Don't Let That Fancy New House Fool You

There are good house flippers out there, but there are also people who cut corners on the stuff you can’t see or won’t think about.
Make sure you know what you're getting.

Washington is the Land of Flippers. There's a lot of older housing stock that hasn't turned over in decades and has been occupied by elderly homeowners who don't have a lot of funds for regular maintenance. Flippers sweep in with all-cash offers and no contingencies, then turn them into open-concept boxes or small (two- or three-unit condos) at an enormous markup.

There are lots of young couples who would be happy to buy the grandma houses and fix them up gradually, but they can't compete with a flipper who can close in days and waive little things such as financing and inspection. There are also a lot of couples who favor the boxes, because they "don't want the hassle of a fixer-upper."

Unfortunately, the flip houses aren't necessarily so problem-free. There are good flippers out there, but there are also people who cut corners on the stuff you can't see or won't think about. We lived in a flip house before we bought our current place, and in the 18 months we were there, we enjoyed:

  • Two Jacuzzis and the smallest water heater I've ever seen, so that you could not fill them with more than a few inches of water before it turned cold.
  • A leaky overflow pipe to the middle bathroom.
  • Wiring to the Jacuzzis that was jury-rigged, with free-floating, poorly shielded wiring right next to the leaky overflow pipe.
  • A doorknob that came off on the inside but held steady on the outside, trapping us inside until the rental agent could come free us (there was a back door, but our yard had no alley access. Had we really needed to, I suppose we could have climbed into the neighbor's yard and pleaded for help).
  • A French door to the patio with a giant gap at the bottom that caused flooding in the kitchen every time there was a heavy rain.
  • Non-fire-rated drywall in a kitchen with a gas stove.
  • A washer-dryer that broke with no auto shutoff valve or plastic tub around the bottom, so when it broke at 5 a.m., it flooded our living room.

That's just the highlight reel. It was a terribly constructed house, which is why I was so adamant about not buying a flip job. It's not that our new house had no problems -- don't even get me started on the mad genius who inexplicably decided that it would be better to run wiring through our unfinished basement by notching the joists with a Sawzall rather than, I dunno, running them along the ceiling. But the thing is, we knew that we were buying some problems -- in part because the unfinished basement let the inspector see a lot of them.

Unfortunately, with a lot of flips, things can look fine, until they really aren't:

Examinations of the D.C. Department of Consumer and Regulatory Affairs (DCRA) building permit records, deeds in the D.C. Recorder of Deeds, pre-flip real estate listings and then post-flip listings strongly suggest that the same flippers who did our house have also illegally renovated dozens of other homes in D.C. They've covered up their tracks well, in part by using permits for minor repair work while they greatly exceeded the permits and gutted the place amid a total rehab. Their carefully hidden illegal work includes the tearing down of load-bearing walls or columns to create a superficially nice but structurally defective and non-code compliant open floor plan, floors that sag two inches or more, an asbestos-contaminated HVAC system, a now-collapsing porch built by draping brand new casing over thoroughly rotten wood, a construction-debris-filled sewer line that will likely spew sewage into our basement yet again soon unless we excavate the pipe to replace the whole thing, zero insulation in the walls and ceilings, and several other problems. We plan to keep the house, but we know that if we ever want to be able to sell the house in the future, we will have to disclose all these problems, will have to undertake a significant redo of the house, and be able to show prospective buyers documentation regarding how we fixed each defect.

It's very easy to think that "new work" must mean "good work." Unfortunately, that's not always the case. And while the person who wrote that letter blames D.C. for having a lazy permitting process, that's the exact opposite of our experience (we ended up having to get a major work permit, with drawings, for a less-than-12-inch decorative wall, even though that doesn't seem to be required by the code). The building code can keep contractors from doing something really crazy -- if they follow it. But it's not realistic to expect the system to catch every contractor who's cutting corners -- say, by pulling a permit for moving a non-load-bearing wall, then quickly and quietly dismantling the internal structures supporting your roof. Completely policing that kind of fraud would require an inspector to babysit every construction site 24-7, which would be absurdly expensive for both taxpayers and homebuyers.

That's not to say that this sort of thing is OK; if the allegations above are true, I certainly hope the homeowners manage to pierce the corporate veil and recover expenses and damages from the moron who perpetuated this fraud on them. If the contractor had a license -- which unfortunately they say he didn't -- I certainly wouldn't be sad to see the government pull it.

But unfortunately, the government isn't enough to protect us. Nor is a home inspection. You should always get one, but remember that there's a lot behind the drywall that you can't see. Homebuyers need to familiarize themselves with a builder and their reputation for quality.

Or they should consider those dated, ugly fixer-uppers, at least if they can find one in decent shape. Yes, you'll have to do some work, which is a giant pain. But at least you'll go in knowing that you have to do work and pay accordingly -- instead of paying top dollar for granite countertops and new flooring with a series of expensive disasters lurking underneath.

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