3 clues for spotting a budget remodel

The sale of remodeled homes for a profit or “flipping houses “ is more popular than ever due to exposure to television shows featuring home remodelers and a variety of seminars that teach people the basics of real estate investment.  There is sometimes a stigma associated with these homes, but that is often undeserved or overstated.  The only rule that is relevant when shopping for a new home is that you should try to get the “best” home that meets your needs and your budget allows. 

A good real estate agent will be invaluable when looking for that “best” home.  A good agent will know the local market and what homes are available.  A good home inspection is also invaluable, but keep in mind that a home inspection is focused on the performance of the home on the day of the inspection.  A newly remodeled home may be performing well on that day, but the future performance of the home will depend greatly on the quality of materials and workmanship used during the remodel.  Identifying the level of quality of a recent remodel is best identified by a well informed buyer themselves. 

Here are three telltale clues that will help a perspective home buyer identify the quality of materials and level of workmanship in a newly remodeled home, or how to tell a budget flip.  Keep in mind that a budget flip does not mean a bad home.  In fact, a budget flip may be the best value in your desired location and price point.  The clues may be of use if you find two homes of equal desirability but having differing quality of materials.  Also being better informed will make anticipating future performance easier. 

1). New but poorly laid out or having too many imperfections

Most remodels come with new paint, plumbing fixtures, and appliances.  The kitchen and bathrooms are likely to look brand new, but look closely.  How is the layout?  Do the kitchens and bathrooms have a good functional flow?  Dishwashers should be close to the kitchen sink (usually, to the immediate right).  Is the trim put together well with little or no gaps?  Check the shower controls.  Do they have the correct hot and cold orientation?  Hot controls should be on the left, cold on the right.  With one piece handles, the water flow should start cold and get hotter as you turn the handle.  It is normal to find a small number of imperfections.  Even the best builders or contractors will be unable to catch every small fault, but too many imperfections may indicate a contractor (or contractor’s crew) having fairly modest levels of skill.

2.) Quality of materials

It may be worth a visit to your neighborhood big box building supply warehouse (Home Depot/Lowes) before you start your home search.  Familiarize yourself with the less expensive laminate flooring especially the “click to install” brands.  This flooring is relatively thin and made of composition press board with a decorative wood like surface.  This is basically compacted sawdust topped with treated paper.  Because of its composition it may tend to delaminate at the edges after repeated cleaning with a damp mop.  Again, it is not a bad material for the budget conscious, but it will have a much shorter serviceable life span than solid wood or even better engineered floors made from thicker layers of real wood.  Next visit the plumbing section and identify the least expensive “house” brands.  For example, Bar Harbor is a propriety brand from Home Depot.  These fixtures may be fairly nice when installed, but they may be made from less expensive materials and may be difficult to repair in the future.  While you are in the plumbing section, look at the different tiers of shut off valves for faucets.  The two most common types have an oval handle or a slightly smaller wedge shaped handle.  The shut off with an oval handle takes a few turns to close and likely has a plastic stem.  The shut off with a wedge shaped handle takes only a quarter turn to close and likely has a metal stem.  The quarter turn shut offs are vastly better and cost about one whole dollar more.  A 3br/2bath home may need only six shut off valves.  In such a home choosing the cheapest shut off valves will save the contractor about six bucks.  Seeing the less expensive shut off valves under a sink tells you a lot about the contractor’s priorities. 

3.) Equipment age

It’s pretty easy to tell the age of most air conditioning and heating equipment and water heaters.  A great website to have bookmarked on your phone is www.buildingenter.org.  They have age charts for most air conditioning and heating equipment and water heater companies.  For many companies, the age of the equipment is either the first or second two numbers of the serial number.   For Goodman, it is always the first two numbers of the serial number.  Bradford White water heaters and some other companies use a letter code.  Practice deciphering these codes at your present location.   Another item that is informative to look at in older homes is the electrical panel.  If the home is older than the mid seventies, it may have a Federal Pacific or Zinco electrical panel (name brand should be on the cover).  These panels had well documented issues and replacement may be needed.  Your home inspector will most likely include this information in your report, but it may be useful to know if any high dollar equipment needs to be replaced before you make your offer.  Most equipment has a serviceable life span of fifteen to twenty years unless defective or there are local factors like bad water quality that effect the life span.  If all these items are fifteen years or older it is possible, even likely that you will need to budget for replacement in the first few years of occupancy.    

Choosing a home can be difficult.  There are too many factors to list that will determine if a house is “right” for you and many of those factors are a matter of taste.  Sometimes it is easy to be blinded by appearance.  But for the long term it would be prudent to look past appearance.  Hopefully these suggestions will make that easier.


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