Seven Questions to Ask When Purchasing a Flipped House

Flipped House Questions

If you’ve ever watched HGTV, chances are you know what it means when someone says a home has been flipped. For those that don’t, a flipped house is one bought at a discount either because of the property’s condition or the seller’s need to move quickly. The investor then makes any necessary repairs or renovations and puts it back on the market for a higher price than they bought it for, reflecting the work they put into the house. If you are thinking about purchasing a flipped house, here are some questions you should ask before purchasing.

  1. Do you get a home warranty?

Although a flipped house typically has new appliances, it doesn’t mean it has a new water heater, air conditioner, and furnace. Ask if the home will come with a home warranty. A home warranty is typically written for a year at a time and can help you save a lot of money if something breaks during that time. You can renew the warranty by paying for it yourself during your second year in the home.

  1. Did the flippers have the right permits?

Ask if you can see the permits that the flippers used to update the house. This will help you ensure that the home is up to any safety codes and standards. You can also have an inspector check the property to make sure that the wiring is up to code and all changes were done correctly and safely.

  1. What do the disclosures say?

If your state is a “full disclosure” state, the seller must disclose any defects of the property or anything that could influence the buyer’s decision. Ask your real estate agent to get a history of all the sales on the property. Look at how many times it has been sold, who owned it before the flippers, how long they owned it, and why they moved. After, look at the disclosures for any possible red flags.

  1. What has been replaced and renovated?

Have your real estate agents to get a list of things that were repaired or replaced. While viewing the home, pay attention to the small details, such as crown molding or the tiling. If these aren’t done correctly, chances are that the flippers may have skimped out on the larger issues that will cost you money later.

  1. How old are the windows and doors?

Look at the windows and doors. Make sure that the windows can open and close easily. In addition, make sure that the doors can be closed fully and can properly lock.

  1. What about the basement?

If there is a basement, make sure to look at it. If it smells moist, it’s possible that flippers just painted to cover up any mold and moisture. A dip in the basement floor can be a sign of water protrusion. Before purchasing, make sure to have a radon test done.

  1. What about the outside?

The outside is equally as important as the inside of a home. Check to see if the fence is in good condition. If there is a pool, make sure to have it inspected as well. You may have to get a separate inspector to do this. Any issues related to the pool can be costly to fix.

How to Choose a Contractor

Choosing a Contractor

Are you thinking about remodeling a portion of your home? Before you do, you have to make sure you are hiring the right contractor for the job. To make sure you have the perfect person, follow these steps.

  1. Get recommendations

First things first, get recommendations from trusted friends and family. Afterward, look at the National Association of the Remodeling Industry for a list of members in your area. In addition to these two sources, you can talk with a building inspector or your local lumberyard. They will know who meets code requirements and who buys quality materials.

  1. Phone interviews

After you make a list of possible contractors, call each one for a preliminary interview. Ask questions such as:

  • Do you take on projects my size?
  • Can you give me a list of previous clients?
  • How many other projects would you have going on at the same time?
  • How long have you worked with your subcontractors?

These questions will give you a sense of the company’s reliability, availability, and how much attention your project will be getting.

  1. Face to face meeting

After your phone interviews, narrow down your list to four or five companies and meet them face to face. During your face to face time with these companies, you should be able to get an estimate and ask them any additional questions you have. It’s crucial that you can communicate well with the contractor. After meeting with a contractor, check the company’s profile with the Better Business Bureau to see what other customers thought about working with them. You may also want to perform a background check. To do so, make sure you have the full company name and address. The background check will help ensure that the firm as a current state license and insurance coverage. It will also help determine any formal complaints or legal action taken against the company in the past.

  1. Look at the facts

Call up former clients and ask how their project went and ask if they can send photos of the finished product. You may also want to consider visiting the job site of a current project to see how the contractor works. Look to see if the job site is clean and safe.

