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 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.
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.
Many owners are anxious to sell their homes. In the rush to sell, there will always be those owners who do not disclose all the problems the property may have. Perhaps they want a quick sale, or a better price, or maybe they simple were not aware of the problems in the first place. Whatever the reason, it’s up to you, as the potential buyer, to spot these problems.
Hiring a home inspector might seem like a good idea, but unless you’re very wealthy, you simply can’t afford to hire an inspector to look at every house that might catch your eye. You can, however, educate yourself. If you know what to look for, you’ll be able to weed out the more damaged homes and focus your attention and money elsewhere.
General Maintenance
If you’re looking for a home you can just move into without having to address a lot of issues, make a point of looking for signs of poor maintenance or maintenance that was never done in the first place. Cobwebs over important areas such as the furnace, hot water heater, or air conditioning unit are generally a sign that these appliances haven’t been serviced regularly. Look at the plumbing as well, if at all possible. If you see an excessive amount of caulking or putty, you’re probably going to have to replace the pipes, and this isn’t cheap.
Go outside and check gutters and drains. If either of these are clogged with more than a week’s worth of debris, it’s likely a sign of neglect. The interior of the gutters may be damaged and have to be replaced. This may not be something that you want to do when you purchase your new home.
Doors
When most people look at a home, they look behind a door, but they don’t close it. A door that won’t close might indicate a serious structural problem. Take the time to open and close every door in the house. Some settling of a home as it ages is normal. But it’s not normal for doorframes to warp.
Flickering Lights
While you might need a home inspector to determine if the wiring is faulty, you can still make some basic observations on your own. Walk through the house and turn on every switch. If the lights flicker or you hear crackling or sparking sounds, it’s a sure sign that there might be an electrical problem. Also take a close look at the circuit box. Corrosion or an overload of wires is an indication that the system needs an overhaul.
If the agent or homeowner tells you the power is off because the house is standing vacant, insist on touring the home while the power is on. If your request is refused, you should absolutely walk away from the deal.
A Fresh Coat of Paint
Many homeowners repaint right before listing their home for sale. This could just be general maintenance and the desire to sell. However, it could also mask some serious problems. Fresh paint can cover up water spots, structural cracks, and even large holes in the drywall. If the house has been repainted but other maintenance has been neglected, you might want to ask why.
The Floor Plan
If you’re looking at older homes, beware of obvious changes in floor plan. Most older homes were not originally open concept, so if you encounter a home that has been renovated to have an open floor plan, ask to see work orders from a qualified contractor. Many times, important load-bearing walls are removed but not replaced. This leads to structural problems down the road, problems that will present a danger to you and your family and are quite expensive to fix.
The Foundation
You may not be a trained and qualified home inspector, but you can still look around for obvious problems that the owners simply didn’t tell you about. One of the most overlooked parts of the house is the foundation. Walk the entire perimeter of the home and examine the foundation in detail. Some cracking is normal, but watch for very deep or very long cracks as these could indicate a weakening foundation. Also make sure the foundation is level. A foundation that is not level is usually a sure sign of a problem that will be difficult and expensive to fix.
When you go inside, make sure you look at the basement. Search for signs that water may have leaked into the basement at some point. You don’t want to have to deal with water damage when you first move in. If there are signs of water damage and the owners claim it’s been fixed, as to see work orders to that effect. Not all owners will lie to you, but some will, so don’t take their word for it.
The Neighborhood
Before you even consider making an offer, take a tour of the neighborhood that you might be moving into. Boarded up homes and vandalized property is usually a sign of problem, as is graffiti. That ‘good deal’ might be because the neighborhood is unsafe or an attraction to criminals.
While looking around the area, take note of how many homes are for sale. If there seems to be too many homes for sale, don’t be afraid of asking neighbors why everyone is moving. You might gain some valuable information that night make you decide to walk away from that particular property, or any others in the area.
That Odd Smell
Let your nose guide you when you’re looking at a potential new home. Take a deep breath and try to identify the various scents. Try to smell beyond the baking cookies and the scent of poodle on the couch. A foul odor might mean mold, mildew, or something worse. If you smell gas, there’s probably a leak, or maybe a furnace in poor repair.
Some homeowners and agents will try to tell you that the house smells funny because it’s been uninhabited for some time. Even if it’s true that the house has been sitting vacant, that’s not the reason for the smell. If you don’t know exactly where the smell is coming from and how to fix it, walk away. Find a home that doesn’t make you gag.
Windows
It’s not enough to simply look through all the windows. Open each window each fully and close it again. Sliding windows should slide with little or no resistance. If they get stuck, you’re probably looking at a structural problem. Even if there isn’t a structural problem, windows are expensive to replace.
Where’s the Water?
While you probably can’t crawl around the house inspecting every piece of pipe, you can turn on all the facets and check the water pressure. Low pressure might indicate corroding or leaking pipes. If the water isn’t on because the house is vacant, arrange to view the home once the water has been turned on. An agent or owner who refuses to do this is definitely hiding a larger problem. There have been cases where unsuspecting homebuyers have purchased a home with no water supply at all.
Purchasing a home is one of the biggest investments you’ll ever make. You owe it to yourself to look for the red flags and evaluate potential money pits. If you haven’t seen any obvious red flags and decide that you’re interested in a particular property, hire a qualified home inspector to further examine the home. This may cost you a little money, but it will also put you in a better position for negotiating the price of the home and let you walk into your purchase with full knowledge of the problems associated with the property.
