Rooted in the American dream of homeownership is the notion of transforming your newly purchased home into a better product-your own customized palace. This may be one reason why "Fixer-Uppers" seem to attract and intoxicate many buyers. A fixer-upper may mean a historic home that requires some minor repairs and updates. Or, it could mean a certified dump with no insulation, mildew in the bathrooms, and water problems in the basement. All home buyers (especially inexperienced first-time-buyers) may want to be cautious of fixer-uppers. Indeed, some fixer-uppers can be excellent bargains and wonderful homes, but a careful and thorough investigation of the property and all of the costs, can help you avoid a money pit.
Foreclosures: Let the Buyer Beware
A foreclosure property is a home that has been repossessed by the lender because the owners failed to pay the mortgage. Like fixer-uppers, you may find these are often bargain-priced, but it is wise to be cautious of the legal and monetary risks when considering a foreclosure. Many experts, in fact, advise inexperienced buyers to hire an expert to take them through the process. It is important to have the property thoroughly inspected and to be sure that any liens, undisclosed mortgages, titles and court judgments are cleared.
Be a savvy buyer, and use these rules-of-thumb when evaluating a fixer-upper:
· Educate yourself between the too-good-to-be-true home listings and reality.A home may appear to look wonderful on the outside, but a closer look on the inside may reveal a much different story. Look for fixer-uppers that have relatively inexpensive cosmetic problems, like outdated decor, old carpeting or the need for a fresh coat of paint. Also pay attention to floor plans and layouts.
· Choose a top-notch neighborhood.Sometimes the neighborhood eyesore can be upgraded, and the neighborhood will help support the value of the fixer-upper and the return on your money.
· Evaluate the surroundings.Find out if the asking price of the fixer-upper is comparable with the prices of other homes in the neighborhood. Also see if any other nearby homes have been refurbished, and for how much they sold.
· Buy a fixer-upper when the market has bottomed out.This way, you minimize your risk of overpaying, and it can help to offset the cost of your improvements.
· Estimate up-front exactly how much work will be required to fix your prospective home.Calculate every dime - purchase costs, maintenance, building materials, labor, financing costs and your valuable time invested--to make sure you've considered everything.
Find a reputable home inspector.
A general inspection of the home, from the crawl space to the roof top, should be part of any home purchase. There is always the possibility that the inspector can locate a significant problem which you may not notice . If possible, be present at the time of the inspection to learn first hand about the condition of the home. Read more about home inspections in our Complete Guide to Home Inspections.
Try to get the seller to pay for all or part of the home improvement costs.
After the home inspection, you may be able to negotiate repairs with the seller by having them reduce the cost instead of making the required repairs.
Involve your lender.
Keep the lines of communication open with your lender about exactly how much work will be required to fix your potential home and whether it can be done before or after closing.
A ggod lender can work with you to find the loan that best accommodates your home financing needs.
Inspect the general contractor who will potentially be doing renovation work
Make sure general contractors are licensed, insured, financially stable, and not facing numerous consumer complaints. Talk to people who have had experience with the contractor, and view some of the work they have done.
With careful research, you can definitely find promising fixer-uppers out there. Take your time, and align yourself with reputable realtors, lenders, home inspectors and contractors. Most importantly, educate yourself in order to help you make the right decision on the best home purchase for you.
|Dave Magua, P.A.|
Weston Town Center
954-515-0100 Ext. 7323
More about me