What is a Flipper House?

Understand the Benefits and Drawbacks

man and woman renovating house
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Question: "We've been looking at homes in Land Park, a tree-lined neighborhood of Sacramento close to downtown. Our real estate agent emailed us a bunch of homes for sale there and mentioned one of them was a 'flipper.' She made it sound like this was something important to know. I know we've heard the term before, but exactly what is a flipper house?"

Answer: Flippers are investors who buy a home — a flipper house — preferably in its original condition, at a price they hope is under market value in a desirable neighborhood. Then, they fix it up for as little money and as quickly as possible to flip it for the next sucker ... er, I mean unsuspecting buyer, who purchases for a lot more money.

Remodeling a fixer-upper and turning it over for a profit is a legal and accepted way to make money in real estate. However, there are other ways to do a flipper house that are illegal.

Tips for Buying a Remodeled Flipper House

Flippers are attractive to buyers because they are turn-key homes — everything is new, sparkly and fresh, including the appliances. If the price is in line with the comparable sales in the neighborhood, it really doesn't matter how much the investor originally paid for the home.

Assuming the investor didn't pull any funny business when acquiring the home, buyers still should exercise caution when considering a flipper.

  • Hire your own agent. Hire a buyer's broker to negotiate for you. Sellers generally pay your agent's fee. A buyer's broker will look out for your interests and represent you, not the seller.
  • Get a home inspection. Ask the home inspector to thoroughly investigate the plumbing, heating, electrical and mechanical apparatus in the home, including structural. Take along a home inspection checklist to verify nothing was overlooked.
  • Hire experts recommended by the home inspector. If the inspector suggests you obtain other reports such as a roof inspection, sewer inspection, HVAC report, chimney inspection, structural engineering report or pest inspection, follow the home inspector's advice.
  • Carefully inspect for the quality of workmanship. Look for signs that the flipper cut corners or tried to save money by using inferior products or materials. Note any defects you find and ask for repairs in the purchase contract.
  • Check with the county for permits. Not pulling a permit for work that requires a permit is common and not necessarily a deal-killer. However, there is no guarantee the work was performed according to code if the flipper didn't obtain a permit.
  • Get a home warranty. With a home warranty plan, buyers are covered for one year in the event a system fails, electrical malfunctions or plumbing leaks. Home warranty companies charge a service call fee, but the repairs are free.

    At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.