|Things to look for when you buy fixer-upper
Buying a Sonoma County fixer property? Be prepared to do some work.
What many see as a fantastic fixer-upper property, potential property issues associated with the dwelling could easily derail an appraisal and your mortgage loan. Key characteristics the property you’re interested in purchasing has some “hair on it.”
Red flags that could jeopardize your mortgage
• Mortgage tip: it’s all about the appraisal and purchase offer. If it’s not listed in the appraisal or the offer, it shouldn’t delay or deny your loan.
• Roof: Many local resale properties have worn-out roofs. In such a situation, your real estate agent will already be working a solution for it.
It’s best to obtain at least several quotes to determine how much more economic life the roof has.
If the roof is completely done or, worse, has a leak, and it’s identified in the appraisal as a “subject to item,” it will have to be fixed in accordance with the comments made by the appraiser.
• Open sub floor: This is an automatic red flag because it presents a safety concern for the buyer of the property.
As such, it is guaranteed to stop the loan process at the appraiser until new flooring is laid and the appraiser signs off on it.
• Exposed Wiring: This seems silly, right? Well, houses throughout Sonoma County contain exposed wiring either on the exterior or the interior, which poses a lending monkey wrench.
Any open and exposed wiring would be best suited to be repaired prior to the appraiser visiting the property.
• Dry rot: This depends on the individual appraiser on whether or not they view it as a conditional repair item. In most cases, appraisers simply want the rotted area repaired.
• Pest damage: If the pest damage is visible to the naked eye, then yes, it’s probably going to be noted in the appraisal for the pest damage to be repaired. However, it’s more common to be a concern when it’s identified as a condition of the real estate purchase contract, at which point it must be fixed.
Making necessary repairs
The buyer, seller, listing agent or realtor buyer’s agent, can pay for repairs critical for loan clearance. More commonly, the buyer typically pays for such repairs to the property, but this is always negotiable. It can be paid for by any one of these parties and can be divided up as well. As a prudent homebuyer, you’d want to make sure your loan is lender approved prior to making such repairs.
The last thing you want to deal with is shelling out dollars for repairs for a house you don’t own yet, when your mortgage lender hasn’t given you the sign off.
There are other repairs that inevitably pop up when evaluating homes, including the need for a CO2 detector (became law in July 2011), obvious repairs such as broken windows or an unstable deck are all examples of things that will likely need an appraisal clearance.
Scott Sheldon is a local mortgage lender, with over six years of experience helping people purchase and refinance primary residences, second homes and investment properties. Visit him at www.sonomacountymortgages.com.