qualified home inspector (or anyone you know with these skills) to completely inspect the house for any red flags.
When you first walk into the house remember that they could have bought:
1. A good house that needed minor repairs, updated mechanicals, and a cosmetic makeover; which they did.
2. A crappy skank of a house that needed an exorcist and a whole lot of renovations; which they did.
3. A crappy skank of a house that needed an exorcist and a whole lot of renovations; which they just covered with lipstick.
Do not ever be taken on any house purchase by the new paint job and clean, fresh look; especially with flips. Know who the person was that did the flip and their reputation. Don’t be afraid to peek behind the curtain, you may find a wizard or you may find the witch.
Can't stress what Rabrrita said enough. Flippers have a bad reputation because of those who do #3 on the list above. That's not all of them, but it sure seems like it once you get to looking at flipped homes.
Be very, Very careful, you never know what's been hidden and even a great home inspector can't inspect stuff that's been covered over.
Thanks! We don't know who flipped it, but they've everything new except the walls. We'll get it inspected for sure. If everything is ok with the inspection should we be ok to go ahead with the house?
Along with the inspection, talk to the surrounding neighbors, they may have information for you on how the house was rehabbed. We have a house near us that sold in an auction to a company that buys houses to resell. They've done a great job on it They've taken it down to the "bones", replacing sheetrock, AC, and total new roof. It was more work than they bargained for according to the foreman on the job. They spent a lot of time doing it right and I have doubts they will make a profit with what they paid for the house along with all the work/repairs/replacement expenses.
In some muncipalities the data that comes from permits and related checks of the work-in-progress is a "public record". You can see a whole lot of interesting things in such files, including the names of the contracting firms, which can tell you quite a bit about how extensive the work really was...
Assuming you are getting a mortgage, before you waste any time pursuing this flip, ask your bank what their requirements of time-of-ownership by the Seller are for them to be willing to consider writing a mortgage for your purchase. In other words, the short term ownership may raise a red flag with your bank.
Assuming you are getting a mortgage, before you waste any time pursuing this flip, ask your bank what their requirements of time-of-ownership by the Seller are for them to be willing to consider writing a mortgage for your purchase. In other words, the short term ownership may raise a red flag with your bank.
I was just going to add this one. I know most lenders have backed off on this policy, but some have not. If the flipper did a bunch of remodeling, they've probably owned it long enough to sell it without issue, but make sure your lender is ok with it.
Other than that, get a good inspection, as everyone else has already said. Make sure the inspector knows it is a flip and could have sat vacant for a while.
I love the ideas of talking to the neighbors, too.
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bank restrictions
