Red flags: Know how to spot problems in a flipped house

Originally published in Charlotte Five

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The agent and his buyer client were touring a remodeled house. The work was beautifully done, he says. The house had three refurbished bathrooms with fancy tile showers and umpteen other upgrades.

The agent says the first hint there might be a problem was when he spotted one of those precast concrete blocks at the base of a deck post. You know, those handy blocks with four fingers sized to accept the end of a treated 4-by-4. The things are easy to use, but, you see, in most applications they don’t meet code.

A building inspector would have caught that. So, what else had been done without permits and inspections?

“My palms began to sweat,” the agent says. “I ran back to my office to see if there had been permits pulled for all the work. There hadn’t been a single permit.”

He was the most recent of a half dozen agents who’ve shared stories about homes remodeled and flipped without permits since I wrote about the problem last spring.

It’s getting worse, they say, as more flipped homes hit the market. The agent says he spotted one recent listing that had been bought in early October and was back on the market by early November. “And there were no permits.”

Agents, inspectors, appraisers and other pros are taught to look for clues that work might have been done without proper building permits.

Bill Gallagher, who operates the Superior School of Real Estate, would call that precast deck block a “big red flag.”

The biggest of the red flags is additional square footage that doesn’t show up on official county records.

Gallagher says that was a point of emphasis in agents’ classes a few years ago. Agents are charged with measuring homes they list for sale.

“If there’s more square footage than the tax records show,” he says, “that’s a big red flag.”

Gallagher lists others: If the bonus room and bath over the garage were finished after the main house, that work might have been done without permits.

If floors are not all the same level, if you have to step up or down to move from one space to another, that might indicate extensive remodeling.

All of this is just to remind you again that if you’re considering a flipped house—or any house—you need to check the permits. It’s easy to do online, Lexie Longstreet of Savvy + Co. said in that column last spring. Check not only to see if there were permits for the work, but also how many times the work failed before passing.

Said Longstreet: “If you see the plumbing failed, failed, failed, failed before it passed, you say, ‘Okay, let’s look at that plumbing a little more closely.’”

The agent who shared the most recent story says his client was lucky, because they scratched that house off the list of homes to consider. The seller surely didn’t feel lucky.

“(The home flipper) had to tear three brand new showers apart,” the agent says.

The agent shared a download from the N.C. Real Estate Commission explaining when permits are needed in home construction and remodeling. It’s from a continuing education class for those who hold real estate licenses. You can find it at ncrec.gov/Pdfs/bicar/Permits.pdf. It’s eye-opening even if you’re not considering a flipped house.

You’ll notice that, way up high, it mentions “red flags.”

This story first ran in the Dec. 2, 2017 edition of Home|Design by The Charlotte Observer

Date : 12/6/2017