Steve and Tiffany were so excited to find the charming brick bungalow on a tree-lined street. It was in an area they had been looking at for several months and it had just come on the market that morning. Their enthusiasm was high as they went through the home, noting all the wood trim and spacious floor plan of a 1940s bungalow. It was exactly what they were looking for. A home where they could strip off the layers of paint and wallpaper and restore its former charm. Since Steve and Tiffany could come up with a 20 percent down payment, they opted to finance conventionally to avoid PMI costs. The deal closed three weeks later and two happy buyers moved in ready to start their renovation project.
It didn’t take long before the new homeowners discovered the problems. The gas company tagged the furnace because the service tech suspected it had a cracked chamber and the vent pipe was too near a wood joist. Other problems, typical of older homes that haven’t been upgraded, added up.
Unfortunately, the buyers had spent most of their money buying the home and didn’t have funds for the major problems they encountered. Interestingly, Steve and Tiffany felt that the bank’s appraiser would find any problems and list them on the appraisal. In reality, an appraiser is interested only in the overall value of the home as compared to others recently sold in the neighborhood. The appraiser’s job is to ensure the home is worth what the bank loans on it. So what should Steve and Tiffany have done differently? First, they should have hired a profession inspector. The inspection report would have outlined exactly what problems lurked under the rafters, joists, and in the dark spots of the basement. The buyers will know the condition of the appliances, furnace, water heater, and plumbing The buyers will have a list of problems and about how much it will cost to fix them. They’ll go into the sale with both eyes open and won’t have to max out their credit cards on unforeseen repairs.
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