Tips for Buying a House As-Is

Just the idea of buying a house ‘as-is’ frightens many homebuyers. Generally, ‘as-is’ means that the homeowners might not allow an inspection prior to purchase, and this should make anyone wary. Be aware that you will certainly be doing repairs of some kind. After all, a house wouldn’t be listed ‘as-is’ if there was nothing wrong with it.

If you do choose to pursue the ‘as-is’ home, there are some things in particular that you should watch out for. While many things are a fairly simple and inexpensive fix, there are some problems that will drain your wallet and frustrate you as you attempt to fix them. While an inspection may not be possible, you can still take a look around and make an attempt to identify what might be your biggest problems.

Electrical Sockets

Modern houses that are built to code generally have one electrical socket for every six feet of wall space, though this number varies a little between jurisdictions. Older homes may have fewer outlets, so you might have to invest some time and money remedying this.

Adding electrical sockets is usually considered to be a quick and easy fix. However, you should really count the number of outlets in the home. If there are very few outlets indeed, the problem may be bigger than simply a builder who didn’t put in enough sockets. The house may be wired with a system that truly can’t handle any more outlets. This may mean a total rewire, and that won’t come cheap.

Floors

It’s easy to just never look down when taking a look at a property. However, when buying a house ‘as-is,’ you owe it to yourself to look at every possible problem. This means looking at what’s right beneath your feet. Floors that are not level or that sag in the middle might indicate that the builder of the home took a few shortcuts. Perhaps the contractor set the floor joists at twenty inches instead of the standard sixteen. There are other possible reasons for the sagging floor as well, none of them easy to fix.

If the floors do sag, feel spongy, or is at all unstable, consider walking away from the house entirely. It will probably be a very expensive fix, but since you cannot have an inspector take a look at the problem for you, you have no idea how much it will really cost you.

Roof

Replacing a roof is very expensive and if you suspect a problem with the roof you should probably consider a different property. Look for loose or missing shingles, an excess of moss, or any areas of discoloration. Also keep your eyes open for any sagging spots on the roof. These can indicate structural problems that you probably don’t need to be dealing with.

If it’s winter, check the eaves for a build-up of icicles. Heavy ice usually indicates poor insulation, at least near the roofline. This ice build-up can cost you money, not only in heating bills, but in repairing the damage done to the roof by the ice dam.

Taxes

In most jurisdictions, property taxes are a matter of public record. You can easily assess just how much the property taxes will be, and maybe you can even estimate what they might be once you begin repairing whatever it is that needs to be repaired. Keep in mind that this will only be a guess, since you’re really not going to know what the repairs are until you actually buy the house.

Utilities

Knowing how much the utilities cost for the property you’re interested in can be a great way to evaluate how much energy the house consumes. However, the homeowners, having chosen to list their house ‘as-is’ and not allow inspections, are probably not going to give you the utility bills for the past year. In some jurisdictions, there might be a way around this.

Record the asset number on the meter and contact the utility provider. If your jurisdiction allows it, you may be able to request the usage for up to the past two years. This will allow you do get an idea of how much you will have to pay to heat the home at various points in the year. You might also be able to decide whether or not you’ll have to invest in insulating your new home. Insulating can be very expensive.

You can usually purchase an ‘as-is’ property for relatively cheap. However, the costs associated with bringing this home up to code are undisclosed. You might find yourself having to invest thousands in your new property. This will elevate your costs, possibly to the point where the house just isn’t worth it. Evaluate the home carefully and decide if you’re really willing to take that risk. If possible, negotiate a home inspection and contractually detail the home’s current condition, allowing yourself room to back out of the deal, if need be.

Tips for Buying a Used Home

Pre-owned or used homes are a popular and viable option for many people and for a variety of reasons. Sometimes they are more affordable than a new home. Perhaps some people are more attracted to older homes from a purely aesthetic standpoint. It might also be the case that an attractive neighborhood is full of pre-owned homes. Whatever the reason, when purchasing anything used, it is best to be cautious. Older homes will not have any type of builder’s warranty (though there are exceptions), so there are some things that the potential buyer must be aware of.

Electrical System

There are many reasons to inspect the electrical system of any home you are considering for purchase, especially an older home. A faulty electrical system can put both you and your family in danger. Every year, hundreds of homes are destroyed by fires caused by problems in the electrical system. And every year people are killed in these fires. Protect yourself by having the electrical system inspected by a qualified professional.

There is another reason to have this inspection performed. In many jurisdictions, there are codes that must be met before you can legally reside in your new home. Also, if you are obtaining a mortgage, your lending institution may require a thorough inspection before they will approve the mortgage request. This is to ensure that they know where they’re money is going. Most institutions won’t want to invest money in a property that’s not worth it.

