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Thursday, September 19, 2013

Florida Real Estate Market Update: Should you buy from a "flipper?"

Now that the market has bounced back I have read articles about flippers returning to the market.   A flipper is one who buys a property and does work (cosmetic mostly) and then turns around and hopefully sells for a profit in three to six months.

This is a great opportunity for those willing to do this needed rehabbing work and can manage the risk.

As a buyer of a flipped property something that may come up is the lack of a seller disclosure.  Specifically, I am referring to a “Seller’s Real Property Disclosure.” 

The seller’s disclosure is a series of questions where the seller is asked to provide responses to all sorts of questions like any roof issues, systems (AC, heating, etc), appliances, Home Owner Association rules, water damage, zoning or future use changes, etc.   All of which is very useful for a potential buyer to know before an offer is made.

I have seen cases where the seller's disclosure says one thing - "Seller never lived in house and has no knowledge of property."

If you are flipping, Mr. Seller, you know something about the property.  You know what you have fixed, what you have replaced, and what may be an issue.

If you are an investor selling a rental property you have probably made repairs and heard tenant complaints through the years.  Just because you have not lived in the property is not a reason for a "I know nothing, response."

My Florida buyer clients always have a get out of jail free card they may play, if necessary.  They have an inspection contingency even on an "as is" contract.

Flippers in the Florida real estate markets should expect this "card."  Besides if a seller hides something that they failed to disclose yet knew about there is a potential liability issue.

As a flipper, managing your risk also includes disclosing what you do know! 

Disclaimer:  I am not an attorney nor have I played one in the movies.  Consult appropriate professionals for legal guidance.

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