Renovating a Foreclosed Property
Buying a foreclosed property can be lucrative, but you need to be sure of the condition of the house before you buy it. During the foreclosure process, it is unlikely that the homeowner would have kept up the maintenance. In addition, the property may have been further neglected while it is in the process of being sold. There may even have been vandalism. If you have purchased a foreclosure before, you probably already know this, but if you are new to foreclosed home purchases, read on for some helpful hints about the renovation process.
Occasionally, you can buy and resell a house in “as-is” condition. However, most of the time, you will have to do some work on the house in order to make it saleable.
First, assess the overall condition and structural integrity of the house. Look for major cracks in the walls, out-of-square doors, water damage in the basement and floors that seem to sag. If you see these things, it’s time to get the home inspected by a professional and then hire a contractor to do the needed work. This is not for the average do-it-yourselfer.
The roof is also very expensive to repair but it is essential that it be in good condition before resale. Your prospective buyers will hire appraisers to be sure the roof is solid so you need to plan for the cost of any needed roof repairs when you make your bid.
Next, inspect the wiring and electrical connections. Look for any signs of charring or loose wires. The house should be equipped with a GFCI (Ground Fault Circuit Interrupter) system.
Heating and central air conditioners are expensive to replace. They should be inspected by a professional before you buy. Again, even if they don’t look good, it doesn’t mean the deal is off. Rather, you need to be sure to plan for the replacement cost when making your bid for the home.
Now on to some of the areas that, while not safety related, are none-the-less essential to the resale of the house. The areas that potential buyers look at most critically are the kitchen and the bathrooms. Unfortunately, these are the most expensive to renovate. You can sell a house with old and out of date baths and kitchen but it will take longer. Remember that the time it takes to sell, not just the price, is a factor in the determination of the profitability of the deal.
The windows and doors are among the first thing prospective buyers see. If the windows and doors are in poor condition, or if they are of a very old design, you may need to replace them.
Two areas will almost certainly require attention: Plan on repainting the interior and replacing the carpets.
Do not overlook the light fixtures and ceiling fans. These are not expensive and generally, you can replace them yourself. They add significantly to the overall ambiance.
The matter of the outside of the house and the landscaping is a trickier matter. Beautiful landscaping is conducive to the salability of the property but it is expensive. Also, it usually takes time for the newly planted shrubs and trees to grow and have the desired effect. At the least, be sure that the outside is trimmed and tidy. Just how much more time and money you want to put into the landscaping will vary from site-to-site. If you elect not to paint the house you should at least be sure it is clean.
In summary, it is up to you to understand the condition of the property and to set your offer price accordingly. Sometimes the deal that looks great at first isn’t really so great, if you have overlooked a lot of expensive repair work.
Original: Renovating a Foreclosed Property