Buying Flipped Houses: What to Consider

One woman thought she got a great deal on a newly renovated house, but later discovered problems.
4:57 | 07/22/14

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Transcript for Buying Flipped Houses: What to Consider
Many these days are making big bucks flipping homes. But in some cases those new renovations can leave a lot to be desired. How do you know what costly problems would be lurking beneath the shiny surfaces? Here's ABC's Rebecca Jarvis for our series, "Reality check." When Ericka Doolittle bought this house, she thought it was the perfect home for her. You see a lot of nice stuff. On the surface, it looked good. Reporter: She was dazzled by the location, the fresh coats of paint and the new kitchen appliances. It was a little scary to take that step forward on my own. Reporter: The seller, a house flipper, who had purchased the property just eight weeks prior. Ericka paid $302,000, her life savings, even though an inspector told her there might be problems. She decided to buy it as-is. The problem was deeper than I anticipated. Reporter: Among the problems, loose, hazardous electrical wires, leaks in her sewer, and on top of it all -- The house wasn't attached to the foundation. Pretty big concerns. Reporter: And a year later, she found two feet of water under debris in the basement. When the workers got down there, there was a lake. There was a lot of flooding issues. Under the house. Reporter: Water. Water under the house. Reporter: Back then, Ericka was told the damage would cost $15,000 to fix. But now, five years later, she's sunk $50,000 into the home. Buyer beware. Do your homework. And just make sure, you know, all the "Is" are dotted, all the "Ts" are crossed, and you know what you're getting into. Reporter: Real estate guru, Barbara Corcoran says buyers need to be cautious when buying homes. Flippers are good at doing surface repairs. You would be crazy to buy a house from a flipper without having a full inspection of the house and making a contract contingent on the house passing that inspection. Reporter: And these days, more and more homes are flipped or bought and resold quickly than ever before. Up 16% last year. And up a staggering 114% from the year before. So, how do you know if you're getting the most for your money? Enter Jennifer and Steve Clark, a professional husband and wife real estate marketing and design team. They've been helping Ericka with Herr renovations and say half their jobs are bad flips. We do because a lot of people out there don't know what they're doing. We're flipping. All this needs to be replaced. Reporter: The popularity of reality TV shows about flipping homes make it look easy and glamorous. That's 170k profit. Do visit a shrink, it ain't easy. We have supports. Reporter: Jennifer says it's important for buyers to beware. As more people get into flipping, you have to be more and more careful as a buyer. Right. Exactly. Often times people buy what they see. But it's the things you don't see that cost so much money that can be so easily hidden. Reporter: They say there are insider secrets to spotting a potentially bad flip. And they showed us them in various homes. There's no vent line for this laundry. Reporter: In your utility rooms, make sure the drier and heater are vented out of the house. Instead of taking the step and venting the drier outside, they take an easy step and drill a hole in the floor. Reporter: Measure the height of the electrical sockets. I know this is old electrical and it was done improperly. Reporter: Because it's next to the base boards? Yeah. Reporter: They should be 12 inches off the ground. Any higher or lower can be a mix of old electrical wiring, which Jennifer and Steve say can be a wire hazard. Your switches should be on the wall, not in the molding. The electrical switch should have been moved out this way. Reporter: An afterthought. A complete afterthought. Reporter: If the owner says the house comes with new appliances, ask to see the manuals. Just because they appear brand-new, doesn't mean they are. Reporter: And in the bathrooms, separate hot and cold knobs in the shower may mean the old fixtures were replaced but not the old plumbing, which could have cracks and leaks. While not all flips are flops, the Clarks say, always get a thorough inspection before buying. And remember -- If it sounds too good to be true, absolutely. It is. Reporter: It's too good to be true. Yeah. Reporter: For "Nightline," Rebecca Jarvis, Oakland, California.

This transcript has been automatically generated and may not be 100% accurate.

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