Don’t Get Burned – Get a Home Inspection to
Save Money on Your Next Purchase
Okay, you made one of the most important
decisions in your life: you’re buying a home! You found your ideal home. It’s
in your desired neighborhood, close to everything you love, you dig its design
and feel, and you’re ready to finalize the deal.
But, whoa … wait a minute! Buying a home
isn’t like buying a toaster. If you discover something’s wrong with your new
home, you can’t return it for a refund or an even exchange. You’re stuck with
your buying decision. Purchasing a home is an important investment and should
be treated as such. Therefore, before finalizing anything, your “ideal” home
needs an inspection to protect you from throwing your hard-earned money into a
A home inspection is a professional visual
examination of the home’sroof,
plumbing, heating and cooling system, electrical systems, and foundation.
There are really two types of home of
inspections. There is a general home inspection and a specialized inspection.
Most general inspections cost between $267 and $370. The cost of the
specialized inspection varies from type to type. If the inspector recommends a
specialized inspection, take that advice because buying a home is the single
most important investment you’ll make and you want extra assurance that you’re
making a wise investment.
By having your prospective new home
inspected, you can:
·Negotiate with the home seller and get the home sale-ready at no
cost to you
·Prevent your insurance rates from rising
·Opt-out of the purchase before you make a costly mistake
·Save money in the short and long run
How Much Money Can a Home Inspection Save
A home inspection helps to find potential
expenses beyond the sales price, which puts home buyers in a powerful position
for negotiation. If there are any issues discovered during the home inspection,
buyers can stipulate that the sellers either repair them before closing or help
cover the costs in some other way. If the sellers do not want to front the
money to complete the repairs, buyers could negotiate a drop in the overall
sales price of the home!
Perhaps even more importantly, a home
inspection buys you peace of mind. Your first days and months in a new home
will set the tone for your life there, and you don’t want to taint that time
with worries about hidden problems and potential money pits.
To help you understand how much money a home
inspection can save you, here are some numbers fromHomeAdvisorto drive
the point home … so to speak.
Roof– Roofing problems are one of the most
common issues found by home inspections. Roof repair can range between $316 and
$1046, but to replace a roof entirely can cost between $4,660 and $8,950.
Plumbing– Don’t underestimate the plumbing. Small
leaks can cause damage that costs between $1,041 and $3,488 to repair. Your
home inspector will look for visible problems with the plumbing such as leaky
faucets, water stains around sinks and the shower, and noisy pipes. Stains on
walls, ceilings, and warped floors show plumbing problems.
Heating and Cooling– Ensuring the home’s heating and cooling
system is working properly is very important. Your home inspector will make you
aware of any problems with the existing system and let know you whether the
system is past its prime and needs replacing. You don’t want to throw down
$3,919 to replace an aged furnace. Nor do you want to spend $5,238 replacing an
ill-working air conditioner. Replacing and repairing a water heater gets pricey
too. Wouldn’t you rather use your savings for a vacation?
Electrical Systems– When thinking of the
electrical system, no problem is better than even a small problem. Electrical
problems might seem small, but they can blossom into thousand-dollar
catastrophes. Make sure your home inspector examines the electric meter, wires,
circuit breaker, switches, and the GCFI outlets and electrical outlets.
Foundation– If your home inspector sees that the house
is sinking, that means water is seeping into the foundation; cracks in walls,
sticking windows, and sagging floor also indicate foundational problems. The
foundation is so important that if the general inspection report shows
foundation problems, lenders will not lend money on the home until those issues
are solved. Foundation repairs can reach as high as $5,880 to repair.
As you can see, a small investment of a few
hundred dollars for a general home inspection can save you tons of money and
future headaches. To save even more money, you might consider investing in a
specialized home inspection as well. A specialized inspection gets down to the
nitty-gritty of all the trouble spots the general home inspection might have
How Much Money Can a Specialized Inspection
A general home inspection can trigger a need
for a specialized inspection because the general home inspector spotted
something off about the roof, sewer system, the heating and cooling system, and
the foundation. If humidity is high where you’re buying your home, a pest
inspection is recommended. Usually, a pest inspection will check for mold as
well as pests. Most home buyers have a Radon test done to ensure air quality.
specialists examine the chimney and the flashing surrounding it. They also look
at the level of wear and tear of the roof. They can tell you how long the roof
will last before a new one is needed. They’ll inspect the downspouts and
gutters. The average cost of a roof inspection is about $223. Most roof
inspections will cost between $121 and $324.
