Could a ‘flipped’ house cause you a big legal problem?

On Behalf of | May 23, 2018 | Blog

Ever since the property market hit the skids back in 2007, there’s been a huge increase in available houses that have been bought for a song, renovated on a dime and resold for big bucks.

This has created some major headaches for people in real estate. Agents have to walk a thin line when it comes to laws regarding full disclosure of any property defects.

Here’s the problem — houses that were abandoned or foreclosed upon because the owners could no longer afford them are often not in the best condition when they’re sold by the banks. A large industry of house “flippers” has grown up around these kinds of deals. They’ll take a house, often without even seeing the inside, and renovate it as quickly and cheaply as possible.

That creates a couple of problems. The shortcuts the house flippers take often include using cheap materials and focusing on cosmetic fixes instead of quality repairs. Buyers in a rush to purchase can be easily tricked into believing a house is problem-free when it actually has some serious issues lurking below the shiny new surface details.

Real estate agents may also be fooled. The flippers are often unaware of (or purposefully obfuscate) the major issues a home might have. That can, and has, led to problems with disclosure. Since 2012, 40-50 percent of nondisclosure lawsuits in a neighboring state involve house flips.

Fortunately, the market is rebounding. Buyers are in a better position to take their time and ask questions. If you’re a real estate professional, you can stay out of litigation by encouraging your buyers to take their time when deciding whether to purchase.

If a house has been through a foreclosure and been flipped, it’s especially important to get a thorough, independent inspection of the property before taking the bait that’s being dangled. If a seller can’t wait, then move onto another place. It’s better to lose the property than end up in a lawsuit later.

Source:, “Latest Legal Issues in Real Estate Trends,” accessed May 23, 2018