Buying a home that turns out to need more expensive repairs than originally thought is only funny in the movies. In real life, buying a money pit can nearly drive a new homeowner to lose their mind - and their shirt. There are a number of strategies that buyers can act on to prevent their home-buying process from turning into a lemon of a purchase. Here are 5 of steps that will help you avoid buying a money pit:
1. Attend Inspections. Rely on your Realtor when you’re buying a home. You should continue attending your home, pest, roof or other specialty inspections on your own personal to-do list. When you’re there in person, the inspector is able to physically show you the items that may need repair, and give you a professional opinion of how serious the repairs may actually be that a written report may lack.
Sometimes, written inspection reports convey minor items, like reversed hot and cold faucets as a red-flagged health and safety issue, and more major items, such as a cracked foundation as something that needs further inspection. If you are at the inspection in person, you can brief the inspector on what level of cost and effort you consider major and ask them to help you understand roughly where the property overall and any individual repairs needed fall.
2. Read the Reports and Disclosures. Attending your inspection is just the first step. Reading the inspectors’ reports is critical to avoiding a money pit - both the reports generated by your own inspectors, and any reports and disclosures provided to you by the seller. Things to watch for and investigate further in the sellers’ reports and disclosures include:
- repairs the seller completed themselves,
- repeated repairs to the same system,
- water and leakage issues, and
- any reports of non-functioning mechanical or other systems in the home.
- repair estimates they offer,
- items that will have to be completed soon (versus upgrades you can do over the long run)
- items that seem like they might run into big ticket dollar amounts, and
- especially watch for any recommendations that you get a specialist to look at something - some of the largest potential repairs are often dealt with in this way by a property inspector.
- list your questions and concerns,
- ask the inspector(s) and seller any follow-up questions you have,
- obtain follow-up inspections (including obtaining an extension of your inspection contingency, if needed) and
- obtaining reliable repair estimates.
4. Stop Overconfidence In Its Tracks. Unless you are a construction professional, all but the most minor home improvement or repair projects tends to take more time and money to do yourself than you expected. Even if you expect to cut costs by doing some work yourself, contact and obtain bids on the repairs and upgrades you plan from actual professionals. You can at least be armed with the information about what it will cost to get them done if you cannot complete them.
5. Prioritize Price Reductions and Credits over Seller Repairs. Buyers will select their own materials and contractors with more care and are more interested in ensuring the repairs are completed to their satisfaction than an outgoing seller. If you are negotiating with your seller over repairs that are needed, discuss with your agent whether it makes sense to ask for a price reduction or a closing cost credit to offset the cost of the repairs. That way you can have them completed to your standards and with the materials and contractors of your choice after closing.
Avoiding the Money Pit is most successful to a buyer when listening and following the advice of the professionals. Realtors and Home Inspectors spend much time in the classroom of experience and in continuing education. Knowledge is the key. We're here to help.
If you are in the market to purchase or sell a home, call JoAnn Young. 321-243-4917 or email me here - JoAnn Young I'd love to help in any way I can.
