Buying a home can be stressful and overwhelming, thanks to various factors at play. Lending, for instance, can be affected by the home’s appraisal value. If you’ve recently become self-employed, even obtaining a mortgage can be difficult. One question to ask yourself before buying is whether you should buy a house “as-is” and what that term actually means. There are both advantages and disadvantages to buying homes “as-is,” so it is certainly something to consider. These insightful tips presented by The Scislow Group will help you make a decision that works well for your needs and budget.
Seller’s Repairs
There are certain items such as structural issues, mold problems, pest infestation, or a leaky roof that sellers will not fix prior to selling. This means that a house sold “as-is” will come with these problems and the buyer should be prepared to take the house in its present state. Additionally, “as-is” means that the house will come with existing structures on the property such as a garage, a swimming pool, fireplaces, and appliances.
Repairs that sellers are more likely to take responsibility for are typically cosmetic, notes Inman, such as new hardware in the kitchen, new caulking in the bathrooms, painting the exterior of the home, or filling any cracks. Larger repairs such as HVAC systems should have been repaired before the house went on the market and will not likely be repaired at this point. Remodels are also costly but will increase the overall price of the house, as will smaller repairs, too.
Negotiating Repair Expenses
After a failed property inspection, certain big repairs can come to the surface. These are not required to be fixed by the seller, but they can be negotiated. Maximum Real Estate Exposure explains that, many times, buyers should request that the seller fix large repairs such as a termite infestation, major water problems, significant plumbing issues, or even remaining lead paint. Although the seller can refuse the request, it is wise to ask and use this as a negotiating point. For such large repairs, it’s a good idea for the buyer to gauge how much it will cost to fix.
Sellers will sometimes offer furniture, appliances, or a home warranty as a means to ease concerns. Buyers can, however, enter a contingency clause into the agreement to ensure the seller makes all repairs they promise to do. In this case, up to one-and-a-half times the estimated cost of the repairs can be held in trust from the seller’s earnings and used for the repairs after closing. You can also ask the seller to reduce the price due to the necessary repairs. Buyers can always back out of the transaction, as well.
However, passing up an offer of a home warranty doesn’t mean you should skip this altogether. Purchasing a home warranty is an excellent way to ensure you don’t get hit with costly repair bills down the road. How will you know if a home warranty is worth it? If the peace of mind knowing you’re covered doesn’t seal the deal, the first time the warrant helps cover the price of a repair surely will.
Repair or Closing Credit?
Making the decision between repairs made by the seller or a closing credit can be tricky. Some sellers ask for a higher price on a home in anticipation of buyers asking for credits, and buyers asking for credits just to get the cost down may be taking a risk. This makes ascertaining how much the home is actually worth even more important, as you’ll need to have a solid number in mind as a starting point before choosing to either repair or request a credit at closing.
A seller can go back and accept another offer from a new buyer if more concessions are requested after inspections are completed and the closing date is in sight. However, sellers may also try to avoid credits by completing repairs during escrow.
If buyers fully expect repairs to be made by the seller, begin by asking for the seller to complete the repairs. If they refuse, move on to asking for a closing credit. This will help assure the seller that you, the buyer, are not simply trying to lower your own closing day costs.
In closing, buyers should always have a property inspection completed before purchasing a home. Ask for any big, necessary repairs to be completed by the seller prior to closing. If there is a counter-offer as to repairs the seller will complete, consider them, and respond to negotiate. If the seller refuses outright, ask for a closing credit to complete the repairs afterward.
When you’re ready to begin your search for a new home, The Scislow Group is ready to help. Contact us today by calling (612) 747-9900.