As you get preapproved and embark on your homebuying journey, you will soon discover an array of different homes. Some homes are in good condition, some in excellent condition and others perhaps in poor condition. Here are some things to consider as it relates to whether the house truly needs work when deciding to make an offer on a home…
Let’s say a house on the market for $500,000 and there’s some deferred maintenance around maybe $10k. The house has been on the market for a couple of days and comps in the area support $500-$520k for example. Just because the house needs $10k of work does not necessarily mean you as the buyer can just automatically assume the seller of the house is going to do the work for you or the because the house needs work you are entitled to a reduction in the purchase price of the house. In other words, put yourself in the shoes of the seller. You’ve had for a few years and it’s time to upgrade and sell it and move into something else. You know the house needs a little bit of work, but it’s priced correctly for the market and the comparable in the area support it therefore the market value should be consistent in the neighborhood in which you have it presently listed for. Do you make repairs or sell as is? The answer depends on what a ready, willing and able buy would be willing spend in this market.
Does the house truly need work right now or can be completed over the course of time? Can you buy a home “as-is” and make the repairs or the adjustments to the home as your home equity, income, and finances otherwise support? Most sellers want to sell the home as quickly as possible in most situations, not in all, but probably 90% of the situation’s that are out there. A seller and a real estate agent want to do everything they can to sell the property. Obviously, something that’s detrimental to the home such as subterranean termites, or some major structural issue will probably be known and disclosed at the beginning because it’s in the seller’s best interest to do so. Something along those lines for you as the buyer would have to get fixed or cured right away depending on loan type. If that’s already a known element, you could probably buy the home and make the repairs later. You’re under no obligation to buy the home and the seller by the same token, is under no obligation to make the repairs to the home, but the feeling of “I am a buyer and therefore I want to get a deal on the house just because” may not bode well in today’s present real estate climate.
The house might not need as much work as you think it does. The beauty of homeownership is you can always adjust and repair the home as you see fit. If the house is too small, you can do an addition. If it’s in the right area in the right location, you can do that, if the house isn’t the right color, you can paint the house and make it whatever color you want. If it doesn’t have the extra bedroom that you want, you can put up a wall and make a bedroom. There’s so many different facets and elements to homeownership and you literally have endless options. That said not making an offer on a home because it’s not the right color or the house needs some work is linear way of evaluating a home. Lets say the house needs work but these elements are met..
- great location
- good bones
- equidistant to work/family
- enhance qualify of life
- makes you wealthier
- increase your credit
If the homes has any of most of these six elements and the house needs work, it still make prove to be a sound financial choice.
Ok, so you cannot get past the work the home needs…
Let’s define what that work actually is and maybe you might buy the house move into it as your primary residence and then realize the repairs that you thought during the home search process that had to happen don’t actually have to happen. These are things to consider. It is a wise best practice to be working a with a quality lender, and the quality real estate agent so you can decide for you and your family what makes the most financial sense.
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