Sewer System– Making sure your sewer system has no
problems should happen before the closing because what might look like a small
problem can turn into a large problem in the future. If any issues pop up, you
can negotiate with the seller about needed repairs or replacements before
closing. Cost of inspection will vary; on the low side, it might cost you
around $95, and on the high side, it might cost you $790. Compare these numbers
to repairing a septic tank, which can cost, on average, $1,435 (though it could
reach as high as $4,459), and you can see that the cost of an inspection is
worth it when you catch the problem before you buy.
Heating and Cooling System– A HVAC specialist will
check the ducts for blockage and for consistent maintenance of the unit. The
repairs needed might be small or they might be big, but this small investment
will save you headaches and lots of money down the road.
Foundation–A foundation specialist will pinpoint the
exact problem with the foundation. The specialist will look at the grade or
slope of the home. The ground should slope away from the home in all directions
a half inch per foot. Most homeowners have spent between $1,763 and $5,880 to
repair their foundation. And the average cost to re-slope a lawn is at $1,705.
Most homeowners paid between $933 and $2,558 to re-slope their lawn.
Pest Inspection– Termites eat a home’s wood structure from
inside out and can cause thousands of dollars worth of damage to your home.
Other pests can turn your dream home into a nightmare. Depending on the humidity
of where you live, you should a pest/termite inspection every two years or so.
You can start with your potential new home. Most inspections are extensive and
cost between $109 and $281. The good news is that most pest management company
will guarantee the past inspection if bugs show up.
Radon Test– Radon
is a naturally occurring invisible odorless gas that is the second leading
cause of cancer. A radon test is a good test to have done as a good habit. The
cost of radon test is low and its cost varies from state to state. Here’s more informationabout Radon.
Steps You Can Take to Save Money Using a
To help yourself save with a home
inspection, you will need to:
Attend the inspection– Attending the inspection is important
because it’s an opportunity for you to ask questions.
Check utilities– Checking utilities let’s know the energy
efficiency of your potential home.
Hire a Qualified Home Inspector– We can recommend bona-fide home inspectors
to you. You can compare our recommendation with all inspectors who belong to
theAmerican Society of Home Inspectors.While the decision of who you work with is
always yours, we can educate you so that you make a wise home buying decision.
dream home has the intricate details that you usually find only in older
construction - wainscoting and crown molding in the interior, the front porch
with a swing, an older tree shading the back yard, and the white picket fence.
Or maybe your
dream home has all the conveniences of modern living - open floor plan in the
living and dining spaces, large windows, connected, “smart” appliances and
security systems, and minimalist design elements.
Whether you go
for a brand new construction or an existing home, both types of properties have
their pros and cons when it comes to purchasing. What type of home is right for
you will depend on which factors are most important for your lifestyle.
Build your dream home with new construction
If you’re making
a home purchase that’s still in the pre-construction phase, you may be able to
customize many of the details. Many home builders will give you the option to
add design elements that will give you the exact dream home you desire. If it’s
a new subdivision, you may even be able to pick which lot you like best.
Very early in
the building process, you may have more room to customize. For example, if the
walls aren’t complete, you may be able to add extra outlets in each of the
rooms or custom wiring for surround sound in the media room. Perhaps you could
move the laundry room to the top floor instead of the basement. You might be
able to get a separate mudroom entrance.
Later in the
building process, you may be able to add marble countertops, an island, and
custom cabinets in the kitchen. Your master bathroom could be upgraded with a
steam shower, spa tub, and European fixtures. You will want to check with the
builder to understand which features are included, and which ones are extra.
New homes save money with fewer repairs and more
Once your home
is complete, all you’ll need to do is move in. New appliances will be under
warranty for a few years if they need repairs, and will likely work well for
several years without needing fixes. Often, new construction is under a
builder’s warranty, so any repairs needed in the first year should be covered.
