When you are in the position to fulfill your dreams of buying and renovating a beautiful, older home, it is essential to understand exactly what you are getting into financially. Serious problems with fixer-uppers will go undetected if you do not complete adequate due diligence before agreeing to a purchase. The following guide outlines the major tasks you need to complete when embarking on buying a home in need of extensive renovations.
Schedule Interior and Exterior Inspections
Hiring licensed inspectors to evaluate the condition of your home is one of the most important steps in buying an older home. An inspector will not only provide you with a list of structural defects, electrical issues and other potential problems, they can provide you with estimates on how much it will cost to repair the home.
Check for Termites
While inspectors can detect structural issues, you should hire a licensed pest control expert to check the home for the presence of termites and other critters. If the house has a serious termite infestation, it may need to be condemned and destroyed.
If the infestation can be eradicated, the pest control specialists will get rid of the insects, pinpoint termite entry points and provide you with tips on how keep the them out of your home. In addition, it is in your best interest to schedule an annual termite inspection to protect your home in the future.
The cost for a termite inspection should be included in your final purchase agreement.
Research Municipal Codes for Renovations
Local building codes dictate what type of renovations you can make to a home and specifications that you must comply with when remodeling. While inspectors and building contractors will provide you with information on these regulations, you should take matters in your own hands and review your town's building code on your own.
In addition, historical homes or houses located in historic districts may fall under more stringent regulations. If the home is in a neighborhood with a homeowner's association, you need to also check with the HOA to find out if they have rules on how you can modify a home.
Hire an Attorney to Draw up Your Purchase Agreement
When have comprehensive details about the condition of the home you want to buy, it is important to have a real estate attorney draw up your purchase agreement and help you negotiate a final purchase price. You want to make sure that any structural defects and other issues that affect the property value are included in the purchase agreement and reflect what you end up paying.
Furthermore, in some states only attorneys can draw up purchase agreements. While anyone can download a boilerplate agreement, if you are purchasing a home that needs significant work, a template will not be sufficient.
Real estate attorneys can also conduct a title search and research the history of a home for you. Above all, it is important to have an attorney scrutinize every document you need to sign when you buy a home. If the seller reneges on stipulations of the purchase agreement, it will be easier to bring legal action against them when you have an airtight purchase agreement and an experienced attorney in your corner.
While buying a fixer-upper home can be a great way to acquire the home of your dreams, you need to be realistic about what you are getting into so you do not end up with a home that turns out to be a dud. Completing the steps above will ensure that you are really getting a diamond in the rough and not a money pit.