The definition of a “flipped” home is essentially a purchase to renovate/revamp with the intention to sell quickly to be able to turn a profit. Anything wrong with this? In our eyes it seems like a great business model, however a lot of buyers in today’s market seem fearful that a flip is not a good investment. This fear comes from the idea that back in the days between 2005 – 2012, flips were more popular, but also purchased originally in scenarios where the vendor lost their home due to financial issues (caused by the economic crises at the time) and the properties would be left in dilapidated states. The term “Lipstick on a pig” was popularized because home flippers would clean up, repaint and sell at a profit without truly repairing the issues at hand.
We don’t believe that this theory or fear is still a reality in today’s market for a few reasons. The first being that the state of the homes being purchased by the flipper are usually much better to begin with as most flips come from succession sales (after the owner passes away) and the homes start in a much better condition than before. Another reason is that buyers tend to be much more educated today than ever before, so the flipper has a lot more homework and elbow grease to put in before reselling the home and make sure to dot t’s and i’s before listing the home. Last but not least and probably the most important difference maker is the seller’s declaration and the common, everyday building inspection!
Since 2010 the OACIQ has become extremely strict and much more detailed with their sellers declaration that must be attached to all offers. Believe it or not it was somewhat rarely used before 2010. The questions asked make for a transparent and smooth transaction, if the seller does not answer honestly or has not repaired certain aspects of the home, the buyer now has access to this information even prior to visiting a property! The other important factor is that inspection (yes, you heard me) was not a popular thing years ago, the opinion of an inspector was rarely seeked, and homes were more often than not bought blind. Today however, easily 9/10 homes purchased are inspected by the buyers, and the obligation to tie up any loose ends is usually taken care of or negotiated prior to closing the deal!
In conclusion, buying a home that has been completely renovated in today’s market is definitely not an additional risk, and actually can serve its purpose for young couples that have a great budget but do not have the time, energy or knowledge to renovate a home themselves. As long as you are protected by your own broker and do all necessary due diligence you shouldn’t have any additional worries!