New homes often
contain energy efficient and green appliances, like high-efficiency stoves,
refrigerators, washing machines, heaters, or air conditioning units. These
energy-saving appliances, along with good insulation and energy-efficient
windows, will help you save money on monthly utility bills.
New homes also
often use new building materials that require less maintenance — for example,
using composite siding instead of wood, which doesn’t need annual repainting.
You won’t need to spend as much to maintain your new home.
customized it during pre-construction, you won’t need to spend any money on
renovations or upgrades for several more years. You can just enjoy it and not
worry about saving for major home repairs.
What you need to do to make a good new home purchase
Before you put
in your offer, do some research on the builder. Do they have a good reputation?
What else have they built? Did their other new properties have issues such as
poor construction or unfinished details?
You like the
model home, but will you like where it’s situated? After you look at the home
itself, come back to the neighborhood to see what it’s like at different times
of the day. Walk around during the day and in the evening, and see how you like
communities usually attract similar types of buyers—urban professionals,
couples, or young families, for example. These will be your neighbors, so
you’ll want to make sure that you want to be part of this new, homogeneous
You may also
need to be flexible with your move-in date. Builders will only be able to let
you move in if they can meet their construction schedule. If the wiring is
delayed, the walls can’t be finished. And because there are so many
construction tasks that are dependent on the completion of prior tasks,
schedules tend to slip.
Get more variety and established neighborhoods with an
are those that have generally been built and lived in between the 1920’s and
1970’s. With existing homes, you will get more variety in home styles, as
different types of construction have gone in and out of style throughout the
decades. Within one neighborhood, you may be able to find a mix of different
styles like Victorian, modern Tudor cottages, tract style, ranch or
split-ranch, or contemporary homes.
are situated in established neighborhoods, which may have more amenities nearby
that a new home in a brand new subdivision may not have. Your new neighborhood
may have restaurants, cafes, and boutiques within walking distance.
You might also
have access to more supermarkets, dry cleaners, discount stores, and gas
stations nearby. An established neighborhood might have a nice park, running
path, or playground for the kids to enjoy. You might also be closer to a
library or the post office.
Resale homes can be a less expensive purchase
considering a resale home, you may be able to get into a beautiful, unique
property at a lower purchase price than a new home.
There are many
more resale homes available than there are new homes — according to theNational Association of Homebuilders, about 10 times as many. With such a
large pool to buy from, the market for resales can be more competitive. You may
have more room to negotiate theselling
price of the home. With a brand-new construction, you won’t likely be able to
have the same kind of negotiating power.
a home on the market, sellers often make home renovations or remodel parts of
their homes to make them more attractive to buyers and to be able to
potentially increase the list price. If the resale home has a brand new, modern
kitchen, an updated bathroom, or even a new roof or upgraded windows, you could
end up getting a home that’s comparable to new construction without having to
pay the potential more expensive new-home list price.
have already been inspected at least once on the last sale, so you will know
about any potential structural problems or repairs that have been made on the
home. Knowing the track record on your potential home will help you avoid
purchase mistakes—you’re much less likely to end up with a property that has a
rotting roof, dangerous electrical wiring, or a crumbling foundation. With a
new home, you could end up with incomplete construction or major issues that
you didn’t know about because they weren’t yet documented.
What you need to do to make a good resale purchase
Before you go
too far down the road to a purchase, you can protect your purchase by first
having the home inspected. A good home inspector will document all flaws, no
matter how small they appear. If the inspector finds any major problems, like
foundation cracks or leaky roofs, you may be able to counter offer and get the
seller to either fix it or reduce the selling price.
Even if the
inspection doesn’t uncover any major issues, you will need to expect the
unexpected. Older homes will eventually need replacement appliances, a new air
conditioning unit, or a plumbing repair. As long as you know that before you
buy a resale home, you can plan for surprise repairs.
With an older
home, you may want to eventually remodel parts of it. Will you be happy living
in your house while you’re doing major work on the living room or the kitchen?
