Flipped Home Inspections

Note: The Managing Risk column with InspectorPro Insurance provides home inspectors with tips to protect their businesses against insurance claims

Flipped homes are a common grievance among home inspectors and buyers alike. While house flipping is impressive at first glance, “house flippers” often make cosmetic changes while ignoring or concealing serious issues, explains Mark Turner of Inspectus Home Inspections in Missouri.

“The biggest issue I have found with flipped homes is that more effort is spent on the cosmetics of the home and not much effort is spent on repairing the major defects,” Turner said. “One home I inspected was during a heavy rain. The home looked amazing. But when I got to the basement, one wall had about a foot-long vertical crack covered up with paint and a substantial amount of water standing in the floor.”

For this reason, many in the inspection industry compare house flipping to putting “lipstick on a pig.” That is to say: What you see isn’t always what you get.

This raises several questions: What are the biggest issues inspectors see with flipped properties? Should flipped home inspections differ from standard residential inspections? How can you manage your risk while inspecting these renovated homes? We spoke with our claims team and inspectors like you to find out.

What is a flipped house?

What does it mean to flip a house? It’s the practice of buying, renovating, and repairing property, then promptly reselling it to turn a profit, explained writer Haisten Willis in a previous Washington Post article called “What you need to know before buying a flipped home.”

Megan Polom wrote in a Rocket Mortgage post that, under the right circumstances—e.g., using a licensed, esteemed contractor, high-quality materials, and proper permits—remodeled houses can become buyers’ dreams.

Why do flipped homes require more scrutiny during inspections?

Some house flippers do not take the time to ensure quality repairs, which is why flipped homes require more scrutiny during inspections. 

What common red flags should inspectors expect from quick flips?

Neglected issues. Incentivized to work quickly, real estate investors may prioritize superficial upgrades, take shortcuts, or neglect the most crucial and expensive repairs that will cause problems later, said Mike Leggett of The BrickKicker of Georgia.

Poor workmanship. To save money, house flippers may hire inexpensive or unskilled workers or attempt to do their own repairs, said Ian Scott of HomeTeam of North Shore Wisconsin.

Unrealistic expectations. Flippers and buyers alike get unrealistic expectations from watching reality television shows. Many flippers lack an adequate understanding of how much they must do and spend to bring a property to good condition. And many buyers believe a recently renovated home will be free of defects, according to Leggett and Kevin Smith of Forward Assist in Texas.

Managing Risk with Flipped Home Inspections

Inspecting a flipped home has some unique challenges. Here are eight tips for avoiding flipped home-related claims.

1. Research the property beforehand.

Carl Henley of HomeVue Inspection Services in Idaho encourages his fellow inspectors to research the house’s condition and value histories online before the day of the inspection. This preparation is especially helpful if the condition you observe doesn’t match what the seller described.

2. Encourage clients to check permits.

You may want to look at permits from the city to gather more information. However, pulling permits yourself is outside a home inspector’s scope and is, therefore, not something our claims team recommends. Instead, encourage clients to investigate whether the proper permits were obtained for the renovations, as recommended by Bruce Barker of Dream Home Consultants in North Carolina and Jerry Stronger of Preferred Inspection Services in California.

3. Get your pre-inspection agreement signed every time.

Your agreement defines inspection parameters, limits your liability, and controls dispute resolution. Without this agreement, clients are left to assume what your inspection covers and what repair expenses they can put on your shoulders. Make sure you get it signed prior to the inspection 100% of the time.

4. Have a disclaimer.

Most of your clients don’t have much of an idea what an inspection is and isn’t until you tell them. By explaining what happens during the inspection and what you may uncover, clients are better equipped to understand your findings. Furthermore, reminding your clients what’s realistic for a flipped home will make them less likely to file claims without merit.

5. Don’t rush.

Although your inspection process should look identical, set aside additional time to evaluate flipped homes—and charge accordingly, advised Craig Parent of 406 Home Inspection in Montana. Stronger and Mike Hamilton of MBH Services in Arizona agree that slowing down and cautioning yourself gives you the freedom to investigate anything that doesn’t feel right.

6. Take lots of photos.

Photos can prove what was there on the day of the inspection and what wasn’t. That’s why our claims team recommends taking pictures of everything and of every room in a flipped home. This includes problem areas and areas without any defects. If a client accuses you of missing a ceiling stain, having a photo from three months earlier proves the stain didn’t exist on the day of the inspection.

7. Be familiar with code, but do not cite it.

Being familiar with code may help you recognize potential issues that the builders tried to conceal, explained Richard Stockton of A Better Home Inspection Service in Virginia. Just remember not to cite code in your inspection report if you aren’t performing a code inspection since doing so exceeds your SOP.

8. Safeguard your business with home
inspector insurance.

Flipped home inspections can be tricky. But, with the right precautions, you can mitigate your risk and help your clients recognize a great deal. While thorough preparation helps minimize risks, maintaining home inspector insurance ensures you’re covered if something gets missed during these challenging inspections.

With InspectorPro with the ASHI Advantage, members like you receive exclusive discounts and additional protection. Scan the QR code to apply for a quote.

Alyssa Guerra is the Marketing Content Editor for InspectorPro Insurance, which offers ASHI members exclusive benefits through its program: InspectorPro with the ASHI Advantage. Through risk management articles in the ASHI Reporter and on the InspectorPro website, InspectorPro helps inspectors protect their livelihood and avoid unnecessary risk. Get peace of mind and better protection with InspectorPro’s pre-claims assistance and straightforward coverage. Learn more at inspectorproinsurance.com/ashi-advantage.

Opinions or statements of authors are solely their own and do not necessarily represent the opinions or positions of ASHI, its agents, or editors. Always check with your local governmental agency and independently verify for accuracy, completeness, and reliability.