So I am sure those buyers who are out there looking have noticed the abundance of renovated homes that are currently on the market. I am finding there are two very extreme opinions about these renovations, either the buyers absolutely refuse to even look at them, or they will look at nothing other than a renovated home.
I would never tell anyone to not consider a renovated home, because there are some definite advantages to buying a home that has been renovated. At the same time there are some very specific things you will want to take a look at when it comes to buying one of these homes.
- How long did the renovation take? Your buyers broker will be able to tell you when the home sold to the investor, from the day it closed to the day it came back onto the market is what you want to focus on. If it was flipped within a short period of time (30-45 days) you will want to have a very thorough home inspection. The reason for this is because in that short of a time period it was more than likely a cosmetic renovation.
- What was done during the renovation? Certain things are quite obvious, but just because the home has new baseboards it does not mean that the heating was upgraded, you want to check the boiler/hot water heater/oil tank. It could be that they did not require being replaced but the only way to know for sure is to let a home inspector look at it. Don't ever assume that just because a light switch was replaced, that the electrical system was upgraded, most investors will upgrade the electric to 200-amp service, which is ideal for a remodeled home.
- How many homes has the investor renovated? More and more people are choosing to take advantage of all of those short sales by buying them and re-selling them. Many investors are well known in the Real Estate community, you may not know them but your buyers broker will be able to find that information out for you just by talking to the listing agent. Do not attempt to find this information out on your own, call your broker! I personally have a investor who has been doing this for 15+ years, and I have investors who have been doing this for 2-3 years but I only work for those who do quality work.
- What kind of warranty is provided? It is very common that new construction builds that they provide some sort of home warranty, but you always should ask if this exists on a remodeled home. Some investors will simply give you the warranty paperwork that is provided by the manufacturer of the items the put in the home; others will offer you added warranties about the work that was done by their contractors. It is not very common but you should still ask the question because it is a definite plus if they do!
Those 4 questions on the most important questions you will want to know the answers to before you put in an offer on a renovated home. Not every investor throws together remodels, but these homes are not for everyone. If you are an avid to it yourself, or even have friends that are contractors many times you can do the same cosmetic work over the course of a season as the investor did. I would like to think of myself as pretty handy, but I could never come close to what any of my investors do as far as quality of work. So let's look at a few of the perks of buying a renovated home.
The obvious perk is you are getting a turn-key home, that you will be the first to live in and will include some
sort of warranties that you ordinarily would not have.
Investors now are smart and in order to move their investments instead of rushing through the renovation they
price the home a few thousand dollars UNDER market value that means your paying less for a better home.
The reality is the renovated home came about because of an estate/short/foreclosure sale, which means the investor
has done all of the dirty work for you this is a very big perk for those areas that were really hit when the economy
went because the majority of the homes your looking at will be these renovations.
Here is an example of a renovation, mainly cosmetic but the electrical was upgraded, plumbing as well and an extensive rehab done to the property itself including the retaining wall in front.
A renovated home is not for everyone, take the time to talk with your Realtor about your wants/needs as well as your price range. If your working with a buyers broker they will be able to guide you on what kind of home is best for you. I always try to reinforce the importance of having a buyers broker working for you but it is a absolute must if you are planning on buying one of these homes. Only a buyer broker will be able to do the kind of research this home will require, the listing agents are legally obligated to get the best possible deal for the investor, not for the buyer. If you are planning on looking specifically at renovated homes I would suggest going one step farther and working with an agent who is knowledgeable on these kinds of homes, not only selling them but listing them and working with investors they will know right away what questions to ask, and what answers you want to hear !!