Reality TV has romanticized the art of flipping, making it look simple and profitable as its stars appear to turn straw into gold. According to a CNBC report, some flippers are turning historic homes into modern, hybrid treasures. However, less scrupulous flippers are putting a quick cosmetic cover on flawed properties. As a result, for unsuspecting buyers, that move-in-ready dream home can quickly flip into a nightmare. That is what happened to Cameron McGuire and his wife when they purchased a historic Washington, D.C., row house. The home had been fully renovated and enlarged by a local developer-flipper.
“And that was actually part of the appeal — to have something that was completely finished that from top to bottom had been redone. All new electric. All new everything in it. High-end appliances. All of those things were part of the appeal for us.”
The flipper came under scrutiny and the McGuires received a call from a D.C. housing inspector, who was investigating claims against the developer by other buyers. The inspector walked through the home, and McGuire said it was as if demons suddenly seeped out of the walls.
“They gave us list after list after list of things that were either not permitted or violations or weren’t zoned correctly here in the property. Receptacles are not permitted the way that they’re installed here. The canned lighting up in the ceiling is not permitted the way that it is supposed to be in here. Even looking at them I still can’t even tell they’re out of compliance. It was an unending list of things.”
It also was found that the developer never filed permits for the back addition, which houses two bedrooms and two bathrooms. The McGuires were shocked to learn that the city has the legal right to make them tear off the back of the house.
“So, we right now have a legal one-bedroom/one-bath, even though we paid for three bedrooms and three bathrooms.”
Bringing the home up to code will cost the McGuires $100,000. They paid $630,000 for the home, a premium in the transitional neighborhood. However, the price was based on the high-end amenities and like-new condition of the home. Stephen Carpenter-Israel, president of Buyer’s Edge, a brokerage that only represents buyers said like-new condition can be a red flag.
“It’s literally putting lipstick on a pig. They’re just doing cosmetic stuff and actually covering up problems, and that’s scary because it’s very difficult to figure it out.”
Carpenter-Israel specializes in detecting the flaws of a seemingly perfect home. He is a member of the National Association of Exclusive Buyer Agents which has issued warnings of the potential pitfalls associated with purchasing a flipped property.
“Really it’s that they’ll cover up structural problems instead of fixing them. And a lot of times we’ll see where there’s termite damage or water damage in a house, and it literally just gets slapstick, you know, right over the top of it.”