Flipping ourselves off!


Once upon a time, when the market was REALLY HOT, a lot of the home inspections I did were on homes being “flipped.”  There is not much flipping going on any more.  These homes often had their share of issues including, shoddy workmanship and lack of building

Flipping houses

Flipping houses

permits.  The whole idea behind the “flip” was to get it back on the market as quickly as possible to maximize profits.  The only thing standing between the flipper and the buyer was the lowly home inspector.

We always earned our fee with these houses.

At the same time this “craziness” was going on, there was another craze going on—perhaps related—-perhaps sort of the same thing.  While people were buying and flipping houses, lenders were buying and flipping mortgages.  By all accounts this did not work out too well.  While you might be able to slop a coat of paint on a house,  blow some insulation over knob & tube wiring and rotting galvanized water pipes, putting a “gold frame” on a mortgage doesn’t mean the house is “actually” worth more—-especially after all the copper wire,  copper pipes and appliances—like Elvis— have “left the building.”

It is my understanding that banks were/are able to pretty much “make up” the value of the house and sell the inflated mortgage to whomever will buy it—-and then that mortgage buyer can do the same.  Am I missing something here?

I have a “vague” idea of how capitalism works, but is it actually good judgment to allow the sale of mortgages—-at least without some “honest” means of establishing “real” value?

****

Charles Buell, Seattle Home Inspector

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This entry was posted in Home Inspections, Uncategorized and tagged . Bookmark the permalink.

One Response to Flipping ourselves off!

  1. Paul McFadden says:

    Thanks for your thoughts, Charles. They are always interesting!

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