“If you do decide to buy a home with a serious problem, get several quotes to find out what the issue will cost to fix,” suggests Christie Bieber at Fools.com. “Don’t ballpark the cost; the last thing you want is to take a $200 credit for a curled roof shingle, only to find out that the underlying problem requires a $10,000 roof repair. If the seller is going to solve the problem, confirm that a qualified and licensed contractor is doing the work, so the seller doesn’t do a low-cost patch-up job that gives you problems the minute the paperwork is signed.”
2. The Home Appraises for Less Than Your Offer
While a home inspection reveals the condition of the home, a home appraisal determines the value of the home. In some cases, an appraisal will show that the house is worth less than what you offered. If you continue with the deal, this means two things: 1) you’ll be overpaying; and 2) you’ll have to come up with a larger down payment. For example, “the bank will typically only lend you 80% of the value of the home, unless you want to pay for private mortgage insurance. So, if you’re buying a $200,000 home, you’ll need to come up with a $40,000 down payment, and the bank will lend you the remaining $160,000,” explains Bieber. “But if that home then appraises for $175,000, then your loan-to-value ratio will be 91% ($160,000/$175,000). In order to satisfy your lender, you’ll need to raise your down payment to $60,000.” In the end, it might be better to walk away, unless the seller is willing to drop the price to the lower appraised value. You should never buy a home that’s worth less than you’re paying for it.
3. The Title Search Reveals Unexpected Claims or Issues
143
Powered by FlippingBook