  1. Get bids

To compare bids, ask each company to break down their price in terms of cost of materials, labor, profit margin, and other expenses. Materials generally cost about 40 percent of the total cost, 15 to 20 percent is covered by profit margin and the rest covers overhead. However, the price shouldn’t be the be all end all decision maker. In fact, if you get an extremely lowball bid, you shouldn’t consider it. Often, these bids mean that the contractor is cutting corners or just desperate for work. The most important factor in choosing your contractor is how well you two can communicate.

  1. Set a payment schedule

A payment schedule is how you will pay your contractor for their work. Typically, for a large project, 10 percent is given at the contract signing, followed by three payments of 25 percent throughout the duration of the project, with the final 15 percent given once everything is complete.

  1. Put it in writing

Now it’s time to sign the contract. Make sure that your contract is very detailed and includes every step of the project, including:

  • Payment schedule
  • Proof of liability insurance
  • Worker’s compensation payments
  • A start and projected end date
  • Materials and products to be used
  • Requirement for the contractor to obtain lien releases from subcontractors and suppliers

In your contract, you may also want to set some boundaries for the work site. Establish ground rules for smoking, bathroom use, and any other issues that may be of concern to you.

How to Identify Water Damage in Different Areas of a Home

Water Damage

Water damage can be difficult to detect, and could even go unnoticed for months, but there are a few tell-tale signs that your home may be suffering from such damage. By keeping an eye out for any structural problems and regularly inspecting your home, you can avoid a dangerous escalation in water damages.

Here are some of the most common indicators of water damage:

Water Accumulation

One of the most visible signs of water damage, water accumulation can come from malfunctioning appliances such as dishwashers, water heaters, faucets, and toilets. Pooling water is a form of water accumulation that can be easy to spot, typically a result of a leaking roof or faulty drainage pipes.

Discoloration

Water can cause great aesthetic damage to your home if left unchecked. It can stain walls and carpets, as well as rust your home’s pipes and water heater. By keeping a close watch on any leakage problems, you can prevent your nice home from becoming a brown musty mess.

Changes in Texture

When water seeps into the floorboards of tiles and areas underneath them, it can alter their texture. For example, wood and laminated floors expand when they absorb a lot of water, unsticking them from the base. Although this kind of damage is easy to spot, it may be difficult to identify the source of the damage.

Odor

One of the telltale signs of water damage is odor. If you consistently find yourself smelling mold, mildew, and other muggy scents then you probably have a water damage problem. Certain drywall materials, such as tape and frames, act like a sponge and attract and absorb moisture. These are the perfect conditions for mold to develop, which leads to those pesky odors.

Now that you know what the signs are, it’s time to learn where to look. Different areas of your home can provide you with different signs of water damage.

Here are some of the most common places in your home for water damage:

Walls

When looking for water damage, checking your home’s walls should be one of the first things you do. Any discoloration, stains, or fraying found on the walls usually indicates some form of water damage. In addition to checking the walls, check areas around windows and doors for water damage as well.

Ceilings

Water coming from the ceiling can be a huge problem for your house. Whether it’s from a broken pipe or a leaking roof, damage to your ceiling must be addressed as quickly as possible. If you see any water spots or peeling paint on the ceiling, then you probably have water damage. 

Roofs

Roofs can become damaged during extreme weather conditions, which can in turn cause water damage throughout your house. After a storm, be sure to examine your roof for any damage. Look closely at your shingles; if there is discoloration or they appear to be loose, your house could be experiencing water damage.

Appliances

One of the main causes of water damage in a home can be defective or malfunctioning appliances. Having problems with appliances can be tricky to identify because they are usually not visible until it is too late. If something does not seem to be functioning completely right, you may want to have it checked out before the problem gets worse. If you have detected visible damage but are unsure what the cause of it is, definitely look into checking pipes and other appliances for leaks.

