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Toronto Home Renovations: Beware of House Flippers and Low Quality Work

If you are a prospective home buyer, or just somebody browsing available homes for sale online you probably notice buzzwords and taglines in many MLS listings stating "fully renovated" and "top-to-bottom remodel". It is no surprise that lots of money is changing hands in this bizarre market, and many real estate investors wish to realize the lucrative opportunity that involves buying an undervalued property, fixing it up, and hopefully "flipping" it for a profit.

However, if you are looking specifically at one of these homes on the market to purchase, you should be careful. This is not to say that all homes that have been renovated, and listed on the market have been subject to the low quality workmanship that I will be discussing here, but it is something to keep in mind. It's no secret that real estate investors want their money, and in order to get it, they are only interested in 1) Fast and 2) Cheap. They likely aren't worried about long term quality and your ownership experience after you have moved in. They want to make the place appear absolutely pristine and appealing when it comes time to show the house to prospective buyers, and this can often involve cutting corners to lower costs.

If you are looking to buy a resale home that's "move in ready" and has already been renovated, then chances are that you have no insight into the process of how it was renovated, if any renovations were code compliant, if the contractor on the project had a history of doing quality work, and if necessary permits were acquired or inspections were performed. When the real estate agent opens the front door and shows you the new kitchen, what you see is perfectly staged to appeal to your senses. What you may not see in that bright new kitchen is the fact that an unlicensed electrician was paid under the table to install the new pot, pendant, and under counter lighting. In Ontario, any electrical work done in a home must be carried out by a licensed electrician. What you also may not see on your visit is the construction quality of the cabinetry, the drawers, the hinges, or the cosmetic hardware. These might not seem big deals at first, but if you are buying a home based on the expectation that work has already been done and no further investment will be needed, you would be shocked to find out that you need to spend extra money to correct deficiencies that may only be exposed after you have moved in.

After considering some of these possibilities, you should prepare yourself with some questions. If a well known house flipper has a house on the market that you are looking at, and has done other flips in the same neighborhood, you should seek out other owners and discuss with them their experience. Have there been any problems that cropped up after moving in? You can also check with the local permitting authority to see that appropriate permits were issued for the work involved, if the work performed required that a building permit be issued. Furthermore, you would want to know if a structural engineer was consulted regarding the removal of a load bearing wall in a home, or if other major structural changes were made, because that would be a major safety matter and it would be prudent to verify that it was done correctly, in compliance with the Ontario Building Code.

On the more cosmetic side of things, there is a big difference in quality between hardwood flooring that costs $3 per square foot versus that which costs $6 or $8 per square foot. There is also a difference in brand name bathroom faucets and fixtures that you would purchase at a reputable plumbing supply house versus what you would find at the discount rack at your local big box store. There is also a difference in what you would select for the home you're planning on living in if you were doing the renovation yourself versus what somebody else would select if they were concerned only about their own profit.

Here's a great example: This Toronto home was supposed to have been renovated from "top to bottom" with over $50k in "upgrades". Here are some photos that I was able to take on a scheduled walk through. Upon close inspection, you can easily see the problems with the workmanship of this tiled floor in the kitchen. Although this tiled floor was newly installed as a part of a whole home renovation to prepare the house for sale, it was clear that whoever did the work did not have a clue as to how a proper tile installation is to be completed. In addition to taking the photos below, I can also note that each step I took on the floor was accompanied by the disconcerting "crunch" sound that can only be made by a loose tile.

Cracked tile floor

Poorly installed floor tile

In short: If you are looking to purchase a new home in Toronto or or the surrounding area, be wary of flip houses and do your research before you buy. Buying a move-in-ready home that has already had that major kitchen or bathroom renovation completed might seem appealing, but do keep in mind that quality has a cost and real estate investors want to keep that as low as possible, so that their profit remains high. If it suits your timeline, it may be better to buy a house that needs cosmetic upgrades or renovations and hire the contractor yourself. That way, you can have much better oversight over the work being completed and control over the quality of work itself.

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