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Top 5 Things to consider when buying an existing house

When you start looking to buy a home for your family, you'll quickly encounter a range of opinions making it difficult to decide what is best for you. This is why the home-buying process can be complex and time-consuming, making it easy to get sidetracked by conflicting advice. To stay on track, focus on the advice from experts with extensive experience in real estate, home renovation, or title services, rather than relying on family and friends who may only have bought or built one home in their life. So, when choosing a Realtor to represent you, look for someone with a proven track record of successful buyer representation and solid local references.

Representing yourself as the Buyer in real estate transactions is attractive because it saves you the commission for the agent's work for you, but it is also risky. Stay focused on these five important factors, when buying an existing home, to make ensure you choose the right property, free from legal issues or major problems that could make it a risky investment. It also provides guidance on making budget-friendly improvements to increase the home's value and turn it into your dream home.

1. Assessing the physical condition of the existing building

Inspection information is one of the most important factors that should always be included in the home buyer's guide. A house inspection is more than a formality. It can reveal major issues regarding a house, such as structural concerns, rot, mold, pest problems, roof damage, poor insulation, outdated wiring, and more. Even though the price for an older house is attractive, you must be aware of these issues, or you may end up paying more to fix the problems. The good thing is that a defect frequently results in a better offer means a reduced real estate value, if you're not in a competitive housing market. Plus, you could condition that the home seller must pay to fix that defect before you purchase it.

2. Possible illegal improvements done at the property

Purchasing a single-family home or multi-family home with improvements without permits might have serious consequences. Buying a property with unpermitted renovations is very often a high-risk decision. You have no reassurance that the improvement without a permit was executed following safety and building standards. Insurance providers will also deny paying if the project at fault had been completed without authorization. Unpermitted work may also hinder you from obtaining a sound title, preventing you even from getting your mortgage loan. If you buy a house that had unpermitted work done to it, you may have trouble selling it. For houses with unpermitted improvements, sellers normally have to reduce the real state value because after the buyer gets possession of the property, they are accountable for any complications that may occur. Verify now, before owning a house with a shady permit history.

Looking for more info on the property? Get a full analysis now.

3. Possibilities to expand or make additions to the house

Purchasing underbuilt properties can be a wise investment decision. It is also a good solution especially when you don't have the upfront budget to purchase a turn-key house in the neighborhood that you love. A project that involves adding more building areas, if budgeted correctly, can increase the real estate value of your house while also providing functionality, space, and a great social environment.

A house improvement or a property development project can be as small or as large as you need to be, but it has to follow the City's Planning regulations. The Planning department establishes the Zoning restrictions on a property. This is the hard part that homebuyers tend to avoid since you'd have to hire an architect. It takes at least 2-3 weeks for them to draft something for you and $2,000+.

The good news is that new emerging technology companies offer cheap, quick calculations of how it could be built, the estimated budget, and the added market value.

Once you find out how much you can add to the existing house, remember the following tips to avoid a long permitting process, valid in most jurisdictions:

typically, a Zoning Certificate is required for expansions of 600 square feet, 15% of lot area or less.
Limit the demolition region to less than 50% of an existing roof or exterior wall framework.
The improvement or new addition must be at least three feet apart from the lot's existing structures.

4. Budget to make those improvements

Budgeting gets easier once you've decided the type of improvements you want to make. The challenge might be how to get the funds to pay for this improvement. Homeowners prefer to take a home equity loan HELOC. It comes with a lower interest rate, and it'd be guaranteed with the house. After the improvements are complete, you can order a new appraisal of the house and refinance the house at the new market value. This way you can pay off the HELOC and get a new mortgage that has the lowest interest rate you can get.

5. The new value on the market of the property with the new improvements

Your house is most likely your largest investment. You owe it to make improvements that would raise its worth and also increase your comfort. After you've decided on the improvements, you want to make sure they add market value to your home. If you're not interested in a financial gain, you probably won't be too concerned about the new market value. However, if you want to refinance your loan after the improvements, or you want to sell it, the new market value has to cover the cost of the improvements.