Owning a home is a unique experience. Good or bad, it’s rife with the potential for memories, discoveries, and lessons learned. It can also be nerve-racking, especially if you find yourself in unexpected situations.
These situations can easily escalate when you take ownership of someone else’s property. Unless you are intrinsically involved in the construction of the home, it’s difficult to truly know the overall condition and value of your purchase.
When considering or looking at a property, it’s good practice to keep two things in mind:
- Minimize emotion
- Don’t judge a book by its cover
When making decisions, I recommend using keen observation, facts, and careful due diligence . Also, it doesn’t hurt to add a little faith into the mix. Taking a chance (along with proper due diligence) can pay off down the road.
Observation of an Open House
Twenty-five minutes before Brian and I stepped into our current home for the first time, he and I were actually visiting the open house of another property a few miles away. To us, that open house was the most blatant display of substandard quality and finesse from all parties. It was a bizarre atmosphere cloaked in arrogant greed and charmed ignorance. The seller and his old neighborhood friends commingled with excitable prospective buyers.
It turns out that the seller had received the home from a family member. He grew up in the area and was very excited to share with us that he flipped the house himself. We took our time roaming around, but we immediately noticed the unfinished baseboards and a sewage smell coming from the ‘hacked-together’ downstairs bathroom. The house was overpriced. It sat on the market for 7 more months.
Brian and I could see that the seller wasn’t detail-oriented right off the bat. There’s no telling what else he missed or covered up beneath the surface.
Flipped homes have flooded the housing market. Investors continue to work through areas with low inventory and the possibility of profit. They snap up homes at a steep discount, and within a few months, many of those homes reappear on the market with glossy, ‘magazine-ready’ finishes and much higher price tags. Some buyers score beautifully remodeled homes backed by quality workmanship. Others, unfortunately, aren’t so lucky.
New Build Shock
Tam Gonzales and her family unpacked their belongings in their newly built home. A substantial purchase at nearly $500,000, this home was the beginning of a new chapter for the family. Little did they know, they would have to pack everything back up and move out just a few weeks later.
Despite being a brand new build with permits and inspections completed by the city, the home was ultimately found to be plagued with dozens of construction defects. As walls bowed and sloped, the attempts to reconcile poor craftsmanship only revealed more negligence beneath each piece of drywall. City officials and contractors pointed fingers at one another while the family remained in limbo. From poor quality lumber and insecure walls to more serious structural issues, it’s obvious that the home should never have passed inspection.
Beneath the Layers
Within months of moving into her ‘dream house’, Jennifer Bachler faced crumbling drywall and falling ceilings. The newly flipped home revealed a litany of issues concealed by patchwork and fresh paint. After two years of ownership, Jennifer has spent $5,000 on repairs with a potential concern of a $7,000 roof replacement due to rotting beams.
The Hoppaugh family purchased a home from a local real estate brokerage firm that specializes in flipping properties. Unfortunately, despite hiring an inspector, they had no way of knowing that the firm concealed water and termite damage. Inspectors are not able to open any walls during their evaluations.
After the home purchase, the Hoppaugh family attempted to replace the kitchen cabinets. This renovation revealed a nightmare hidden beneath the floors and within the walls.
While the examples above provide insight into deceptive measures, the accounts below address opportunities lurking in decay and neglect.
Vincent Orr landed two incredible deals through public auctions from the Detroit Land Bank Authority (DLBA). The DLBA auctions off run-down, publicly-owned properties to increase land ownership opportunities and return blighted properties for productive use.
Orr purchased TWO single-family homes, one for his mother and one for himself, for less than $5,000 total. Both homes required a great deal of work to ensure livable conditions. His mother was able to move into her new home just 9 months after the purchase.
Mortgage-free, Orr happily continues to renovate his properties as he builds equity.
A couple in Baltimore, Maryland wanted to move back to where they grew up: North Carolina. An online search led them down the rabbit hole of houses, where they discovered a dilapidated 109-year-old mansion for $155,000. Abby and Trey Brothers took a risk together. They headed to Aberdeen, NC, walked the property with multiple contractors to determine the work required, and secured a $423,000 loan.
Their 6,000 sq. ft. home cost $268,000 to renovate. The value of the home is now listed at over $900,000.
A 6-Month Deadline
Chris Hanson and his fiancée Merle restored a condemned 1887 Queen Anne to livable conditions in just 6 months. They stumbled across this Newburgh, New York property for $46,000. Despite holes in the roof, animals living throughout, and a busted waste pipe that resulted in sewage inside a wall, the couple knew they could restore the home.
A local bank agreed to lend them $100,000 (the cost of the home plus renovations) with the condition that the home must have major structural repairs completed and plumbing and electrical up to code within SIX MONTHS.
So, Chris and Merle forged ahead. They lived in the home while they did most of the work and hired out the services required by the city. It was February in Upstate New York. With no running water and heat, they showered at local gyms, improvised what they could, and bundled up to stay warm. Together, they completed demolition, new wiring, and reframing. The home began to take shape. With a single extension for siding, they made their deadline and secured the loan. It took them nearly two years to complete the remainder of the restoration. You can see their finished restoration and learn more about their story through This Old House.
These stories offer different perspectives and overall experiences of the ‘first impression’. The housing market is a hard one to navigate. How do you know which properties are worth a deeper look? Is it best to own a renovated property or one that requires renovation? Many mishaps and frustrations stem from a combination of unethical flippers and uneducated buyers.
So, when you’re ready to jump into home ownership, try to arm yourself with as much education as you can. Read, read, and read some more. There is always a chance that you might become disappointed with your decision, but that shouldn’t stop you from living your life.
Personally, if I’m genuinely interested in a property, I check into the:
- Last purchase date
- Current and previous owners
- Length of time it has been on the market
- Previous MLS listings
- Tax records
- Overall quality of location
- Google Maps Street View to ‘drive around’ the neighborhood
I explore these factors before I drive by or visit the house. If you’re looking to own a home soon, you will figure out the best methods that work for you. Hopefully, you will have a solid support team and real estate agent you can trust to help guide you. With a little bit of faith, due diligence, and reading beyond the cover, you can find a home that works for you.
What do you think about the homes featured above?