Basements

One of the worst places in your home to have water damage is your basement. It can come in all shapes and sizes and, if extreme enough, could destroy this area of the home. Basement flooding can be caused by numerous different events and it is imperative to identify whether or not the damage you are experiencing is a one time event. The signs of this damage can range from small discoloration on your walls to dangerous outgrowths of mold.

Demolishing a House: How to Do It

DIY demolition

How to Demolish a House

Demolition sounds like a scary word that should stay with the professionals, but you can do it yourself and save some bucks!

What to do first

First things first, you need to look at the demolition as a project itself. Demoing a space may take as much time as the actual renovation, so getting in a mindset that you’re completing a project may help you through the demolition. On that same note, set aside a specific time that will be dedicated to solely demoing. The demolition process can take a lot out of you, so you probably aren’t going to want to do anything afterward. Carve out a period of time, whether it be an afternoon or a whole weekend, and devote it to demolition and forget about any other renovation projects you have planned for the time being.

If the area you are demoing is open to other areas, make sure you seal it off. Plaster and drywall have a habit of flying around and getting into places they shouldn’t be! The best way to seal off an area that is not getting demoed is with sheet plastic and blue tape. Closing a door just won’t cut it!

What’s behind the walls?

Perhaps one of the most important things about DIY demolition (or demolition in general) is knowing what’s behind the walls before you start swinging. Try to figure out what’s behind your wall before you start the demolition process. The last thing you want to do it swing into any electrical wires, pipes, or gas lines. Before doing anything big, use small holes and a flashlight to make sure your wall is clear of anything. And to ward off any unwanted surprises, turn off your electricity just in case you run into any wires you didn’t see at first.

If you decide to the demolition by yourself, you need to make sure you have the right tools. A typical demo project will require a sledge, a big crowbar, a pry-bar, and a claw hammer (your claw hammer will get dinged up and may actually break, so make sure that you don’t care about it too much!). In addition to having the right tools, hiring a roll-off dumpster may be very beneficial, especially if you are undertaking a large demo project. They are cost-effective and keep you from taking multiple trips to the dump. If you are taking on a smaller demo project, consider hiring a haul-off service, which will come to your house and pick up anything you want to dispose of.

When demoing walls, you’ll need to consider which walls are structural or nonstructural. If you can’t determine whether or not a wall is a load-bearing, don’t do anything to it! Almost all non-bearing walls run parallel to the joists. Stud walls in basements are usually non-bearing. Any trim, kitchens, baths, wallpaper, or drywall is usually safe to tear down.

Safety

Finally, you want to make sure that you are in the right attire. Boots and coveralls are a must. Boots give extra protection against any rogue tools or nails that happen to land on the ground, and coveralls go over your clothes, which can be especially handy if you’re doing a messy job. If you’re working in an old house, or a dusty one, a dust mask or respirator can be extremely helpful. They protect your breathing and can protect against any lead-based paint, asbestos, or other hazardous materials that may be in the dust.

Demo projects that are easy for someone to DIY:

Demo projects to leave to the professionals:

  • Roofing
  • Natural gas
  • Asbestos, lead, and mold
  • Anything over one story
  • Electrical
  • Plumbing
  • HVAC

Home Staging: Tips for Staging a Home for Sale

Home Staging Tips

What is home staging?

Home staging is the act of preparing a private residence for the real estate market. If you want to sell your home, and sell it fast, staging is what you need to do. Here are some tips and tricks for you.

Bathrooms

  1. Get Rid of Grimy Bathroom Walls

Grimy bathroom walls aren’t just not pretty to look at, but they can end up being a major red-flag for a buyer. But don’t fret: there’s an easy way to get rid of surface mold. In a spray bottle, mix together one part bleach and one part water. Spray it on the wall and watch the mold disappear. A fresh coat of paint will make your bathroom look like new again.

  1. Avoid Dated Tile by Painting

Replacing tile is expensive. Instead, paint the tile. To begin, coat tiles with a high-adhesion primer. Afterward, paint on a ceramic epoxy covering.

