So, the new house that you have been considering isn’t perfect, but it can be with a bit of renovation. Of course, buying a house that needs only a bit of TLC to be ideal for you is a bargain. But Paradise Developments advises you to be a bit cautious when it comes to buying a house like that.
After all, there is only so much you can change through renovations, right? And there are budgetary matters to consider, as well. Taking everything into account, the following are the questions to ask when purchasing a house that needs renovation:
What Are the Issues With the House?
One of the first things you need to know is the exact places where the house will need renovation. So, consider whether the renovations required for the property are purely cosmetic.
For instance, there are smaller details that make the house look prettier, such as changing the kitchen sink, painting the entire house, and so on. These are minor glitches in a property that will neither cost a lot nor need too many contractors.
Is The House Structurally Damaged?
If the house you are considering has structural damages, it is better not to go for it, especially if you have never got home renovation done before. Structural issues like plumbing, termites, and foundation problems are usually found at the time of home inspection. It is time-consuming and expensive to fix these issues. Thus, you need careful consideration before buying a property that isn’t structurally sound.
What Is the Age of the Roof?
The fact remains that roofs are expensive and necessary. When the roof of a house reaches the end of its days, and you need to replace it before moving in, expect to spend thousands of dollars on it.
When the damage is in the roof, your lender might have a clause that it has to be repaired for your loan to be approved. In simple words, if your listing description does not mention the age of the roof, do not forget to find out the age beforehand rather than dealing with an expensive headache later.
Where Will You Stay?
In case you have a place to stay while renovating your new place, you have nothing to worry about. However, if you are a DIY enthusiast and love the entire process of renovating and beautifying something, this disruption may not be so much of a bother to you. Also, you might want to be constantly present during the renovation.
How to Hire the Right Professionals?
If you are planning to hire a contractor, you will need to carry out a bit of research before you ask for bids. The rule of thumb is to get a minimum of three estimates for all kinds of work you’re planning to get done.
Also, you need to ask the contractor for references for their work and tell them to show you possible examples of past work. You can also ask your neighbors or realtors about the contractor they have used and liked in the past.
Are There Any Safety or Health Hazards?
Things like radon, mold, and the likes are major hazards that can be too expensive to address and stall the loan approval. So, you need to ask the seller to offer proper documentation if the property has experienced such issues in the past.
Furthermore, figure out what they did to address these issues. If you notice any hazardous problem or the home inspector’s advice added testing, you will have to spend more on such specialized work.
What Kind of Budget Constraints Do You Have?
In case you are pooling all your money for the down payment, you will not have anything left for the renovations. So, it is better for you to buy a house that is as livable as possible.
Even when you have cash set aside for renovations, do not forget to include twenty percent additionally over all the estimates that you receive. After all, extra expenses will always be there, regardless of how carefully things are planned.
How Long Has the Property Been on the Market?
The motivation of a seller to strike a deal and the duration for which a house has been lying around in the market both rise in tandem. So, the seller will be more flexible about the price, terms, and contingencies.
At times, a home simply stays in the market because it was priced too high to start with, which necessitated multiple price drops. Any listing that has multiple price reductions and has been in the market for a long time gives buyers the idea that something isn’t right with it. You can use this as an opportunity to get a good deal.
What Will Your Closing Costs Be?
Your down payment is not the only cash you will be shelling out on the closing day. The closing costs will be your responsibility, too. It typically includes loan origination charges and third-party cash for paperwork processing, title research, appraisals, and other such administrative work. You will be paying at least two to five percent of the purchase price of the house in closing costs, though that changes from one area to another.
The lender is expected to offer you a closing disclosure at least three business days prior to closing. It will outline all the loan fees, along with the amount of cash you need for the closing.
Are You Setting Realistic Expectations?
In case your idea of home renovation is inspired by some show, you can be absolutely sure that your experience would neither be that quick nor dramatic. Disasters can happen at any point, but if you have a proper plan with resources, money, and time, the hard work can truly pay off.
Getting a house at a bargain simply because it needs some renovation is one of the best deals you can ask for. However, you have to make sure that you ask all the right questions like the ones mentioned here. It will help you in making the right decision.
*Photos by Birgit Loit