Summary: You may have come across listings that specify that the home will be sold in “as-is” condition. But what does this mean? And should you consider buying a home like this? This article will discuss the pros and cons of buying a home that the seller will not take responsibility for fixing before is transferred hands.
Buying a fixer-upper in Washington can provide you with benefits that include adding in instant equity. By snagging a home that needs a little TLC at a bargain price, you can effectively fix it up yourself and increase the value of the property, bringing you quick financial rewards by doing so. But, there are also some precautions that buyers need to take when buying a home that is advertised “as-is” condition.
When considering buying a home in an “as-is” condition, the buyer takes all the risk of anything needed to bring the property back up to current building codes and make it ready for occupation or re-sale. There can be bargains in as-is properties if you know how to hunt for one.
How To Find As-Is Bargain Properties
To find these properties, look for those that sell at auction for tax liens or other reasons for governmental asset-seizure. The might be distressed as-is properties in WA that are foreclosures, short-sales, or estate sales.
A popular home-flipping strategy is to buy an as-is property at a price that is far below market value, make the repairs necessary, and then resell the home for a price that covers the repair costs plus makes a profit. Many people may do this with the intent of selling very quickly to minimize their carrying costs, while others adopt the “buy and hold” approach and allow time to appreciate the value of the home while they collect rent checks.
Regardless of the approach you take, fixing up a home after buying it as a discount is a viable way to make a profit in real estate.
Tips On Buying As-Is Properties
It is a guessing game when buying an as-is property in Washington State. There may be very unpleasant surprises for repairs that are very costly and are not obvious. Hidden problems include major plumbing troubles, severe electrical system repairs, shifting or broken foundations, dry rot, and termite infestations.
- Home Inspection: Conduct a professional home inspection. This is insurance to avoid a serious mistake. It is worth the few hundred dollars to pay for one, even if you do not get the property. Your home inspector will have the expertise needed to identify any potential problems that may exist in a home that you may not be able to notice on your own.
- Work With A Contractor: Being a contractor yourself is great. Many contractors buy and flip houses when not working on projects for others. But if you are not a contractor, the next best thing is working or partnering with one. Just doing a walk-through with a remodeling contractor helps identify things that need to fix. Then, the estimates for the renovation can be done more accurately.
- Major Systems: Assume the major systems will need work or replacement. The biggest unknown expenses in a renovation come from the heating, cooling, and other major systems. If you are able to account for these major expenses in your calculations and still expect to see returns, then you may have a good deal on your hands.
- Check Drains: Running water into the sinks for a few minutes is an easy way to see if the drains are blocked. You will also want to flush all toilets in the house or even turn the water on in shower stalls and bathtubs to uncover any potential issues with the pipes.
- Roof: Based on the home’s age, assume the roof needs replacement if the roof is more than 20 years old. Inside the home, look for evidence of roof leaks that left behind stains on the ceilings and walls that are signs of water damage. Any water damage can be costly to fix, as it can lead to mold and other hazardous conditions that will need to be rectified.
- Probe For Termites: Drill tiny deep holes into wood, in an inconspicuous area, to test for termite infestation and/or pay for a pest control inspection. Termites and other types of pests can wreak havoc on the integrity of a home’s structure, so identifying their presence right away and eradicating them from the home is important, and is a cost that will need to be factored into the equation.
- Foundation Problems: Go into the crawl space under a home to look for foundation problems, such as major cracks and shifting. Another indicator of ground movement and settling, which may be a problem, is that the doors in the home are not level or plumb and do not close properly.
Should You Buy a WA Home in “As-Is” Condition?
It is possible to get a bargain when buying an as-is property; however, it is not a certainty. If you are just starting with flipping houses, it is better to partner with professionals to get helpful guidance. Work with a qualified real estate agent who specializes in distressed properties and partner with a reputable building contractor to increase the chance of success.
If you are in the market for a new home in Washington or interested in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss financing options.
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