Foundation

One of the most overlooked aspects of a purchasing an older home is the foundation. A flawed foundation can cause problems, both now and in the future. The foundation should be straight and level. It should also stretch the entire length and width of the home. If any portion of the home does not have an adequate foundation, consider a different potential home. Also have a professional look for any serious cracks. Some cracking is normal, but serious cracks can indicate a larger problem. Fixing a foundation is very expensive, so walk away from any home with a flawed foundation.

Heating and Cooling System

Unless you enjoy being too hot or too cold, you’d better take a close look at the heating and cooling system of any potential home. A furnace that malfunctions can be both a hazard and an inconvenience. Unfortunately, unless you’re experienced in the function and maintenance of a furnace, you’ll probably overlook something important. Furnaces just aren’t that user friendly. It’s probably a good idea to hire a professional to inspect the system before you put an offer in on the home.

Plumbing

Replacing an entire system of pipes is incredibly expensive. Even lesser plumbing problems cost a lot of money to fix. And an unexpected problem with pipes can cause so much damage that you’ll just want to tear the house down and build anew. Before you sign anything or make a single concrete offer, have the plumbing inspected. If you do wish to make an offer on an older home before having this inspection performed, make sure you make the offer conditional upon a satisfactory inspection. Get this in writing before you make your offer.

Roof

Another very expensive fix is a damaged or substandard roof. In addition to the costs associated with repairing a roof, you may have to fix any damage caused to the interior of the home by an ill-timed leak. To ensure that the roof is in good repair, look for any missing or damaged shingles and an excess of moss growing on the roof itself. Also keep your eyes open when you’re touring the home. Any staining from water leaks should be noted.

A roof in need of repair doesn’t necessarily mean that you can’t purchase the home. But you will want to take the cost of a new roof into consideration when making an offer. It might be prudent to deduct the expense of a new roof from the asking price of the home.

Whatever your reasons for purchasing a pre-owned home, be aware that you will have to deal with some amount of wear and tear. This is normal, especially if the home if more than five years old. However, some things are neither easy nor cheap to fix. The electrical system, foundation, heating and cooling system, plumbing, and roof five areas you will want to investigate thoroughly before making an offer on any home.

Buying a Fixer Upper

Buying a new home is stressful enough, but buying a fixer-upper brings a whole new level of uncertainty and sometimes even fear. And though turning a decrepit property into a gem can be fun and rewarding, it can also be fraught with difficulties. Before you take on the task of fixing up a home, there are a few things you should consider.

Be prepared

People often underestimate how difficult it is to truly renovate a property. Only those people who’ve never bought a fixer-upper and successfully improved it think that it’s an easy process. Before you even consider buying a fixer-upper, you’ll want to mentally prepare yourself. Assume that the renovations will cost twice as much as you think, take double the amount of time you initially thought, will be less pleasing to the eye than you had imagined, and that the house itself won’t be worth nearly as much as you had hoped. Even though all of these things are unlikely to occur, if you assume they will, you’ll be pleasantly surprised when they don’t.

Current Value vs. Potential Value

It is important to understand how your renovations will impact the value of the home you wish to buy. If all of your work will result in a home that’s worth exactly as much as it was before, you might want to consider another property. In order to adequately assess these values, enlist the aid of a qualified real estate agent. An agent experienced in properties that require extensive renovations should be able to give you a general idea of how much the value will improve.

It’s also a good idea to hire a home inspector to evaluate the cost of the renovations. The inspector should provide you with a report indicating the work that needs to be done as well as what the estimated costs might be. Make sure you add ten to fifteen percent to account for any unforeseen expenses. If you feel you need a more accurate estimate, hire a contractor to tally the costs for you.

Add the renovation costs to the price of the house and compare the final cost with the estimated value after renovation. If the final value of the renovated property is actually less that the cost to purchase and renovate the house, consider investing in a different property.

Fixes That Pay

Some renovations bring more value to a home than others. Fixing kitchens and bathrooms will increase the value of your home exponentially. Adding new floors, especially hardwood, and fixing any damaged drywall are also cheap fixes that increase value. Paint may be cheap, but it doesn’t really add to the value of the home. Beware of any structural fixes such as piping and foundations as these are money-eaters that don’t add as much value as you might expect.

Know Your Own Limitations

Not everyone can do everything. Know exactly which renovations you can do yourself and which one you’ll need to hire a professional to complete. You might be tempted to do all the renovations yourself to save some money, but if you don’t know how, or if it’s something that requires a specific skill that you simply don’t possess, hire someone. It might cost a little more, but it might actually be cheaper in the long run. Some projects, if not completed properly, will actual lessen the value of your home, so think twice before tackling a project that you’re not qualified to take on in the first place.

