The Flipper Skipped the Inspection and got Foreclosed

Home Inspections in Los Angeles

I recently inspected a newly updated house. It had brand new granite counter tops, brand new cabinets, new paint and new flooring everywhere.  But curiously, there was a foreclosed sign in the yard. The real estate agent explained to me the house had been purchased by an investor, but the investor stopped making payments on the house, and it was repossessed.

As my inspection went on, I began to realize why the investor had stop making payments. They didn’t simply run out of money, they had purchased a house that had more issues than they could handle. It became apparent the investor had not had a home inspection, and thus had not been aware of serious issues with the home.

The investor attempting to flip the home had laid new carpet and laminate, but without making sure the floors were supported. My inspection revealed the homes foundation was cracked with significant deterioration and rot. New carpet may be pretty, but cosmetic upgrades do not help a structure that is not supported.

Flipper foundation found cracked
Cracked foundation found in a flipped house during a home inspection

In addition, the roofing was bubbling because it had been installed over the old roofing materials. There were cracks in the attic structure. There were electrical issues, HVAC and more.

Had the investor had a home inspection, they could have realized the full extent of the issues with the house and either fixed the structural issues before dumping money into trying to cover it up with cosmetics, or simply moved on before sinking so much money into cosmetics that they would not get a return on.

I realize that in the competitive world of flipping, investors sometimes buy houses as is, sight unseen. But this story shows that even after the purchase, a home inspection is vital to understand the issues that will stand in the way of re-selling the property at a profit.