If you know that it would disrupt your lifestyle too much, you may want to
consider whether you really want to buy an older property.
choose to buy a new home or an existing home, the best way to get started is to
speak with your trusted real estate professional. We will have access to both
new properties and resale homes that may fit your goals, and will know which
neighborhoods will serve your needs.
grim economic outlook for some industries, one sector is gaining viability --
real estate. According to the 2016 Emerging Trends in Real Estate,
which was released by the Urban Land Institute earlier this year, trends such
as “18-hour cities” and millennial parents increasing moving from urban areas
out into the suburbs signal that real estate as an industry is gaining strength
every passing day in 2016. One lending officer at a large financial institution
even went to far as to say that “the next 24 months look doggone good for real
These trends means that real estate is a smart place to
make an investment and grow your wealth. A housing shortage means that flipped
homes tend to sell quickly and for high prices, and an increased demand across
all age groups for rental properties means that finding tenants for your
buy-and-hold properties should be a breeze.
Of course, these trends also mean that the real estate
market is highly competitive right now. If you want to make a foray into real
estate investing, you’ll need to educate yourself and be strategic in who you
work with and where you look for investment opportunities. Read on for our
beginner’s guide to real estate investing.
Assemble your real estate team before you buy
relationships with your team will empower you to make serious offers that will
more likely get accepted by sellers. Among your team members, you will want to
●A mortgage broker or banker, who can
help you get the financing for your deal
●A real estate attorney to protect you
by reviewing and revising contracts
●An appraiser who can help you get a
correct appraisal for your potential property
●An accountant who is well versed in
real estate investments
●A good contractor, for repairs
whether you’re rehabbing or buying rental property
How to find rehab or wholesale deals
You can buy
properties to fix up and resell (flip) or you can buy and hold properties that
you rent out for monthly cash flow.
of flipping properties is that you can end up with a good return on investment
(ROI) in the short term. For example, you buy a property for $100,000, and
invest $50,000 into repairs. Once it’s rehabbed, your property is valued at
$200,000, and you sell it for a $50,000 profit.
This is an
extremely simplified version of ROI. There are many other factors that you need
to determine to see if the numbers work in your favor — that is, you’re not
overpaying initially when you buy the properties or for the renovations or
properties means that you will need to spend more time looking for fixer uppers
that may be under market value. These may be more difficult to find in a hot
market with rising property prices. Beyond the actual purchase price, you will
also need to factor in fixed purchase costs for inspections, closing, and
need to factor in holding costs. Your budget should include funds for making
repairs, whether you are doing them yourself or hiring contractors. While
you’re upgrading the property, you’ll need to carry mortgage payments, property
taxes, utilities, and insurance.
rising property values, fix-and-flip deals in good neighborhoods can be hard to
find. But once you know where to find rehab opportunities, you can easily
repeat the process by reinvesting proceeds from a previous flip into the next
property, which can be bigger, in a more desirable neighborhood, or finished
out more luxuriously, and therefore sold for more cash!
the right real estate professionals will help you learn which neighborhoods to
consider and determine where you should focus your search. We can help you find
the right fixer-uppers that may be under market value. Also, a Realtor will
have access to many properties that may not be publicly available.
Finding buy-and-hold rental properties
rental property is one that your purchase with the intent of renting it out to
tenants. If you find the right long-term buy-and-hold rental property, you can
earn consistent cash flow each month, which can be a great source of
You’ll need to
carefully review the operating expenses on the property and what tenants are
willing to pay for the space to know if you’ll make or lose money each month.
For example, say your total costs to buy a duplex was $20,000, including down
payment and closing costs. You can rent each of the units for $600. Assuming
your building is 100% occupied, you’ll make $1200 per month in income. Your
expenses include mortgage payments, taxes, insurance, utilities, and management
fees, and you want to set aside some cash each month for capital expenditures
and routine repairs. You calculate that your expenses add up to $1100 per
month. Once you subtract your expenses from your income, you’ll have a positive
cash flow of $100 per month.
Of course, this
is a very simplified example, and it doesn’t take into account that problems
will inevitably arise. Emergency roof repairs, heating system breakdowns,
broken windows that need replacing, and other unexpected expenses can eat away
at your profits. One of your units may be vacant for a month or more -- for
example, vacancies are high in the summer months in buildings around
universities -- or you could have a tenant who fails to pay their monthly rent.
