Home buyers beware: House flippers cutting corners during renovations can create serious dangers

Hundreds of homes in the Triangle are bought up every month, renovated and then resold. It’s a practice called 'flipping,' and it can bring in big money – but also potential risks for homebuyers.

The average profit for a flipped house in Raleigh is $61,000 according to the most recent figures from real estate data firm ATTOM.

However, complaints about flippers cutting corners to inflate profits are rising – and that can have serious consequences for an unsuspecting buyer.

When walls and floors are opened up during a major remodel of a home, it's easy for an inspector to notice if something is not up to code. But if the work isn’t permitted or inspected and gets covered up, a buyer could be left to deal with potentially deadly hidden dangers.

"We live in the HGTV world, you know, so everybody can house flip right? I mean that’s what they’re told on TV," said Frank Wiesner, Executive Director of North Carolina’s Licensing Board for General Contractors.

Seeing a house transformed in 30 minutes might make anyone think they could flip a home.

"But you cant believe what you see on TV all the time," warned Wiesner, because there’s a lot to the process that gets left out.

"We’re getting more complaints now about house flipping across the state and especially in the rural parts of the state," Wiesner told 5 On Your Side.

His agency is heading for a record number of overall complaints this year, currently they have 655. North Carolina’s Real Estate Commission just set their own overall complaint record at 1,683.

"It is the most of any year, by far," says Janet Thoren, Legal Counsel for the North Carolina Real Estate Commission.

Of course, the problem isn’t just people who watched a show and decided they want to flip a house.

"I would say that right now, the large majority of our remodeling complaints are related to investors who are buying homes," Thoren said.

But just because a home is flipped doesn’t mean it’s a bad thing. They play an important role in the housing market.

"There’s never a problem with demand, it’s more the supply. So, we can help add to that supply by fixing up these houses," said Adam Colburn, Owner of Oak and Arrow Home Solutions.

His company just finished a house flip in Durham and he talked with 5 On Your Side about his process and how he says his company tries to execute these projects the right way.

Colburn says his company relies heavily on their licensed general contractor to vet workers.

"Bringing in the trades, getting us our bids on what’s going to be done," Colburn says. "And then it’s up to me and my business partner, as project managers, to make sure the things they are quoting us on are being done and done correctly."

Colburn says their end goal of doing the job right, over turning a bigger profit.

"We want to provide the best quality product that we can," Colburn told 5 On Your Side.

Wiesner says when people don’t follow those steps, it can create a real danger.

For example, there is a house being renovated right now that the North Carolina Licensing Board for General Contractors is investigating. A lot of new electrical wiring has been done in the house, but none of it was permitted or inspected.

"Electrical work that’s done without permitting and inspections may not have been done by a certified electrician or a licensed electrician and the home could burn down," Wiesner said. And once you close those walls up, it gets harder to find potential hazards.

"It’s gonna take somebody dying," Wiesner warned. "That’s the type of risk that the consumers are putting themselves in when they’re not doing the due diligence on a property."

You don’t need to avoid a property just because it’s been flipped, but there are steps you can take to make sure that the work was done correctly:

• Check with your local inspection and permit office to make sure that permits were not only taken out, but closed out. Meaning an inspector signed off that the work was done to code.
• You can reach out to the inspector who signed off on the work if you have questions.
• After you offer, Thoren says never waive an inspection.

These are things your realtor can help with.

If you know of violations that need to be investigated, you can file a complaint with the Licensing Board for General Contractors here or with the Real Estate Commission here.