Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in the
upstate of South Carolina I'm your host
as always Stan McCune realtor here in the
upstate out of Greer South Carolina and
as I always tell you guys you can find
all of my contact information in the
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today we are going to be talking about
Good flips versus bad flips and
specifically we're going to be talking
about you as a buyer if you're coming
into a house that you're looking at as a
buyer how can you very
quickly without having inspections done
and all all of that determine if a house
that was flipped and and by flipped I
mean it was a house that was remodeled
that used to be in bad condition how can
you quickly determine if that flip if
that remodel was done the right way
because here's what happens if you don't
catch that during your your initial
showing if if you miss that then you're
going to to lose time and money until
you get to that inspection which you
have to pay for you're going to pay $700
for an inspection the inspector is going
to come back and tell you oh they had a
lot of skeletons in the closet in this
house and let me tell you there are a
lot of skeletons and a lot of closets
and a lot of houses right now because
there's a lot of people that think they
can flip houses right we've been in a
sellers market now for quite some time
the it's it's actually in a lot of
ways harder to flip houses in a seller's
market than it is in a buyer Market
but there is one standpoint in which
it is easier and that's that you're
pretty much unless you completely screw
up you're pretty much not going to going
to get stuck with a house that you can't
sell and so because of that you get all
these speculators that come into the
market that think they can flip a house
that they've never done even a remodel
before but they know that it's a
relatively safe investment because at
the very least they will will be able to
dump it off they might not make any
money but they know that they'll be able
to sell it to someone at some point
so there are a lot of people right now
that think that they can become Real
Estate Investors by flipping houses
let me just say this this is kind of
an aside but if you're flipping houses
you're not necessarily a real estate
investor I don't really consider that
real estate investing unless you have a
well oiled machine whereby you're doing
it you've got a team in place you've got
Capital you've got a strategy you're
you're doing different things in order
to make sure that you can do multiple of
these per year if you're just kind of
like oh the house next door went for
sale and it's in bad shape I think I'm
going to try to buy that and then flip
it that's not real estate investing
that's
just speculating taking a lowrisk
opportunity and then trying to make
something out of it when really all that
you're all that you know is that it's
the house next door you you haven't
gotten into the numbers and analyzed
neighborhoods and and analyzed markets
and looked at Supply and looked at
demand and determined what your
business plan is going to be you haven't
done any of that all you all you knew
was that the house next door came up for
sale and you figured that you could flip
it
and so that's what you attempted to do
there are a lot of those types of
quote unquote investors in the market
right now and here's the problem with
that
right they don't have any experience
with remodels now let me let me back up
for a second that there are some very
experienced flippers that are not good
at what they do they're known for
cutting Corners they're known for doing
bad remodels so a person's experience
doesn't directly correlate with how good
of a house Flip or how bad of a house
flip that they do some of the worst ones
are by very experienced investors who
are Savvy enough to know exactly where
to cut corners and get away with it that
being said most of the time the novice
investors those that are new to the
house flipping game are often times the
ones that are cutting the most number of
Corners they the ones that get in that
overpay for the house and then they're
they're trying to do the work and
they're like okay we've got to save
money somewhere where are we going to
save the money all right we're going to
save it here we're going to save it
there we're going to save it all sorts
of of different places and they they
save it in in ways that ends up
hurting the buyer who ends up purchasing
the house later now there is one common
feature of every flip house okay and and
you might hear my garbage truck going
around the neighborhood cuz it's going
around the neighborhood right now but
there's one common feature about all
flip
houses and it makes sense they all have
good updated Cosmetics of one form or
another no house that's been flipped has
not had its Cosmetics update it's not
they've all had a new paint job they've
all had flooring replaced a lot of them
have had countertops replaced a lot of
them have had things cleaned up that's
what pretty much every flip house has
they they look nice in a lot of ways all
those cosmetic things are good lipstick
is on the pig it's nice it it it shows
up great in pict pictures everything
looks great
until you get into the details of the
house and the devil is in the details
whatever that means it sounds good I
I think it applies to this situation
and that's where the trick lies
that's that's
where that's what the work that you need
to do in order to determine if a house
is a good flip or a bad flip you have to
look straight past those Cosmetics cuz
those Cosmetics they lie to you you know
the the great countertops on top of the
cabinets doesn't necessarily mean that
the plumbing inside of the cabinets is
any good the plumbing underneath the
sink in the vanity or in the your
kitchen
cabinet you can't look at the
countertops to determine that just
because the paint on the walls is great
that doesn't tell you what's behind
Behind the Walls might be tons of
termite damage Behind the Walls so
there's all sorts of of aspects to this
that you have
to look past the cosmetics in order to
get the full
picture so what do you do when I walk
into a house
flip
I can pretty much pretty quickly
