Buyer beware is not just an expression, it’s a lesson to keep in mind, always, lest you end up with a bad buy. The property market may be hot but that doesn’t suggest you should now be reckless all of a sudden. In view of that, stick to your guns and keep to your budget.
A sellers’ market, doesn’t mean there are just good houses for sale; sellers are getting rid of dumps as well as mansions and it’s not just the price you need to look at. In this scenario, it’s plain, old due diligence that wins the day.
So you’re a homebuyer and you believe you know what you’re doing when it comes to property. Let’s test your skills with the following points of consideration, fresh from the experts.
It’s a nice fixer-up
Before you say “that’s nice,” Did you study all the obvious facts before you made your offer? Check the ones you did below and reflect on the ones you my not be aware of and see how much you saved or lost.
Cheap and nasty
If you are buying to resell or rent out, the first thing is the cost to get the house back on the market or rented at a competitive price. A badly calculated budget is all too common these days and there are many factors you need to weigh-up.
Does another bank own your house?
Have you checked out if your house is eligible for short sale or, one for the books, is it purchasable in foreclosure? If this is not the case, you may be offering on a really bad buy, a house already owned by another bank.
Do your own inspection
If the answer is yes, then you’re halfway there and if no, then read on.
In the professional home inspections, the inspection often doesn’t cover damage to septic tank and sewerage pipes, chimneys, roofs, decks and stairs. What the house is built on, is generally not even referred to in their reports.
These facts need to be certified by whatever means you choose but check them out. The day you resell could be when all these chickens come home to roost and then you may need the certificates to show the new buyer.
Did the appraiser do right by you? If your lender appraised the property too low, it can kill the sale and that means a second opinion is needed. The property you’re buying needs to match the loan amount you’re getting.
A good rule of thumb is that the cost of the repairs should never be more than 3% of the purchase price. You may have to rethink your project if the numbers come back higher than that. It’s a bad buy that goes over budget, especially if it costs you in the end
Check for property line location and utility easements or you could be out of pocket to rectify.
General points of concern.
If, after your inspection, you are uneasy about certain add-on’s, check with the city tax records and see if they match with what you’ve been given.
If there’s a deck, it could be a DIY and you would be well advised to check if it’s been built to meet safety standards and code. Decks have a nasty habit of breaking a house and especially when not built to code.
Another point is to know the condition of the foundation before it eats into your pocket. Foundations are nasty things to repair because, in most cases, the repair will cost a fortune.
We always mention pest control and mold because many people do not know what to look for. If you did your homework by asking a pest control agent where and what to look for, in the area you are buying, that’s good.
Apart from water damage and faulty electrical, often found in a bad buy, there is the neighborhood to study.
What’s the neighborhood like
Consider if your sale price is sound, does it match the neighborhood standards. Will you over-capitalize on your purchase and make your sale price unattainable for the type of neighborhood when you list? Or will you undercapitalize and use poor fittings and materials in a trending neighborhood? Both can derail your hard work and sale.
Always check out your area, day and night. This means visiting the area in the morning, noon and night to get an idea of all the sounds and activities. Use public transport to and from, at different times of the day. Check weekends to get the beat of the place and see how the community is when the work week is done.
Using these methods you will find out if you are in a trending neighborhood or a declining one.
Finally, check with the local authorities on the crime level. Always ask neighbors and community centers as well as check out the standard of the nearest library.