In today’s market, it’s trendy to be cheap. Buyers are looking for innovative ways to save money on all the things they purchase. From groceries to gasoline, there are many ways to avoid paying full price for just about everything - including real estate. But is it possible to purchase the home of your dreams without paying full price? Of course it is. If you’re in the market for a home, but don’t want to pay an arm and a leg, consider purchasing a flipped home.
To help understand why buying a flipped house is a smart option, today we are speaking with Michael Ferraro, founder of Innovation REI. Michael is an investor who isn’t in the business of house flipping just to turn a buck for himself; his goal is to, “Ensure that EVERYONE wins in every deal we do. That means that the seller walks away in better shape financially than they did prior to dealing with us, that the neighborhood benefits from one of our Innovation Renovations, and that our company is able to turn a profit in the process.”
Michael, can you tell us what it means to buy a flipped home?
A flipped home is a property that has been purchased and renovated by an investor with the hopes of being able to resale for a profit.
Are there benefits to buying a flipped home vs buying a typical new or pre-owned home?
Yes, there definitely can be advantages. Flipped homes can usually be purchased cheaper than a brand new home but you will be getting many of the same upgrades/finishes that you might see in newer homes. And when comparing to other pre-owned homes, flipped houses are typically in much better condition and are usually reasonably priced (if not priced below comps) to help ensure the investor is able to sell the property quickly. Also, my company likes to try to advertise our properties at discounted prices before we start our renovations (we can offer discounted prices because if we can get a contract on a property before we list with a realtor, we are saving on realtor fees). And when a buyer makes an offer before we start renovations, they can have a say in the renovation choices that are being made and can customize those choices to better suit their needs.
Will buyers of a flipped house experience the same closing process as anyone else?
Yes. There is no difference in the closing process between buying a flip home or any other home on the market. Actually, buyers can sometimes receive more incentives (i.e. having closing costs paid, getting a home warranty, getting upgrades before closing, etc…) when purchasing a flip property because investors are highly motivated to sell their properties quickly, while a typical homeowner/seller may be more inclined to hold out until they receive the exact offer they are looking for.
Are the same loan processes available to buyers of a flipped house as buyers of a traditional home?
Yes. The loan process is mainly based on the buyer’s financial situation and doesn’t have a lot to do with the property itself. Of course, if a buyer is getting a loan, the home must appraise for the contract price but that is the case for all properties.
Do flipped homes come with a warranty?
My company offers a 1 year home warranty on all of our flip properties but that it is ultimately up to the individual seller. A buyer can always request a home warranty to be provided at the seller’s expense, regardless if it’s a flip property or not.
What should buyers be aware of when buying a flipped house?
They should be aware of companies/investors that do “minimal” repairs. Unfortunately, some investors do very minimal renovations and then try to sell for maximum profits. A flipped home should be more than new paint and carpet. Whether you are buying a new home, old home, or flipped home, buyers should always purchase a home inspection to make sure that the home is good overall working condition. And do your homework to make sure you are getting a good deal!
Who should consider selling their home to a house flipper/investor as opposed to listing with a realtor?
Obviously, every seller has their own unique situation that needs to be taken in to account when selling their home and they should do what is in their best interest. But typically, people consider selling to an investor when they have a home that is need of extensive repairs and they don’t have the money to make them or when they need to sell very quickly for one reason or another. Also, when an investor makes an offer on a property, sellers usually won’t have to pay realtor fees or buyers closing costs. Additionally, investors will usually purchase the home in “as-is” condition without requiring the seller to make any repairs. And lastly, an investor can usually close very quickly.
Learn more about Innovation REI by following them on Facebook. Refer someone to Innovation REI who they eventually buy a home from or sell a home to, and earn $ 500! Visit their website for more information.