  1. Don’t Replace a Grimy Shower Door

Instead of replacing a shower door, clean it. Mix together ten parts water to one part muriatic acid.

  1. Pedestal Sinks

Pedestal sinks show off the square footage your bathroom has to offer. First things first, your vanity has to go. Then all you have to do it hook up your new sink. A quick and easy fix that can bring in the big bucks.

Bedrooms

  1. Master Bedroom

A master bedroom should appeal to everyone. Paint the walls a neutral color and choose bedding that matches. Afterward, accessorize with items that complement the color scheme.

  1. One Purpose Rooms

Do you have any extra rooms? Be sure to make the room only have one clear purpose. To avoid this, clear away clutter and paint the room a neutral color. You can then stage it to show a possible room idea. It can be anything from an exercise room to a home office. For more ideas about what to do with a spare room, check out our article all about it!

  1. Storage Space

Home buyers love to see that their new home will have plenty of storage space. When staging a home, pack up any unnecessary items and furniture. Any clutter will just take up space, and that’s the opposite of what you want to show buyers. Organize your shelves and closets, and leave closets open, to show the buyers how much space you have.

Kitchen

  1. Stain Dated Kitchen Cabinets

Instead of paying to replace dated kitchen cabinets, all you have to do is stain them. To stain your cabinets, all you have to do is apply the stain in even strokes, painting with the grain of the wood. Add on new hardware, and your cabinets will look up-to-date for a fraction of the price that it would take to replace them.

  1. Stainless Steel Appliances

Stainless steel appliances cost a lot of money, but there are ways to get the stainless steel look without having to empty your wallet. First, you can use a stick on covering. All you have to do is remove the front panels and apply the stainless steel stick on covering and cut it to size. In addition, you can also use a stainless steel paint to cover your older appliances and give them a new look.

  1. Fill Existing Hardware Holes

If you have removed any kitchen hardware, you may have some unsightly holes left in your walls. Fixing this is easy! Just dip a toothpick into glue and put it in the stripped hole. Afterward, cut off the remaining piece. Once the glue dries, you can add new hardware.

  1. New Kitchen Appliances

This is, of course, more costly than the other options, however, studies show that new appliances bring in high return from buyers. If your appliances are really dated and make the rest of the kitchen look dated, consider replacing those appliances.

Other Rooms/General Home

  1. Overpowering Fireplace

If you think your fireplace is overpowering, consider painting it to tone it down. Using a rag or brush, put a light coat of paint on the bricks one at a time. This allows them to take on a new tone without having them get completely covered. If your screen is old, update it by using a can of heat resistant spray paint. Hold the can about eighteen inches away from the screen and spray using long stokes.

  1. Pack up Unnecessary Items

Clear away clutter! Start to pack up any unnecessary items or furniture and move them to your garage or a storage facility. To a buyer, seeing items scattered around your home indicates a lack of storage space.

  1. Strike up a Balance Between Clean and Lived-In

Bring in some personal touches once you’ve decluttered to make your home seem more lived-in. Small vases of flowers scattered throughout the home, baskets of produce, or other such items help to set the scene of a lived-in home without it seeming cluttered.

  1. Style your Dining Room Table

Many people forget to style their dining room when staging their home. Style it with visitors in mind. Set the table up as if you’re having a dinner party. Down the center of the table, place small vases of flowers.

  1. Look at Your Floor

Clean your floors and steam clean your carpets. After making your home look beautiful, the last thing that you want is for your floors to be dirty! If you have wood floors, you might want to consider refinishing them if they are in poor shape.

  1. Rearrange Furniture

Symmetrical arrangements work well when staging a home. Pull furniture off the walls and use pairs of items, such as sofas, chairs, or lamps, to create a conversation area.

  1. Entice People to Explore the Home

Place things that draw the eye at the top of stairs, in hallways, or around corners to create interest from potential buyers to entice them to walk through the whole house. Consider a piece of artwork, a window seat, flowers, or a small colorful rug to catch the eye.

