Buying A Diamond In The Rough

Buying A Diamond In The Rough



Buying a​ Diamond in​ the Rough
It may be your budget, or​ the thrill of​ doing it​ all yourself, but you are in​ the market for a​ diamond in​ the rough. But just how rough can a​ house be before a​ lender decides not to​ take the risk on a​ mortgage?
When you negotiate the contract, make sure that you include a​ provision for a​ home inspection for structural integrity, defects and potential problems. This isnt part of​ the appraisal, it​ is​ a​ separate detail. a​ home inspection ascertains the health of​ the house you are buying. Whether it​ be a​ bad roof, leaky plumbing or​ termite damage, a​ professional inspector will find all of​ the major problems. as​ part of​ your report, you will receive a​ list of​ what needs to​ be repaired or​ replaced, the time frame and the potential costs. if​ you are buying a​ fixerupper, you may find that your lender will require an inspection. Some will and some wont. But you should insist on one to​ protect your best interests.
What if​ you luck out and there are no major problems, just minor ones? Maybe the carpet is​ worn and needs replacing. Perhaps the deck needs a​ little work. New paint and fresh air could be all it​ needs.
Minor, cosmetic concerns are usually not strong enough to​ scare away lenders, but could lead to​ negotiations between the buyers and sellers. Unless youve done this before, you may find a​ good agent is​ invaluable to​ negotiate for you.
If you want certain things repaired by the seller, such as​ the mailbox fixed and the deck painted, make sure it​ is​ in​ the contract. if​ it​ is, the seller must perform. You may be able to​ have the appraisal include the repairs spelled out in​ the contract. This can help you when getting a​ mortgage, as​ lenders will only lend on the lesser of​ the appraisal or​ purchase price. Just make sure that it​ is​ all in​ the contract.
Occasionally, your seller may ask to​ perform the repairs after closing. Many buyers simply ask for a​ sellers concession. Instead of​ installing a​ $5,000 carpet before closing, the seller agrees to​ reduce the purchase amount by the $5,000 it​ will cost the buyer to​ put in​ new carpeting.
But if​ you dont have that $5,000 in​ hand to​ buy the carpet, dont expect your lender to​ give it​ to​ you. Even if​ your contract states that the seller will give you back $5,000 after closing, dont expect it​ to​ happen. Cash allowances written into contracts cant happen. The lender will not allow the seller to​ hand over cash at​ closing. Your real estate agent should steer you away from this and help construct a​ sales contract that will please both the buyer and the seller. But dont expect to​ come home with $5,000. it​ just wont happen.
Buying a​ fixerupper can be rewarding. You get to​ choose how you want to​ improve the home. But it​ is​ a​ lot of​ work and definately not for every buyer or​ lender. Your best bet is​ to​ be completely upfront with your lender about your intentions. This will help the transaction to​ go smoothly.




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