determine whether the house was flipped
well or not flipped well for for the
most part now almost any house flip is
going to have crazy things show up on an
inspection report by crazy I mean you
know there's just going to be a lot of
things there there is always Corner
cutting when people flip a house it's
just it always happens you just have to
be prepared for that if you're buying a
house that was a flip house because
there's a very simple reason right
they're on a budget they are not living
in the house people that are living in a
house do better work for the house than
people that are not living in the house
that is true 100 out of 100 times 100%
of the time people that are living in a
house when they remodel it do a better
job with the work than people that
remodel a house when they're not living
in it and don't ever plan to live in it
so the ideal
situation is if you have a house that
looks like it was flipped but in reality
it was just remodeled by an owner
occupant that is the ideal scenario
that's the one that I feel the most
comfortable with but in the situations
where it was not an under occupant it
was a quote unquote investor that did
the work there's going to be Corner
cutting somewhere you have to be
prepared for it the key is you don't
want to get way in into the in into
the transaction far along in the process
before you discover that whether the
corner cutting was really bad or not
but the first thing you need to
actually be looking when you look at the
house when you go to the showing you
need to be looking for signs of corner
cutting and then determine how bad it is
and you need to start on the outside of
the house the first thing you can
start with is looking at the Landscaping
okay this is a very common place to cut
Corners because a lot of people are
willing to take a nice house that
doesn't have great
Landscaping but if the house does have
really good Landscaping well that's a
really good sign so this doesn't
necessarily tell you if the house is not
in good shape or if it was a bad flip
but it can tell you if it's a good flip
if the Landscaping is really great that
is a really good sign if if you don't
see a ton of weeds everywhere if they
have if they have good
healthy
grass a lot
of things trim the way they should be
all of that that is a very good sign you
know what's a bad sign if you see straw
on the ground as if they were trying to
seed and grow grass that is the oldest
trick in the book yes they put some seed
down they threw some straw down on top
of it you're not going to get grass I'm
sorry it there's more to it than that
odds are you're never ever going to
see more than a few little Sprouts of
grass result from that it will be years
before and and probably additional
seaing and and whatnot before that turns
into
anything so that usually is a sign
that there was some serious Corner
cutting they weren't even willing to
bring in sad and and put in the work to
get the the sad to be healthy they just
sprinkled some seed and and threw down
some
draw look at the roof while we're
outside look take a look at the roof you
might not be super knowledgeable
about roofs but an average person can
look at a roof and get a sense of
whether it is
you know in decent shape or not if
the roof is
shiny particularly you know at the seams
of the shingles that's not a good sign
it's not the end of the world per se
but but that tells you that the roof is
probably old if you see streaks on the
roof from where you know rain has come
down it again that doesn't mean that the
roof is shot but that's an indication
okay they cut Corners here they didn't
replace the roof this has an an older
roof this is they may have done you know
they may have spent
89,000 replacing granite in the house
but they wouldn't spend $8 or $9,000 on
the roof not a great sign look at the
while you're outside look at the air
conditioning what age is the AC you can
get a sense by just looking at the AC
unit a lot of people have some common
sense the typical AC unit lasts about we
expect it to last around 15 years here
in South Carolina but you can also
look at the serial number and actually
figure out the exact age of it I
recommend for instance if it's like a
train AC Google how old is my
Train AC something like that and
you'll it it will take you to a page
that will help you to re be able to read
the serial serial number typically
serial numbers have several numbers
right at the beginning and then some
letters you typically for AC units and
it and it does vary but typically you
look at the first four numbers and two
of those numbers are going to be the
year very commonly they will do the
month and then the year so it might
be something like 0211
0211 would mean February
2011 sometimes though it's reversed and
sometimes the numbers don't make as much
sense as you would expect it to so it
might say you know
1122 well if it says 1122 22 is not the
month but 11 is probably the year so
that's just kind of a rule of thumb so
look at the AC if the
AC this is a this is a particularly bad
sign if the AC is older than 15 years or
if it just looks banged up that probably
is an indication that there are some
serious other things that were neglected
in the house and here's a a general rule
of thumb that I I tend to say when it
comes to looking at houses if you can
see deferred
maintenance you can't see a whole lot
more deferred maintenance
because everything has been and this is
true of of flipped houses just as true
as it is of just normal houses that are
for sale people will put it out there
and make it look as good as possible so
if when it looks its best it still
doesn't look good that's a bad sign you
know it it's it's like if if someone
asks you out on a date and on the date
that
person does not take their appearance
seriously listen they're never going to
take their appearance seriously it's
silly analogy but it's the same thing
when it comes to selling homes I
shouldn't say the same thing you don't
go on a date with your home I hope not
even if you love your home which I
hope you do but at the end of the day
if you can see problems
Then There are a whole lot of more
problems underneath the surface that
you're not able to
see so while you're
outside go ahead and take a peak in the
