How To Get The Best Deal On A Fixer-Upper Home

Getting a good deal on a home is every homebuyer’s dream. And that means many are willing to negotiate. Often, finding the right home requires a bit of vision and some elbow grease. But at the end of the day, there are a few things you can do to get the best deal on a fixer.

Order an Inspection

No matter the type of property you hope to purchase, inspections are key. Many involve legal disclosures that highlight a home’s quality and any existing issues. With many mortgage lenders, certain inspection types are requirements. In other cases, there’s flexibility when it comes to who needs to check out the property beforehand.

According to HUD, home inspection costs range from $300 to $500. Depending on the property, you may want one or more of these inspection types:

●      Electrical

●      Lead paint

●      HVAC

●      Wood damage

●      Foundation

●      Roof

●      Septic/Sewer

●      Mold

●      Asbestos

While it’s not an “inspection,” looking into the property’s history is also smart. Verifying square footage, inspecting easements, knowing the lot size and layout/boundaries, and understanding zoning and permit laws will help make negotiations smoother.

As for who pays the inspection costs, most of the time, buyers are responsible. Often, property owners decide to pay for inspections to ensure nothing questionable comes up during negotiations with potential buyers. In other cases, homeowners expect applicants to cover those costs. On the plus side, however, if a previously interested buyer backs out, any inspections they paid for must be disclosed. In this case, you won’t pay for the inspection, and the results of prior documents are legally tied to the home.

‘As-Is’ Property Considerations

Most buyers are flexible with homes that are fixer-uppers. However, if a property is for sale “as-is,” that involves a different set of parameters. Properties with this distinction may have issues such as structural problems, a leaky roof, mold or mildew, or pest infestations. Some sellers are not motivated enough to negotiate on these items. In other cases, they don’t have the funds to support any repairs prior to closing.

Negotiate Repair Costs

Once you know what problems a property has, you can consider repair costs and begin to negotiate. On an “as-is” property, it’s often difficult to get the seller to give any concessions. But on other properties, especially those that have been on the market longer, the owner may be willing to work with you. Keeping an open mind is essential when negotiating price concessions. At the same time, asking for more than you plan to settle for is also smart. If the home is overpriced to begin with, you may ask for repairs to come in under the sale price.

Establish a Timeline

Depending on the type of loan you have, repairs may be necessary before your mortgage lender will close on a property. For example, government-backed loans from the FHA and VA, specifically, have relatively strict inspection requirements. Conventional home loans, conversely, may not require inspections at all, depending on the state of the property. 

If repairs must come before closing, you need to work the finances out with the seller. Some sellers may make repairs and adjust the sale price to reflect the home’s value. Others may agree to hand over cash after closing for you to make changes on your own.

Also, even if an inspection highlights issues, there are no guarantees that the seller will agree to pay for them. However, if your mortgage lender approves, you may opt to lower your offer and then handle improvements after you own the property. You should look into potential repair costs to prepare for negotiations and determine whether you can cover the work on your own.

With so many possible scenarios, it’s challenging to prepare for negotiations. Many potential buyers give up on a property they love because of an inflexible seller. Of course, you should keep in mind that being flexible may just win you the property you have been dreaming of.

Photo via Pixabay

5 Tips For Choosing A Home Inspector

5 Tips For Choosing A Home Inspector

You’ve finally done it! You have a house under contract and you’re doing the paperwork to get your mortgage lined up. When your Realtor calls to ask you who you want to use for your home inspection, you freeze. Your brain has to go back and repeat that part. You get to pick your own home inspector? How do you even go about doing that?

Choosing a home inspector isn’t a difficult process, but as usual, we have tips to help you make it even easier.

Read More

Assuming A Mortgage 101

Assuming A Mortgage 101

ll mortgages are structured uniquely, such that the majority of any payment made before about halfway through the loan is interest (depending on your down payment and rate), so it would naturally follow that some people would want to shortcut this early period and get on to paying on the meat of the loan. The buyer would then take over the payments from the seller, without the loan changing terms at all. This is, in essence, how an assumable mortgage works.

Read More

Secrets to Success With Your First Rental

Secrets to Success With Your First Rental

Owning a rental or two just might be a great way to bring in some extra income without having to really work for it. Plus, there’s all the equity you’ll gain as those renters pay down your note. What could be better? Rentals are hard work, even if you only have one or two single family homes. Before you buy your first rental, take some time to ponder these finer points of landlordship.

Read More