My husband and I are shopping for a house. We’ve been living in Lakewood, CO for a little over a year now, and the more familiar we become with the Denver metro area, the more we appreciate our current location. We have easy access to a fabulous green belt and miles of both paved and single-track bike trails. We’re close enough to downtown Denver and the tech center that my husband’s commute to work isn’t intolerable. Yet we’re far enough removed from the rat race that we don’t feel suffocated by humanity (or the lack thereof, as anyone who has ever been stuck in Denver’s rush hour traffic can attest). We have easy access to everything we need in terms of shopping; and perhaps most importantly, our daughter loves her school.
Given our satisfaction with our current locale and the outrageous rents in our area, buying a house makes good financial sense. Finding the right house for our family and lifestyle, however, is proving to be a bit of a challenge. Fortunately, we’re not in any hurry to find the perfect home. In fact, we’re really sort of enjoying taking our sweet time.
I’ve always been fascinated with houses—so much so that I’m pretty sure I’m meant to be a realtor, interior designer, or general contractor. I’ve bought and sold three homes thus far, and I enjoyed the process each time. It helps, I’m sure, that all three purchases and sales went off without a hitch. I’ve heard plenty of real estate nightmares from friends in the industry through the years, but I’ve yet to actually experience one first hand. I suspect that’s because I go into the process with my eyes wide open.
After owning and remodeling three very different homes (one old, one new(ish), and one mobile), I’ve learned a great deal about evaluating real estate. I know the subtle signs that can indicate hidden mechanical or structural problems. I immediately recognize the difference between professional craftsmanship and that of a weekend warrior. I know which changes can be easily and cost-effectively made versus those that can be prohibitively expensive. Basically, I can look past the cosmetics of a house (good or bad) to determine whether a house has good bones and is priced appropriately.
It wasn’t until my husband and I started looking at houses that I realized how much I’ve taken those skills for granted. We’ve had a couple of run-ins with real estate “investors” lately that are at once amusing and horrifying. Both investors took novel approaches to flipping homes in our neighborhood. I like to call it the ‘lipstick on a pig’ principle. They invested their entire project budget in cosmetics and blatantly neglected to address some of the most basic structural, mechanical, and local concerns.
Not surprisingly, neither investor managed to get anywhere near the original asking price. In fact, one of those homes is still on the market, and I suspect it will be for quite some time. The price on that particular house has been dropped more than $60,000 since we first walked through it, and it’s still priced a good $120,000 over the average sale price for the neighborhood.
Sadly, both homes will eventually be occupied by someone who failed to see past the sleek cosmetics to the crumbling bones or the fact that their dream house is grossly overpriced for the neighborhood. Those poor buyers will undoubtedly pay too much for a house that is only going to cost them even more money when the deferred maintenance disguised by new flooring and fresh paint finally reaches a critical breaking point. Or worse, they’ll find themselves upside down in a house that won’t gain a penny of equity unless they intend to live there for twenty years or more.
There’s a common belief among the fix-n-flip types that haphazardly installing new flooring, stainless steel appliances, granite counter tops, and a fresh coat of paint is all that’s necessary to fool most buyers into overpaying for a house. Add that belief to the willingness of certain unethical or inexperienced appraisers to grossly overvalue houses, introduce an inexperienced or naive buyer to the mix, and you have all the ingredients necessary for that buyer’s downfall.
Perhaps it’s because I’m a mom now, but I can’t help feeling a certain degree of maternal protectiveness for all the young and inexperienced home buyers out there. I’ve toyed with the idea of getting into real estate sales for years, but I’ve never been fully committed to making such a dramatic career change. For every bad fix-n-flip I see, however, I feel a greater sense of urgency to educate and protect young buyers from making terrible mistakes. I can only imagine how many other poorly flipped houses are lurking in other parts of the city, just waiting for an unsuspecting buyer to stumble into the fiscally fatal trap of the real estate nightmare.