What we'll cover
Considerations when buying a home that needs repairs
How to review a home inspection report
Different approaches to negotiating home repairs
When the housing market is tight, buying a home that needs some love could help you get a deal on the purchase price. But how do you decide where to draw the line on what's doable (and what's too much) when it comes to repairs?
Minor vs. major fixes
Once you make an offer on a home, a home inspection will help you understand the scope of any problems. The inspector will examine the property from top to bottom, looking for issues to include in the inspection report.
It's important to read this report carefully so you understand any minor or major repairs that may be needed. Minor repairs might include leaky faucets, windows or doors that stick or a light fixture that needs to be replaced.
On the other hand, you might need to spend considerably more time and money repairing issues such as:
Roof leaks
Faulty wiring or significant electrical issues
Major plumbing leaks
Inoperable HVAC systems
Foundation cracks
Septic tank or septic line damage
Termite infestations
Asbestos
Lead paint
Mold
Water damage
These usually require professional assistance. Plus, depending on the type of mortgage loan you're getting, you may need to address them before you can close, which could add a wrinkle to your plans.
When staring down a steep bill, negotiating with a seller to pay for fixes is the first step.
Who pays for home repairs?
If you're buying a home that needs repairs, you might be wondering who has to take out their checkbook — you or the seller? The good news is home repairs are usually negotiable. You can take different approaches when it comes to handling repairs, such as:
Ask the seller to make repairs: This spares you the trouble and expense of making repairs yourself.
Request seller credit at the closing: This credit is a lump sum paid to you by the seller to cover repairs.
Ask for a home warranty. If the home you're buying needs repairs, but they aren't pressing, this can help with the cost of any major fixes you make after moving in.
When staring down a steep bill, negotiating with a seller to pay for fixes is the first step. This is something your real estate agentor broker can do on your behalf.
Keep in mind: Sellers aren't required to pay any repair costs. Even if they do agree, they may limit their financial responsibility to minor repairs. That means if you need a large fix, like a roof or HVAC replacement, you could bear the full expense.
Run the numbers
Once it's clear which repairs are officially on your plate, you can decide if it's worth moving ahead with the home purchase. To make the right decision for you, start with these questions:
How much will the repairs cost in total?
How long will it take to complete them and will the home be livable in the meantime?
Can you do the repairs yourself (or with your partner) or will you need to hire a professional?
How much can you afford to put toward repairs?
For that last question: If buying a home leaves you short on cash, you may need to look into various ways to pay for home repairs or renovation.
If you haven't yet, determine your monthly mortgage payments before deciding whether you can afford both the home and the repairs it needs.
Also, don't overlook the time factor. If you're doing repairs yourself, consider how quickly you'll be able to complete them. Even something simple can drag out for months if you're only able to work on it on the occasional night or weekend.
Find the right mortgage
When buying a home that needs some TLC, getting the best mortgage rate possible can be a big help. Having a great credit score and working with a lender that doesn't charge lender fees, like Ally Home, can also put home repairs within reach.
Stay level-headed
Buying a home is a lot of work, especially when your future home has a project or two. But with the right tools (financial and literal), you can feel confident in your choice, whether you walk away or roll up your sleeves to start repairs.