Research Your Area

Most jurisdictions require homeowners to purchase permits prior to starting any real renovation. While you probably don’t need permits to install hardwood flooring or change the light fixture in the bathroom (though you’ll want to check this out carefully, as some areas require permits for every little change), at some point you’ll encounter a project that needs permits. This is especially important if you intend to do electrical, plumbing, or structural improvements.

These permits will inevitably cost money and should be included in your calculations. You should also be prepared to be patient. The issuing of permits is done by the government, and local governments often take their time.

Expect your renovations to take a great deal of time, money, and labor. There will be inevitable bumps along the way, and the occasional surprise. However, with a little preparation and an honest look at your own expectations, you might find that the old house that’s falling apart really is the perfect home for you.

Home Buying Negotiation Tips

Buying a house is a complex process. Making the initial offer is only the first step on the long road to buying a home. If you want to get a good deal, you’ll have to learn the fine art of negotiation. However, the truth of the matter is most people are not very good at negotiating. Even with the aid of an experienced real estate agent, you might find yourself a little disoriented. However, if you take a moment to ask yourself a few simple questions, and then seek the answers, you will find yourself better prepared for negotiations.

Do They Like Me?

This may seem like a silly question, but it might save you money on your new home. Psychologically, people are normally attached to their homes, especially if they’ve lived there for more than five years. Subconsciously, most sellers want the home to go to someone they like. It might not be a bad idea to attempt to bond with the sellers.

This doesn’t mean you should take them out for drinks. In fact, you might never actually meet the sellers if everything is done through the agent. However, you could include a letter with your offer. Introduce yourself, discuss your family, and your reasons for needing a new home (if those reasons might make the seller feel more favorably toward you). Just make sure you praise the house too much. If the sellers get the feeling that you must have that particular house, they’ll have the advantage.

What is it Really Worth It?

Before making an offer, it is important to realize that the sellers may be overpricing their home in order to make a better profit. Ask your real estate agent for a Comparable Market Analysis (CMA) to put the price in perspective. The CMA will analyze other similar homes in the neighborhood and allow you to get a feel for what other sellers are asking.

You should also take the time to visit other similar homes. You might gain some valuable information that you can use during your negotiations. If other homes have upgraded kitchens and bathrooms, but the home you’re looking at is still stuck in the 1980s, you can use this to save thousands of dollars.

What Are My Priorities?

Don’t fall in love with the house too soon or you’ll put yourself at a disadvantage. Use the CMA to detail a list of homes that are in the same price range but in better condition or have additional amenities. List this because part of your arsenal. You can show the sellers that they are overpricing the home and get a better deal.

You also need to decide what you’re willing to fight for. If you give up a few extras, you might save thousands. Perhaps the sellers will accept a lower offer if they get to take their appliances with them. Be ready to compromise if you want the best price.

Why Are They Selling?

Understanding why the homeowners have chosen to sell their home is a great way to put yourself in a better bargaining position. Your real estate agent might be able to help you discover the reasons behind the sale, but you can find out a lot on your own.

Sometimes, the homeowners will be upfront and honest about their reasons for selling. Other times, you’ll need to do some investigating. Ask the neighbors casually and you’ll often discover a wealth of information. Sellers who are relocating due to a new job, a divorce, a death, or even the loss of employment will be more motivated to sell. Sellers who are simply throwing their house on the market and will sell if the price is right are harder to bargain with.

What Should I Offer?

People often assume that they should offer something incredibly low at first, giving themselves room to negotiate up. This sounds like a good idea in theory, but in practice it can backfire. While you should definitely give yourself some breathing room and make an offer below what you’re actually willing to pay, make sure your initial offer is still fair to the sellers. You want the sellers to make a counteroffer, and an offer that is too low may be rejected out of hand.

When Do I Walk Away?

Try not to be in love with the house or it will be harder to walk away. Decide exactly how much you’re willing to pay in advance, and stick to that price. If the counteroffers really put you off, be prepared to walk away. You don’t need to be overpaying for that house.

Walking away is harder if you’re emotionally attached. If you find that you love the house a little too much, ask your real estate agent to handle the negotiations. Give the agent your maximum price and let him or her handle it from there.

Negotiating a fair price for a house you’d like to purchase can be both stressful and difficult. Keep a level head, clarify your own position, and enlist the aid of a qualified real estate agent if necessary, and you’ll soon find that the negotiation process becomes much easier.