Did you know that last year, 39% of homes sold above their listing price in a single four-week period? The pandemic started a housing boom that has pushed prices up. But do you know how many people are getting around the problem?
That is through buying as is, or as many people may call it, a fixer-upper. Read on as we give five things to know when buying a house as-is.
Has It Had a Professional Inspection?
A professional inspection can really set your mind at rest when buying an as-is house. Typically, this should be done when purchasing any property. However, in the case of an as-is property, it is vital to ascertain the correct valuation.
An inspection will grant you a certificate, telling you the condition of the property. It will look at the roof, foundations, and internal systems like heating and electrics. You will then know if any major problems are present, and how long these systems have left before they need replacing.
An inspection should never cost more than $500. However, if you compare it to the price of repairing any problems that may occur, then it is a very nominal sum. If a potential home has not had an inspection, then speak to a real estate agent about getting one.
Once you have this, you can decide if you want to make an offer on the property. Your offer should reflect the cost of repairs and required major renovations. You may also consider getting a home inspection clause in the contract, so you can back out of a sale if the home is not as you first expected it.
Get a Warranty
A home warranty may take some negotiation. This is a contract that covers the repair or replacement of important home systems. They may be at breaking point when the home is sold or could fail later down the line.
A home warranty usually includes certain appliances such as HVAC systems. When buying a home as-is, it makes a lot of sense as you will be liable to foot the bill later. However, if you are buying a house as-is with inspection certification, it may not be as big a deal.
You may also find that the seller is extremely reluctant to add a warranty when they are selling as is. They are usually selling this way as they need quick cash, and the last thing they may want is to pay for repairs later on someone else’s property.
Do You Have the Right Real Estate Agent?
When you find the right real estate agent, you are not just paying them to find you a property. You are getting their experience regarding buying an as-is house. This can save you a lot of time, frustration, and crucially, money.
They will be able to break down the contract for you, so you understand what is and is not included. In addition, they will have contacts to help you save money on mortgages, loans, and repairs.
Finally, they can help you understand the price and value of the property. With knowledge of the local area, the current market, and the condition, they can help you ascertain value. This helps you make a more informed decision on how much you should be offering.
Do You Have the Finances?
Buying an as-is property usually starts with the seller needing cash, and they often want it quickly. This may be the homeowner, or it may be the bank that has taken ownership of the property. Either way, having the money ready to pay immediately is essential in these situations.
Another consideration is the cost of repair. A budget for minor repairs should not really break the bank unless you are on a very tight budget. It is the larger repairs that can really sting.
The money you need all depends on your intentions with the property and its condition. If you want to live in the house, then you need to price up the amount it is going to cost to make it liveable.
If you are flipping it, then you need to know the cost it will take to get it to a sellable state. Luckily, you can dictate the time period for this one.
The quicker you want it done, the more money it will cost when hiring labor. Factor in other elements for this as well, such as dumpster rental, landscaping, and any permits you may need to buy.
What Are Your Financing Options?
Don’t assume that buying an as-is house will give you access to the same financing options. You may be able to get mortgages if properties only have minor defects, such as window cracks and small bits of interior damage. These will always be conventional mortgages not insured by the government.
You won’t be able to get a mortgage for a home in a bad condition. The reason for this is that lenders need collateral against the loan they have given you. If you don’t pay, they need something of value to recoup their investment.
With a damaged house, the risk for them is much greater. The house may deteriorate and lose value or may have unforeseen problems.
If you are a first-time buyer considering the pros and cons of buying a house as-is, then it may not be for you. Instead, wait and save up a bigger deposit or look at other avenues for financial assistance.
Buying a House As-Is
In summary, when buying a house as-is, make sure you know what you are buying. Organize your finances, and make sure you have enough put away to attain your objectives. If you are unsure, then hire an experienced real estate agent to help you out.
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