crawl space and really most of the time
just a peak is adequate I I don't
necessarily think you need to to get all
up in there and and crawl around some
people like to do that and that's
totally fine I can usually get a pretty
good sense by just poking my head in
there take a peek in the crawl space I I
I I was showing a house recently to
someone and and we looked in the
crawl space and there is so much that
you can gather from from sticking your
head in the crawl space you want to
look you want to smell you want to
feel you want to do all use all of your
senses and so this was an instance where
I opened the crawl space door and I was
hit by cold air cold air well what
did that tell me there's an AC there's
AC leaking somewhere in here there's a
duck that's leaking or something and
it's interesting cuz we had been inside
the house and the AC did not seem to be
performing very well and it was like
well here we go this is the reason why
there is some sort of a major leak
down here that is pumping cold air
into the crawl space rather than inside
the house if you see no vapor barrier
in the crawl space again
that is a bad sign that is a a sign of
corner
cutting and and an important one too a
vapor barrier you know with the moisture
levels we have in in Greenville you need
to have that that helps to to protect
the foundation the the wood structure of
the
foundation from growing fungus from
having all sorts of issues from the
inside of your house having high
humidity levels all sorts of things
you see if the crawl space is wet
now there's going to be listen you're
not going to have a bone dry crawl space
let's just be realistic there's going to
be moisture that that is completely
normal but if you see like standing
water in the cross space or it's just
muddy really bad sign and if you see
that you're probably going to also see
mold fungal growth again let's not
overreact these things are resolvable
I'm I'm not trying to encourage you to
oh no I see little white spores on on a
on a joist here listen that's not the
end of the world but that may if if
you're seeing some of these things if
you're piecing these things together the
and the cross space looks like it was
neglected that is a another major major
sign of corner cutting that's a common
area that that flippers will try to cut
Corners because
they know that a certain percentage of
the market is just not going to look in
the crawl space and among those that do
look in the crawl space there's a large
percentage that won't know what they're
looking at and so that is a very
common spot to to cut Corners in
another thing you can look for down
there is is Missing or falling
insulation that's a sign of of moisture
issues it also tells you that they
didn't address the Missing or
falling
insulation I'll also open up crawl
space doors and just see a lot of things
down there you know it's just like
like there was stuff being stored
down there just garbage down there maybe
a person living down there at one time
you might see evidence that there are
creatures cats squirrels mice rats
living down there those those are really
bad signs okay okay that those are are
things that happen in a home that's not
occupied and that's going to become
now your headache once you purchase that
home you're going to have to figure out
a way to resolve that and you're going
to have to do that very quickly and of
course I mentioned your sense of
smell cross spaces are going to be musty
they always are so don't worry about
that per se but if it's a if it's a
strong wet kind of musty smell okay and
and I've got to be careful here because
some of my listeners are experienced
enough that that they know what I'm
talking about some of you aren't and so
make sure that you always have your
crawl spaces inspected don't just take
your noses word for it but I there is
a difference between a normal musty
smell and a okay there is some heavy
moisture in here musty smell and it's
just it's it's a heavier type of must I
I don't know how to how to say it it's
just heavier it just it it's not
repulsive but it just feels you can just
feel the moisture that you breathe in
and of course when you enter the
house if you smell mustiness in there
that can be another bad sign now don't
confuse the normal smell of an empty
home which can kind of be a little bit
musty or at least seem a little bit
musty don't confuse that with what I'm
saying I'm saying again there's like a
heavyish type of like wow this this just
smells like high humidity
musty I can just kind of sense the
moisture if you start like getting a
headache from being in there that's a
bad sign that that might indicate that
you're breathing in something that you
shouldn't be breathing in so those are
all things to consider as well once
you're ins inside the house because the
moisture problems down below they will
rise to the top they will rise they will
come into the house in one way or
another you sense any of those things
those are signs that there was there was
some Corner cutting that should not have
been done in that
house and at that point you may want to
consider maybe this is a house that I
shouldn't put an offer on again this
is just a guide this is just a guide to
help you be prepared it's not I'm not
saying that you should completely
rule out a house on the basis of of any
of these things but you need to know
what you're getting into on the front
end once you're inside the house
there's a bunch of things that you can
look at in there as well so kitchen
cabinets that that's an easy one right
you saw that they replaced the
countertops they put some some Granite
well what kind of granite did they put
on there let's start with that before we
even get to the cabinet
is it just your basic low grade
granite or did they go with something a
little bit nicer something a little bit
nicer would be quartz of course which
isn't Granite if you don't know what
quartz is just Google it it's a man-made
type of stone it's more expensive
often times than granite then there's
different levels of granite as well
and so the levels are based on kind of
how unique the granite is if the granite
has basically a set pattern to it or if
it's just like one color particular like