  1. Show How to Use Awkward Areas

If you have awkward areas in your home, such as space under your stairs, find a unique way to show it off. Try setting up a small work station, a bulletin board, or shelving to make the spot a selling point for your home.

Outside

  1. Stage Outside Areas

Do you have any balcony areas? If so, consider staging these as well to show how functional the entirety of your house can be. Add a small table and chair to create a small eating area to add value to your outdoor area.

  1. Think Seasonally

If you have any extra features, such as a pool or fire pit, make sure that they are cleaned. Keep your garden in good shape. During the winter and fall, have a fire burning in the fire pit.

  1. Curb Appeal

Curb appeal gets a person to stop and look at your home. It is equally as important to have the outside of your home in just as great of shape as the inside of your home is. For more information about how to improve your curb appeal, read our article about it!

Fix it or Leave it Alone

home repairs

When making the decision to sell your house, you may be wondering if you need to repair anything in your home. Here are some questions to ask yourself to figure out if you should fix it or leave it.

  1. Does it make the property look uncared for?

Anything that doesn’t work as it should can be an immediate turn-off to a buyer, such as leaky faucets, cracked tiles, an overgrown lawn, anything that doesn’t work as it should, or doesn’t appeal to the eye cosmetically. At an open house, people may walk through quickly, and if they notice a few things that are wrong or off, they may just give up on your home.

  1. Can you find a less expensive fix?

Rather than spending money on a large upgrade, see if you can find a less costly fix. For example, if the other homes in your neighborhood have updated kitchens, you can paint the cabinets, switch out the hardware, or change the light fixtures. You can also use stainless steel paint to emulate the look and feel of a more expensive product.

  1. How much would you need to lower the price if you don’t fix it?

If you have a lot of repairs that would be too costly to fix, consider selling the house as is and lowering the cost. People who are looking to buy a fixer-upper will also be looking for homes at a lower asking price.

  1. Is it one of the first things a buyer would see?

Pretend you are a buyer. Is the broken item something you will see when you first approach the house, or when you first walk into the house? If so, fix it. More often than not, first impressions are your only impressions, so you want to make it a great one.

  1. Is it a deal breaker?

If you have plenty of time in a hot market, there’s no harm in trying to sell without making the big repair as long as you’re pricing it accordingly. If the buyer is ready to purchase but you do not have time to repair before listing, you could offer the repair as part of the sales agreement. However, if the repair is on a larger scale, it may be best to make the change first and put the home on the market afterward.

8 Tips for Negotiating When Selling Your Home

negotiating_home_saleWhen selling your home, it’s hard to get the deal you want.

Here are some tips that can help you negotiate your way to the best deal.

1. Stay in Charge

You always want to be in charge of the situation when selling your home. If you have a deadline, don’t mention it. If you are behind on mortgage payments, don’t let your buyer know. If the buyer knows about these situations, it gives them unnecessary leverage during the selling process.

  1. Silence is Golden

Silence shows self-control. If a buyer is throwing offers or terms that seem ridiculous, the silence may cause them to rethink their choices on their own. However, don’t be silent in situations where the buyer is being fair and respectful. In these cases, the buyer can take the silence as a sign of disrespect and may cause them to move onto another opportunity.

  1. Work with Your Bank

Working with your bank can help reduce pressure, especially if you’re behind on mortgage payments, or if you can’t afford the current payment. If you can come up with a plan to make a payment as soon as possible, they are more likely to offer you an extension on your payments until you sell your house.

  1. This House is Made for Talkin’

Renovations on your house can help improve its appeal, but once the house is shown to a potential buyer it pretty much sells (or doesn’t sell) itself. Buying a home is an emotional decision, so if people don’t feel connected to a home, they won’t buy it.

During a walk-through, try not to be too talkative unless someone asks you a question. It can be beneficial to remove yourself from the situation entirely, and in some cases, letting the agent take over. By doing this, the buyer is able to connect with the home on a more emotional level.

