No Bull Agent

Upgrade and repair documentation important when buying flipped homes

The practice of investors flipping homes in San Diego can still be found in various areas of San Diego County.  Typically, these areas were the hardest hit by the residential real estate downturn.  Basically, flipping a home means an investor has purchased the property at a low price and is selling it at a higher price.  Please know that’s the simple definition as the process can be quite complex depending on the property and market conditions.  If you are currently looking to buy a home in San Diego County, you may come across an opportunity to purchase a flipped home.  These can be great as they are usually competitively priced traditional sales where you can avoid some of the challenges of short sales and foreclosures.  We recommend doing the normal due diligence when it comes to inspecting and investigating a flip, such as a physical inspection.  One crucial item that can be overlooked is to request documentation from the seller detailing the work performed in rehabbing or updating the property prior to them listing it for sale.  Make sure to review and understand all receipts, invoices and warranties as part of the property investigation process.

Typically, an investor who wants to flip, will buy a property that needs upgrading.  The goal for them is to buy low, make the necessary improvements and sell at a price satisfying their profit margin.  It is important to know that the seller, in this case, is obligated to provide the buyer with documentation (receipts, invoices, warranties, etc.) for the improvements and/or repairs.  The seller in this type of sale is not TDS exempt.  TDS exempt means that they would not be required to provide the buyer Transfer Disclosure Statements.  California Civil Code requires these statements be provided by the seller to the buyer which gives information about the property.  Information includes the state of seller occupancy, appliances, defects, malfunctions, material facts, etc.  TDS exemption applies to sellers who obtained the property through involuntary deed such as a bank in a foreclosure or trustee sale and does not exempt an investor who is flipping.

For example, this documentation becomes extremely important to the buyer following a successful close of escrow.  There are instances when the previous work done fails.  Using the appropriate documentation, the new owner can go back to the licensed contractor and have the problem repaired.  In addition, a potential buyer may be able to discover if work was done by a licensed professional during escrow which may weigh on the decision of whether to purchase the home in the first place.  For questions on buying flipped homes, please contact us at 888-466-2855 and search for active homes in San Diego at www.NoBullAgent.com.

Tags: document, flip, home buyer, investor, ken kaplan, real estate, repair, san diego, tds exempt, transfer disclosure statement

This entry was posted on Tuesday, October 26th, 2010 at 11:08 am and is filed under Home Buyers, Real Estate Market Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

Name (required)

Email (will not be published) (required)

Website