Updated: Feb 6, 2020
Natatie Jones and her husband just became new homeowners. During the process of buying their home, they encountered many obstacles. They share some tips below that will help new homeowners prepare for buying a house that needs some work.
Buying a Home As-Is
According to Simply Referable, there are three main types of home sales—standard, bank owned, and short sale. In standard sales, sellers are often willing to invest in maintenance and upgrades before selling so they can get the highest price possible for their home. However, bank owned homes and short sales are typically sold “as-is”. Real estate investors most often buy these homes to flip for profit.
If you decide to buy a home “as-is”, you must be ready to take on all of the maintenance requirements and costs on your own. As Redfin explains, people selling “as-is” homes will not make repairs or offer credits for major problems like a leaking roof, structural damage, pest infestations, or asbestos. Make sure you know what you’re getting into before buying a foreclosure or short sale!
The Seller’s Responsibility to Disclose
In a standard home sale, the seller has a responsibility to disclose known problems with the home. If the seller fails to tell you about any needed repairs before closing the sale, you may have a legal case. The seller could be liable to cover the costs of these repairs. Still, it’s better to check for issues yourself by having the home professionally inspected before closing the sale. This inspection usually occurs while the home is in escrow after the seller and buyer have signed the purchase agreement. It’s important to include a home inspection contingency in your purchase offer, so you can back out of the sale if your home inspection reveals serious problems.
Pick Your Battles
If the home inspection reveals maintenance issues, you have to consider your next steps carefully. It's reasonable to expect the seller to make repairs to major systems in the home, including the electrical, plumbing, and HVAC systems. However, certain repair requests should be avoided. The seller won’t be willing to fix every minor issue and might even move onto another buyer if you get too picky—especially if you’re in a seller’s market! Avoid asking the seller to fix cosmetic problems or make repairs costing less than $100. Focus on major issues and safety concerns.
Negotiating Repair Demands
As a homebuyer, you have two main options for making repair requests. You can ask for a cash credit on the repairs at the close of the sale, or you ask the seller to make the repair before you buy the home. According to The Balance, asking for a repair credit is generally preferable, since you will be able to ensure the quality of the repairs made on your new home. Remember, the seller no longer has a vested interest in the home, so they might cut corners on repairs or hire the first contractor they can find. Sellers often prefer to give a repair credit because it speeds up the sale process. If you want to negotiate for a repair credit, reach out to a local contractor for an estimate of the repair costs so you know how much to ask for.
Don’t let maintenance issues scare you away from your dream home. Most often, you can get these problems fixed without cutting into your home buying budget to make expensive repairs on your own. Just remember to get a home inspection done and negotiate repair issues with the seller before you close the sale. Avoid skipping these important steps to ensure a smooth and successful home buying process.
See more of Natalie and Jason Jones' tips on www.homeownerbliss.info