  1. Create a Bidding War

Bidding wars are exciting because it means more than one party wants to buy your home! It’s difficult to fabricate a bidding war, so instead of trying to fabricate them, many people find success by refusing to accept offers until a certain date. At this point, when someone finds out that another person has made a higher offer than them, they might work up an even stronger bid.

Like most major sales or purchases in life, it’s not a sure thing. If you’ve struggled to get an offer or if the housing market is poor in your area, don’t hold off with offers. Work with what you get as they come, and you can negotiate with the buyer directly. You can also make a counteroffer if you receive a lower offer. With this, you know that the buyers are already interested in the house and you may be able to come to a mutual agreement.

  1. Trust Your Realtor’s Expertise

Just as a buyer will have a buyer’s agent, a seller should have a listing agent who represents the property. You should be comfortable enough letting them take the lead in negotiations to get you the best outcome. Realtors know the current market conditions and can negotiate with those conditions in mind.

  1. The Price Isn’t Always Right

You can negotiate prices until the cows come home, but it’s also important to make sure the buyers have the correct financing in place so they can make good on the offer. In addition to price, sellers and buyers can make plans about repairs that need to be made on the home, who will pay the closing cost and the settlement date. If you are having trouble coming to an agreement on an issue, try making a concession on another topic to help push the deal along.

  1. Move Quickly

It may be tempting to wait it out and see what other offers come in, but that might not be the best situation. Often times, the first offer is the best offer. If the offer happens to be close to what you were asking for, don’t make a counteroffer so the buyer doesn’t have time to rethink their offer or lose interest. Take what you can if it’s close enough to your asking point. Once you know your bottom line in terms of profit, and other such details, you can move forward with the transaction.

Why Flipping Houses is the Hottest Thing to Hit the Market

flipping houses

The newest trend in the housing market is flipping houses. Just look at all the shows on HGTV that are based on this very premise. There has been a recent fascination with fixing up houses to resell, and it is amazing to watch the final product come through. If you’re in the market to flip a house, here are some things that you should know.

First-time Flippers

One thing that first-time flippers, or flippers in general, may underestimate are the costs associated with flipping houses. The obvious first expense is the property acquisition cost. Paying cash eliminates interest, but there are still other costs associated with the purchase, such as taxes and utilities. If you are unable to pay with cash, you need to research your different borrowing options and find a lender that offers low-interest rate mortgages. In addition to the costs of acquiring of the house, flippers should also consider the costs of renovating the project, as well as any hidden costs they may occur, such as any issues in the house that may not have been noticed before renovation started.

More Things to Consider When Flipping a House

Another thing that flippers might not take into consideration is the knowledge it takes the carry them through a flip. A lot of already-skilled professionals do flip work on the side. If you do not already have the skills as a handyman or for home improvement, you’ll have to endure the costs to hire these professionals. If you plan on flipping a lot of houses, consider building a team of people that are familiar with all aspects of flipping houses, such as legal, accounting, and construction information. One thing that a person should do before flipping a house is to get a good lay of the land surrounding the possible property. Knowing what characteristics people most look for in these types of houses and what they usually sell for can help you to understand more of what should, or can be, done.

Taking Your Time

Patience is a key ingredient in flipping houses, and finding the right property takes time. Finding the right team to help also takes time. Finding the right decor for the house takes time. Selling the finished home takes time, too. Notice a pattern? Like anything, if you want the flip to turn out right, you’ve got to take your time with it, making sure you are making the right decisions when and where possible.

Finally, make sure that you have a plan! Seems fairly basic, but very important. Know your budget and where and how you want to spend the money. Know your after-repair value of the house you are going to flip, which is the amount the house will sell for after everything is done, and buy and rehab the house for 70% or less than what you believe the final selling price will be.

Flipping houses seems to be a “trend” that is here to stay. Before you start a flip, make sure you understand everything that is coming your way.