Flipping houses has been big business, especially in the South Florida over the past few years. As a home inspector they usually present the most challenges in the inspection industry. Most flippers are in business for one reason and one reason only – to make money. I laugh every time I see the show Flip or Flop. I have yet to see them lose money on a house, and of course they always get more than the appraised value. That is usually not the way it works. I have run into multiple people who have taken those courses and have gotten burned.
Most flippers that I run into only do cosmetic upgrades. They install new flooring, paint the interior and exterior, update the kitchens and bathrooms, and maybe do some landscaping. What they overlook is the roof, electrical system, plumbing system, and air conditioning system. The usual cost of these updates is between $20,000 and $30,000. I think they hope no one will find the other deficiencies. A new roof us usually a minimum of $5000.00, an AC system $4000.00, and electrical system can cost anywhere from $2000 to $15,000 depending no the work that needs to be done.
The other thing they forget to do is pull permits for the work that requires them to be pulled. I cannot tell you how many tankless water heaters get installed without a permits. These installations require both an electrical and a plumbing permit. Imaging the look on their face when I tell them that the electrical system needed to be upgraded from that 100 amp system to accommodate the now double electrical amps of a conventional tank water heater.
The last house I was at had all new windows installed. No permits. In Florida, all windows have t be either impact rated or have shutters installed. With no permits we have no way to verify if the correct windows were installed. They left out half of the framing screws. Pulling a permit will guarantee that something is installed correctly, but at least is is a check on the work. And why do a lot of these flippers no pull permits. A lot of them are not licensed contractors, which another whole thread topic. On this particular home the seller admitted that he did not pull permits because it would have been too costly to do the work correctly. Now he is facing fines front the city and currently has a house he cannot sell.
As realtors, I would like to get your feedback about listing one of these houses. Do you check for permits, or look to see what they might have overlooked. I know no one wants to do this, but it might be a good idea to have the house inspected prior to listing it to know the issues that might arise when a buyer comes through with their inspector. It could save a lot of time and heartache for all parties involved.
Posted by Bill Siegel Florida Home Inspection Team Inc.