The more you
can anticipate problems before they happen, however, the easier it will be for
you to recover from setbacks! Moreover, rent isn’t the only way to make money
on a buy-and-hold property. You can also add amenities, such as coin laundry
and vending machines, to increase your potential monthly income. If your
property has space to add a billboard, you can earn advertising revenue from
renting that space, too. And when you decide to sell, your property’s value
will likely have increased both from the overall rising property values and by
the improvements you made to increase the cash flow.
Once you find
and invest in your rental property, you’ll need to decide how you want it
managed from month to month.
Getting the right property manager
Do you want to
manage your own property or hire a manager? Property management can become a
full-time job. As a property manager, you’ll have to deal not only with
maintenance, repairs and tenant issues, but also with insurance, fair rental
regulations, and building code compliance. So if you’re not an expert in these
areas, managing your own properties may not be worth your time and effort.
professional manager can save you headaches over the long term. While you’ll
have to factor in management as a fixed expense, your property manager will
likely know how to better take care of routine repairs, tenant issues, and
keeping your property near 100% occupancy.
estate professional can refer you to reputable property management companies to
help you take care of your investment.
Where should I start investing in local real estate?
Work with a
knowledgeable real estate professionalwho knows about the different neighborhoods. We can help you
find properties that will fit into your budget and your overall goals. Whether
you’re seeking a duplex or multifamily property so you can maximize your rental
income or whether you want a condo or single-family home to improve for resale,
we can guide you to the best property to suit your needs.
Contact us to
learn more about investment properties in our area.
Get Your Credit Score in Shape Before Buying a Home
When was the last time you checked your credit score? In a 2012
study by the Federal Trade Commission, one in five people identified at least
one error on their credit report. In their 2015 follow-up study, almost 70%
thought that at least one piece of previously disputed information was still
These rampant inaccuracies are a big deal, especially if you’re
thinking of buying a home soon. With a less-than-great score, you may not get
preapproved for a mortgage. Or if you do get preapproval, you might get a
higher mortgage rate -- which means thousand of extra dollars per year spent in
The good news is that there are steps you can take right now to
clean up your credit. Here are some of my top tips.
Find the mistakes on
Review every section of your report, starting with your
personal information. Make sure your name, address, social security number, and
birthdate are current and correct. Are your prior addresses correct? Is your
employment information up to date? Is your marital status correct? Even
seemingly minor errors in this section can lower your score.
Your public records will list things like lawsuits, tax liens,
judgments, and bankruptcies. If you have any of these, make sure they’re
correct and actually belong to you. A bankruptcy filed by a spouse or ex-spouse
should not be on your report, for example. Are there tax liens that you paid
off that are still listed as unpaid, or lawsuits that are more than seven years
old? Those also need to go.
Are there any unusual inquiries into your credit listed in this
section? An example might be a credit inquiry when you went for a test drive at
a car dealer. Make sure to take note of these as well.
Report the dispute and
If there are major mistakes, you can take your dispute to the
credit agencies. While you could send a letter, it’s faster to submit your
report through the credit agency’s website. Experian, Transunion and Equifax
all have step-by-step forms to submit reports online
If you have old information on your report that should have
been purged, such as a debt that has been paid off, you may need to go directly
to the lender to resolve the dispute.
You must follow up to make sure disputes get resolved. Keep
notes about who you speak to and on which dates you contacted them. Since all
three companies share data with each other, any mistakes should be corrected on
all three reports. If your disputes are still not corrected, you may have to
also follow up with the institution that reported the incident, or a
third-party collections agency that is handling it.
Get help to clean up
your credit now
You should work with a loan professional to check your score. A
professional will be able to guide you to whether your score is in the ‘good’
range for home buying, and their inquiry into your credit is less likely to
have a negative impact on your score. Once you know your score, you can start
taking action on cleaning up your credit.
Does your credit score need a boost so you can buy a home? Get
in touch with me, and I can connect you with the right lending professionals to
help you get the guidance you need.