5 Tips To Identify a Quality Home Flipper

Dear Monty: We are first-time homebuyers. We are looking at a home that we like that a flipper is selling. It appears to us that the house has been updated beautifully. There is a new kitchen, bathroom and flooring, and it is freshly painted. Flippers seem to have a poor reputation, making us uneasy about buying it. Several friends have warned us to stay away. We have looked at it three times and cannot see any shortcomings in the work. Do you have any guidance for homebuyers considering a flipped home?

Monty's Answer: Your observation is correct. Flippers have an undesirable reputation. That may be why some flippers try to hide that the home is a flip. I've written more about figuring this out on my website.

MANY HOME BUYERS ARE TOO TRUSTING

We believe no company keeps statistics on home flippers with real estate licenses. I suspect licensed flippers are abundant. The biggest sharks often portray the characteristics we all respect. The 2009 bestselling book "Freakonomics" describes real estate agents in this passage: "You feel fortunate to have such a knowledgeable expert as an ally in this most confounding enterprise. Too bad she sees things differently. A real estate agent may see you not so much as an ally but as a mark." A flipper has a major conflict of interest. Their sole purpose is to make money in an industry where value is a moving target. Even major corporations that flip homes are only in it for the money. For example, Opendoor is a billion-dollar public company. In 2022, the Federal Trade Commission (FTC) fined the company $66 million for making false claims.

QUALITY-ORIENTED FLIPPERS

There is another kind of flipper. It is unclear how many exist, but I suspect it could be up to 10% of all flippers. These flippers are generally quality-oriented and realize that higher-quality products last longer and demonstrate superior performance. They are establishing a brand that has a purpose more significant than just making money. They demonstrate creativity, design and quality as craftsmen. They are men and women seeking to satisfy homebuyers with a defect-free product. Those homebuyers will endorse their work as satisfied customers. This idea is not unique; homebuilders have built quality brands for decades. I suspect some homebuilders flip homes as fillers for work between custom builds. They have the tools, the subcontractors, the best supply pricing and the reputation to stand behind the product.

HOW TO RECOGNIZE THEM

This type of flipper displays characteristics that make them easy to identify. Here are five tips:

No. 1: You can speak directly to the owner. They are proud of their work and like to explain how they finished the project.

No. 2: You can identify the products installed. For example, a new furnace from a major brand is better than one with no clear manufacturer.

No. 3: Your home inspection is defect-free. Don't let the fear of loss interfere with your common sense.

No. 4: You may pay a premium. The seller understands that some buyers prefer to pay for quality.

No. 5: They can furnish satisfied customers. When flippers have not pursued establishing satisfied customers, they likely are not of this mindset.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter(X) @dearmonty or DearsMonty.com.

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