For homebuyers on a tight budget, it’s tempting to consider buying a home in need of repairs; it may grant you access to a coveted neighborhood or a larger home than you could otherwise afford.
But sometimes, a fixer-upper can be more than you (and your budget) bargained for, and the home seller is the one who ends up with the great deal by unloading their problem home on you.
Money Crashers offers these five things to watch for that could be signs you’re investing in a money pit.
- The listing says ‘as-is.’ This signals that the seller is not in a position to make any repairs before selling. Before you proceed with such a home, find out exactly what repairs will need to be made and get a quote or two from a contractor. If you’re afraid of losing the home while you investigate these costs, make an offer with an escape clause in the contract. Also, be aware that the appraiser must sign off on the house as habitable, which is a condition for most home loans.
- You smell moisture. If the air smells damp or musty in the home, it could be a sign of water damage and mold, which can quickly make a home uninhabitable. Have a mold test done and carefully investigate ceilings for leaks, and basements and foundations for cracks.
- Sloping or sagging floors. If the floors look uneven or seem to be sloping, this could be a sign of serious structural damage. A simple way to know for sure is to place a marble on the floor and see if it rolls on its own. Keep in mind that homes shift as they age, so a slight slope isn’t necessarily a cause for alarm. But a major issue could involve replacing the framing, joists or subflooring, which would be very costly.
- Roof problems. While roof repair may sometimes simply involve replacing a leak, more serious problems could mean replacing the entire roof. This could also mean costly repairs to sheathing, trusses, beams and rafters. To identify serious roof problems, look for cracked or missing shingles, or a ruffled look. It’s also important to check the ceilings on the top floor of the home for discoloration, bubbling paint, mold or other water damage.
- High energy costs. If you’re entertaining a fixer-upper, ask the seller for 12 months of energy bills. If costs skyrocket in winter and summer, it could mean old windows and leaky frames, poor insulation or, most expensive of all, poorly designed ductwork. That said, the federal government offers energy efficiency tax credits, which could help reduce renovation costs.
Before you commit to a fixer-upper, make sure you know all the issues that will need resolving, and exactly how much it will cost.