Tuesday, March 20, 2012 - 1:39 PM
The internet is full of useful sites giving plenty of great advice on the subject of purchasing a home.
In reading around the web, I found the following to be a very useful, and complete article, that covers the basics of what every home buyer should know.
What is not as abundant on the web is specific advantages and dis-advantages of purchasing REO (real estate owned) properties, or foreclosures. In the last couple of years the market has shifted dramatically from new construction home purchases to REO's which now make up the majority of the homes I inspect, and that people are purchasing. There are great opportunities with REO's to acquire a home for a VERY reasonable cost. But as an experienced Home Inspector I would like to share a few thoughts, before you jump right in.
1. If your considering purchasing an REO, of course, get it inspected!. This could save you from a lot of un anticipated expenditures.
2. Make sure you have put aside a "unforeseen repair" budget. Regardless of how thorough and complete a Home Inspection is, there can be things that make it past even the most attentive Inspector. Plan on having a small budget amount set aside for these eventualities. If it turns out that nothing unexpected happens, you can spend this budget on needed maintenance items (see below)
3. Based upon the findings of your inspection, put together a budget for repairs. While sometimes the repair costs can be minimal, I have seen many times where the repair cost are significant enough that they offset any cost savings in the purchase price of the home. Meaning the repairs make the home ALOT more expensive that initially thought. Please remember a trustworthy Home Inspector, should NEVER give you cost estimates for defect repairs. Home inspectors are impartial observers, who are there to identify defects, not contractors there to roust up work.
4. If you’re a first time home owner, be aware that there can be cost you did at first not expect when buying your home and these can build significant cost into your move in. Some obvious examples are things like. Do you own a Lawn Mower? That item along could set you back $300-$500 dollars. What about tools to repair broken sprinkler heads? A shovel, rake, screwdriver set, socket set, fertilizer spreader, hoses ... the list goes on and on. It’s important to consider some of these items, because as you can see they can quickly add up. If ALL your money is tied up in moving costs, and the home purchase, these little expenditures can and up to put a lot of stress on the budget, and you.
5. Making cookies for the neighbors.. I know kind of silly right? Imagine that you have purchased your dream home new. Now imagine that you have lived in your dream home , and added to your dream home for a number of years, the tree's you wanted, the landscaping home you wanted. Now imagine that YOUR neighbor, through a tough set of circumstances could not keep their home. After going into foreclosure, the home next store sat vacant for a year, the lawn went to weeds, kids camped out in it, vandalism occurred, broken windows etc. The weeds blew over to your yard. A tenant moved in, but you’re not quite sure why they were there, and if they were their legitimately, they moved our shortly after a few wild parties, leaving the home in a terrible state. Back to weeds. The Bank sends someone to clean it up a bit and replaces the windows. Now here come the new owners (YOU). Like I said, bring cookies to the neighbors. Chances are they have had a rough experience living next to the REO.
Hope these tips help and best wishes to you in your new home.