"Beware" button - warning article on buying a flipped homeWant to buy a house in the Los Gatos neighborhoods of Belwood, Belgatos or Surmont?  There are a few things you should know about properties may be flipped that look “turnkey”, especially as the market heats up or inventory more available.

What is a flipped home?

Some contractors buy homes with deferred maintenance, often “off market”, do some quick remodeling (often without permits) and then put it on the open market as soon as possible. This is what we usually think of with flipped homes.

Also, some sellers quickly improve houses for a fast profit, sometimes when a house has been inherited to maximize their net.  Some regular property owners do this, too, moving out for a quick rehab rather than remodeling for enjoying the house for their own use, often cut corners. These two categories are a spinoff of the contractor-builder flip. We see all of them in our real estate market.

Whether it’s owners doing a quick makeover or investors remodeling or improving select items, beware! Some of these properties give the impression of being “perfect” but in fact may only have been cleaned up in the most visible areas.

Questions to ask, some things to look for in flipped or similar properties

Here are some questions for you to ask or investigate when looking at homes for sale in east Los Gatos, particularly near the foothills.

Please note, owners or sellers who prepare the home for the maximum return on investment will probably add fresh paint & carpet (or pull up the carpet to expose the hardwood floors), swap out light fixtures, door and drawer or cabinet hardware, and tidy the front landscaping. These are not in the category of flipping, but more like normal refreshing a home to sell.

When does it move from refreshing to flipping? If the kitchen and bathrooms were hastily remodeled in the recent past, you may be looking at a flip of some kind.

  • Look for expensive but less seen areas such as
    • the electrical system (some electric panels may be at risk of fire)
    • furnace (heater)
    • water heater
    • roof, gutters & downspouts
    • drainage system (often needed, seldom there in Los Gatos)
    • back yard landscaping
    • the foundation (always a potential issue in our east Los Gatos neighborhood if drainage hasn’t been properly addressed)
    • insulation in the attic (often minimal)
    • plumbing – has the home been re-piped, or are the old galvanized steel pipes still in the walls and under the house, ready to give up the ghost?
    • condition of retaining walls, if any
    • condition of concrete or hardscape
    • large trees – have they been trimmed, or are they an expense which will fall on you?
  • Is this an investment property (purchased by investors at a foreclosure auction or as a distress sale)?  Or is it a trustee sale where the family or friends inheriting the property are fixing it up for sale (almost like a flipped house)?
    • If it’s a house being sold by investors who’ve fixed it up, how experienced are they?  Some clients of mine purchased an out-of-area house from first time investors.  The kitchen remodel was made such that a full size fridge wouldn’t fit.  Fail!(Some trustee sales are in a similar category as first time investors – this isn’t something they have experience with, most likely.  They may make costly mistakes by either over-improving the home for sale or not fixing the right things. They may or may not be local and have a true sense of market value, too, so may set themselves up with unrealistic expectations.)
  • Were there pre-sale inspections? If so, did the owners or investors do the Section 1 work from the termite report and the health & safety issues called out in the home inspection?  The home inspection (not the termite or pest) should flag any major issues with the foundation, electrical, mechanical etc. systems in the home.  If there’s no home inspection, prepare for surprises in these older homes.
  • In Surmont, Belgatos, Belwood, and all of the east Los Gatos, Cambrian and Almaden hillside areas, water and drainage is an issue, as mentioned above regarding foundations.  Left unchecked, water seeps into the crawl spaces under the houses and can create real havoc as our clay soil expands and pushes on the foundation.  So look at the downspouts and see if they simply dump the water at the base of the house (which you will see most of the time – but it’s not a good idea, usually), or did the owner take the time and spend the money to handle drainage issues well? How’s the grading? Soil and landscaping should slope away from the house so that any water coming down will run away rather than seep into the crawlspace.

Browse neighborhood homes for sale online on this site.  When you visit in person, bring a notepad and jot down concerns or questions.  It is so easy to fall in love with remodeling that’s been done that it may be easy to miss the expensive items not easily seen that may have been ignored.

Finally, check the permits to see if improvements that needed permits and finals obtained them. Click here for the online Los Gatos permit search.

Need a good, local Realtor?  Call or email me.  I’ve been in real estate a long time (since early 1993), am very accomplished and recently was named “best real estate agent in Silicon Valley” by readers of the San Jose Mercury News.  I’m also a Belwood resident and I know the area and its values well.

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