Can house flipping flip a scam on you?

House flipping is a perfectly legal way to buy and sell homes, and many people in California do so with no problems. But like other forms of real estate fraud, some sellers who flip houses can flip a scam onto you that bleeds your bank account and leaves you in bad financial shape. The problem with flipping scams is that you end up with a house that was hiding some problems that can be very expensive to deal with.  

The Better Business Bureau warns that some flippers do not put much effort into fixing up their houses at all. Some sellers will just make some changes that improve the look of the house but do not address deeper and more substantive flaws to the home. They will add a fresh coat of paint to the walls or install new appliances, and then put the home back on the market with an increased sales price based on the cosmetic changes. The result is that a home buyer may end up with a house that requires expensive repairs just to make it livable.

Possible warning signs can alert you to a scam house. As previously described, scammers will simply put in new appliances without repairing the home’s real damage, so if you investigate a house that is old but has all new appliances, you may want to examine the home’s structure more closely. The home’s seller may also encourage you to buy the home and move in quickly without taking steps to verify the home’s value. For example, the seller may discourage you from bringing in independent parties to check out the home or receiving outside advice.

Additionally, the seller may be deceptive in getting your loan approved. You may have bad credit, but the seller will not disclose that information to the bank. The seller may also omit or flat out lie about your job information, your personal income and your debt, all to make sure you are not turned down for a loan. If the seller offers loan approval that seems too speedy or too good to be true considering your financial situation, it probably is.

People who suspect flipping scams should verify all the necessary information. All of the seller’s promises should be written down. The seller’s loan documents should also be available to you so you can check to see that your income and assets have been properly represented. Also, examine the house’s repair history. Reputable plumbers and contractors should have performed work on the house, and the home should have a proper inspection history.

This article is intended to inform readers about real estate fraud and is not written as legal advice.

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