Is It a Fixer Upper or a Money Pit?
Who doesn't want to get a great price on a home? If you are hoping to find that bargain, and don't mind adding some sweat equity, then a fixer upper may be just the ticket for you. The problem occurs when that fixer upper devolves into a money pit, and that bargain becomes a nightmare. So how do you distinguish between a fixer upper and a money pit? Here are some tips to guide you along:
The As Is clause: A likely sign that a property is a money pit is the "as is" clause. While it may simply indicate that the seller is not willing to make any repairs for the sale to close, often it indicates that the house could need major upgrades or repairs for you to get a mortgage. If you do want a home with an "as is" clause, make sure you get a thorough home inspection.
Dated electrical system: If you see an old fuse panel, a small breaker panel, or fabric-covered wires, chances are you may be in a money pit. Updating the electrical system can cost a lot of money, and not updating it creates the potential for a fire hazard.
Strange smells: At no time do you ever want to smell something odd, and that statement is even more so when viewing homes. These smells can indicate mold, mildew, rot, animals, infestations - or something unidentifiable. Getting to the root of the problem can be both time-consuming and costly.
The roof: Look up top - what do you see? A sagging roof line? Missing or peeling shingles? Layers of shingles? Any of these can signify the potential for shingle repair or roof rot, and may require structural changes to make the home safe.
Foundation issues: Now look down. The foundation supports the entire property, and issues here will cost you. Cracks in the masonry, shifting, and moldy basements tell you that a home is not rock solid.
There's nothing wrong with buying a home that needs repairs - even major repairs. But before signing on the dotted line, make sure you understand the full scope of the repairs that need to be made and how much they cost. Don't forget to add a buffer to your budget either. The cost of being prepared is priceless.