black that is a cheap granite that's
a basic level one Granite if the granite
has some character to it and it's not
just a speckled pattern of some sort but
it has you know like waves through it
and and and different unique things that
catch your eye that's a nicer Granite
that tells you okay they did a nicer job
here they didn't just go with the
cheapest materials possible but that's a
great sign because that indicates
that they that they weren't just cutting
they didn't cut Corners there right they
understood to invest in in the granite
same thing with tile you can look at
tile you can identify pretty quickly
okay is this good tile or did they just
go with the cheapest stuff
is this good Hardwoods or did they just
go with the cheapest stuff look at the
flooring
identify whether they went as cheap
as possible or whether they actually
invested in nice fixtures and nice
flooring and all of that same thing with
the cabinets most of the time with a
flip house they're going to keep the
cabinets but look at them what what do
the cabinets look like are they in good
shape look at the doors interact with
the doors open and close them are these
cheap cabinets are these old cabinets
what's the situation there that gives
you a little bit of an idea as well
the tests that I said before whether
they went with just the cheapest option
or with a little bit nicer option that
applies to a few other things as well
such as the kitchen appliances is it the
cheapest possible or close to the
cheapest possible range cheapest
possible dishwasher refrigerator Etc
okay they cut Corners there
that they they decided to go cheap on
the appliances something to consider
bathroom vanities are these just your
$200 vanities that you can get you know
at a home store or did they put in some
nicer vanities that have nice cabinets
nice countertops interact with all of
that take a look at that that will tell
you the that will start to paint the
picture of what type of a job that they
did flipping this house
look at the windows here's a common one
old windows not been replaced or
windows that perhaps aren't old but they
have problems you can't open or can't
close them properly they won't lock
properly the top sash won't stay up
when you open the bottom sash all sorts
of of different things like that can
arise those are really really good
indicators that Corners were cut in
the house flipping process and of course
there's one that especially given my
my recent podcast about this this is
one that I don't necessarily think I
would lead with but in cases where
you're concerned about something so
let's say you go through this house and
you see several of these different
things and you're like okay I'm
concerned about this I didn't mention
another thing would be looking at some
of the electrical stuff you know are
there do you see GFCI outlets at near
places of water in the kitchens and
bathrooms did they just leave old
two-prong Outlets that tells you that
the electrical has not been updated
there's all sorts of different things
like that but as you as you look
at some of these things if you're
starting to get concerned if if several
of these are being checked off as having
cut Corners that might be the point at
which you need to ask hey was a permit
pulled to do this work and did they go
about it that way now I've seen a lot of
good flips that didn't have permits
pulled and we already kind of
discussed that a little bit so that's
not the end all be all but that can be
something that is a consideration
when you have some concerns about some
of the work that was being done
that's kind of a feel it out kind of
thing like I said I don't lead with that
because I I get I I I don't recommend
not pulling permits but I have been in
that situation myself where it was
confusing whether a permit needed to be
pulled or it you
know there is something got crossed
up between different parties and it
wasn't pulled so there's I see it from
that angle as well that there can be
situations where good work is done
without a permit but that is kind of
the final thing that I would say that
you can look for if you have other
concerns there are some other things as
well I can't I I I you know sitting
in my basement I couldn't come up with
an exhaustive list but when I'm showing
homes to my clients when I'm showing
properties to my clients it's all it
it's Instinct for me I know where to
look I I identify the different places
I identify the different things that
could be concerning and then I raise
those to my clients I let my clients
make the final decisions I don't try
to push them in either direction I
simply lay out the facts and then let
them decide now if it's a situation
where I really don't think it's a good
fit for my client well that's that's
another story I will speak out there are
some situations where I think something
is a perfect fit for my client and I
don't want them to miss out on it and
I'll speak out in that situation as well
but other wise I I feel like my job
is to is to not be the decision maker
for them but to Simply present as much
information and as much data to them as
possible to help them make an informed
decision for themselves and so
hopefully this helps you to think and to
get in that mode if if you're looking to
purchase a home here are some things
when you're seeing that home that's been
remodeled here are some things that you
can look for that can help you to
better understand how well the work was
done that was done on a house and that
can make you feel more confident in
putting an offer or that might raise
more questions be like okay I need to to
do some more research on this I need to
find out more information and that can
be really invaluable and save you a lot
of headache and heartache down the road
that's all for this week's episode I
appreciate you guys listening rate
review
subscribe make sure that you download
do all of those things all of my contact
information is in the show notes if you
need to reach me for anything any of
your real estate needs any of your
podcast discussion needs as far as my
podcast is concerned please go ahead and
reach out to me however you want I hope
you guys have a great rest of the week
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