Potential Damages in Flipped Homes

Flipping, the rapid renovation and resale of properties for profit, has surged in popularity, with 1 in 14 homes sold in the U.S. between July and September 2024 being flipped, according to real estate data company ATTOM. While many flips are carefully and properly renovated, in some cases, cost-cutting or tight timelines may lead to oversights in construction that could result in hidden damages. This article examines the types of damages that might be included in claims and how experts assess their age, cause, and scope so that insurance professionals can make accurate settlement decisions.  

Roofing Work May Not Address Underlying Issues 

While the roof’s size, material, and location factor largely into its price tag, research by Angi, a home services website, indicates that the average cost of a roof replacement is nearly $10,000. For budget-conscious renovators, quick fixes might seem like a cost-effective option, especially if they address immediate concerns. However, issues such as improper flashing around chimneys, edges, and roof valleys—essential for preventing leaks—may sometimes be overlooked. While new shingles can improve curb appeal, underlying structural issues might remain unnoticed until they develop into bigger problems. 

Improperly installed flashing at vulnerable areas, like this roof edging, allows for water intrusion into the roof structure. 

What experts look for 

Objective experts rarely know if a house was a flip, but there are telltale signs that recent work has been done on the roof.   

• Material condition: If only one section of the roof has been repaired, materials in that area will be newer and often a different color and/or manufacturer. This could mean an issue was appropriately addressed, but an experienced engineer will factor the possibility of overlooked problems on the rest of the roof or in the attic into their assessment.  
• Construction techniques: Experts can identify signs of unlicensed or rushed work, such as vertical racking—a fast but less reliable shingle installation method that can leave the roof susceptible to wind damage.  
• Age of the damage: Whether a home is a suspected flip or not, determining the age of the damage is key to an accurate settlement decision. Experts examine the age of the roof, stains from water intrusion, and more to know if the damages were the result of inadequate materials, improper installation, or something else. 

Foundation Problems and Water Damage 

Flippers may not be aware of the threat from rainfall and moisture in the soil. Protecting a home’s foundation requires careful drainage management, which may sometimes be underestimated during renovation. Without adequate ground slope or drainage systems, water-related issues can arise and lead to settlement concerns. Additionally, superficial repairs or cosmetic updates to conceal cracks do not resolve underlying foundation issues, which can worsen over time. 

Some flippers may not know that protecting a home’s foundation from water damage requires a proper ground slope away from the structure and drainage that removes water at least 5 feet from the house. 

What experts look for 

As with roofing damage, knowing the age of settlement damage can help determine its cause and scope. Experts familiar with foundations look for evidence of long-term damage and other signs of settlement. 

• Painted-over cracks: Paint inside of cracks indicates that they pre-date the renovations, meaning there may be older damage that wasn’t addressed. 
• Floor and wall measurements: Experts measure to determine whether the floor is level and walls are plumb, and to ensure there are no gaps or exterior overhangs where part of the building has shifted. 
• Recent or frequent tuck pointing: Tuck pointing is a common method to keep brickwork and other masonry looking clean and new. A wall portion with bright, clean mortar while the rest is faded could be a repair—or it may indicate an attempt to hide deeper issues. 
• Inadequate drainage: Missing or inadequate gutter systems, downspouts, or ground slopes can often be linked to water-related foundation problems. 

Overlooked Pest or Termite Damage 

Pests like termites and rodents can wreak havoc on a property, causing structural damage if undetected or improperly treated. Even after pests are removed, the damage they leave behind can pose significant risks if not addressed. Cosmetic fixes may make damages less obvious during walkthroughs, but these issues can re-emerge later via long-lasting structural damage to wood elements. Rodents may also chew insulation and wiring, and even their droppings can pose a health risk in certain circumstances. 

Termites can cause deep structural damage, so even flippers who eliminate the pests may not address their long-term impact on a house. 

What experts look for 

Assessors may spot pests themselves, but even if they’re removed from the house, they often leave damages that flippers may not recognize as long-term threats. 

• Painted-over damages: Termite tubes or rotted wood may get a quick, cosmetic treatment like a paint job, but that isn’t enough to address the damage. Tubes indicate areas where the wood was weakened by their presence.  
• Mismatched patches: Wood paneling, stucco, and other veneers are favorites of flippers because they add aesthetic value to the house, but they can also hide pest damage.  

Plumbing  

Plumbing systems can be complex and costly to repair. Some renovators may address only the most visible or immediate problems, leaving less obvious issues—like older pipes or drainage problems—untouched. Additionally, rushed installations or lack of attention during construction can inadvertently cause plumbing damage, such as leaks from punctures in hidden pipes. 

Careless construction work can result in plumbing leaks that go unnoticed until later, such as this nail driven through a pipe installed in a bathroom cabinet. 

What experts look for 

• Water pressure that indicates older pipes: Renovators may replace easily accessible pipes like those beneath sinks or bathroom vanities with aesthetics in mind, but poor or inconsistent water pressure may indicate that the hidden parts of the system are much older.  
• Nail holes or other punctures: If construction crews aren’t aware of where hidden pipes are, their work may puncture pipes. Nail holes themselves can cause leaks, evidenced by mineral deposits around the puncture. 
• Age of damage: The condition of pipes and the appearance of water stains help experts determine the timing and severity of leaks. 

These issues are not exclusive to flipped houses, and many renovators work hard to ensure high-quality work. When similar damages appear on any property, expert assessments can make crucial determinations about the loss. Donan Engineering, part of Alpine Intel’s suite of services, specializes in identifying the age, cause, and scope of damages, ensuring you have the insights necessary for accurate claims decisions. Submit an assignment. 

Alpine Intel’s content is meant to inform and educate readers using general terms and descriptions. They do not replace expert evaluations that determine facts and details related to each unique claim.