Buying a Foreclosure or Fixer Upper vs. Move-In Ready Home

One of the most frequent questions I get from Home Buyers is whether they can buy a “fixer-upper” home or not. The answer I give them is, “It Depends.”

 

There are lots of considerations when deciding what type of home you’ll invest in. One that is “move in ready” or one that needs some work.  It will depend on whether you can put in the “Sweat Equity” or if you are getting a loan in which the home must be “safe, sound, and sanitary.”

 

If you’re looking to put in some work and have money to put down, you should consider purchasing a foreclosure or a “fixer-upper”.  You should go to your lender first to make sure you can invest in this type of home. You will more than likely need a higher down payment and need to get an appraisal both pre and post repairs. I always encourage buyers to make sure you do a thorough inspection when purchasing. You can run into some expensive repairs that could cause some major headaches and undue stress. Even if you’re purchasing ” As Is”, know what you’re buying.

 

When you’re making those repairs, are you planning to do them yourself or contract them out? I would suggest getting bids on the needed repairs when making the offer. If you’re going to do them yourself, don’t cut corners! You’ll be glad you did the appropriate repairs if you ever decide to sell your home. One of the worst things you can do is cut the corners and have to do the repairs again for a new buyer. It is possible that you can finance in those repairs with your home loan. Get all the Facts First!

 

Some key things to ask yourself:

  • What will the total investment cost you, before and after repairs
  • What will the home appraise for before and after repairs
  • Can you do the work yourself or can you afford to contract out the repairs
  • How ‘resaleable’ will your home be if you had to sell it quickly
  • Do you have the time to invest in the repairs
  • Can I finish the repairs in a timely manner
  • Have I inspected this home thoroughly and looked for hidden defects
  • Do I have the money I need to complete these repairs

If you’re anwered “yes” to these questions, then Bravo! Get to work! Sweat Equity, Here I come!

 

If you’ve answered “no” then maybe you should look at a home that is move in ready.

 

There are certain advantages to buying a home that is move in ready.  If you don’t have the money or time to invest in repairs, then buying this type of home may be what you need. You can typically purchase one with  a lower down payment.

Regardless of which way you go, be sure and work closely with your Real Estate Agent and your lender to see what is best for you. Your Real Estate agent can help along the way with each concern that may arise.  When making your decision, make sure your agent writes your offer with your best interest in mind. In the AR Real Estate Contracts, your agent should excerise your right to the 10 Business Day Inspection Time frame. Either way, you want to make sure you know what you’re buying and if it’s the right choice for you. Sometimes, you may think you’re buying the move in ready home, only to find yourself making lots of repairs after the purchase! Don’t fret, find yourself a good agent. If you need an Agent in the Clarksville Ar or Russellville AR and surrounding area, Call Teresa Smith, RE/MAX First.

What to expect when Inspecting…

So, you’ve gotten an accepted offer on the house of your dreams…Now what?

There are many things that must be done, but for today, we will focus on your inspection.

In AR Real Estate contracts, there is verbiage that state you will have 10 business days to inspect your new home. Unless you and your agent make changes to the contract, you should focus on that 10 day time frame. Remember, it is up to you to inspect your home and know what you are buying.

There are a list of  licensed home inspectors that your agent can provide you with. These home inspectors are typically not licensed in any specialty, ie…heating/air, electrical, plumbing, or structural engineers. They will do an inspection of the home using a checklist of items that they will inspect. Once they’ve done the inspection, they should walk through the home with you and discuss any issues or areas of concerns. If there is something that doesn’t meet the requirements, they may encourage you to have a licensed person reinspect that particular item. The licensed inspectors may charge $200 or more depending on the size of the home. I encourage All Buyers to get a Professional Inspection.

If there are some repair concerns, the Home Inspector will go over them with you and give you a checklist of things that you may want to consider having repaired by either yourself or the seller.

Once you’ve done your inspection, you can:

  • Sign an Inspection, Repair, and Survey Addendum stating that you have fully inspected the home and you are Not Asking the Seller for Repairs.
  • Sign an Inspection, Repair, and Survey Addendum stating that you ARE Asking the Seller to Do Repairs. These repairs will be negotiated between the buyer and seller.
  • Sign a Termination stating that you are not happy with the Inspection and you want to Terminate your offer.

You will have the right to re-inspect the home prior to closing to assure all repairs, if being done by the seller, are performed to your satisfaction. Your agent should be Extremely Specific on the repairs you ask for. Remember, it is still up to you to fully inspect the home and make sure everything is done to YOUR Satisfaction. Once you’ve done your final walk-through (This should be done just prior to Closing) you will be asked to sign off on the home stating you’ve had the right to inspect it and you are accepting the home.

Does this sound like too much information? Don’t Fret, Because if you are using a Real Estate Agent, they should walk you through these steps… one by one! We will make sure you have all of the crucial information at hand to protect your interest.

Be an informed Buyer! I’ll be happy to represent you if you are looking for Real Estate in The Arkansas Real Estate Market, preferably, in the Clarksville AR, Russellville AR, Ozark AR,  and Arkansas River Valley areas. If you are wanting an agent outside of this area, feel free to contact me and I can help you find an agent in your area.

Have a Great Day!

Teresa Smith

RE/MAX First

 

 

 

First Steps to Buying A Home

I get a lot of questions from potential buyers asking ” Where do I start when I want to buy a home?” Well, my First suggestion is to find a Realtor®. One that was either recommended by someone you know or an agent that you feel comfortable talking to. It is your right to choose your agent. You may have to interview a few of them to find the one you feel comfortable with. There is something called a “Buyer’s Agency” that a real estate agent should ask you to sign. This is permission to represent you as your agent. It is AR Real Estate Law that one is signed by the buyer. It will also give permission to be a “Dual Agent.” A Dual Agency just means that the agent can represent you, as well as, the seller. So, if you look at homes listed by the company the agent works for, they represent that seller. If you’re not comfortable with that, you should discuss this with your agent.

The Second suggestion would be to meet with a lender to get Pre Qualifed for a loan. You can use a lender from the bank where you do business, or perhaps your real estate agent can give you a list of lenders in your area.

It is very important to get the Pre Qualification because:

*You will know if you meet lender requirements to buy the home
*You will get an estimate of what your closing cost and/or out of pocket expenses will be
*You will know what Home Price Range to search in
*You will know what your estimated monthly payment will be ,including taxes and insurance
*You will know what loan type you qualify for;  Your agent can help you find a home that meets loan requirements
*It saves you time. So when you find the home you like, you can write an offer quickly. Some sellers may require that you provide a “pre-approval” letter when submitting the offer.

The Third suggestion is Have Fun! Look at homes that are within your budget. You may need to look at several before deciding on the one you like. Once you find the one, let your Real Estate Agent help you write the perfect offer to protect your interest.

Mortgage Interest Rates are still at Record Lows! More than likely, you can buy a home cheaper than paying rent. There are loans out there that require as little as $500 Down. Some programs will even assist in your down payment. Take the first Step, Choose me as your Realtor®.

Put me to work for You!

Teresa Smith

RE/MAX First Realty