When buying a home, you should always make sure your contract has a home inspection contingency to protect your interests. Once the property has been inspected, you'll receive an inspection report detailing all the hidden flaws or problems.
Once you completely dissect the report, you'll need to make a decision if the defects can be fixed and if the property is habitable; which party is going to take care of the repairs; and what alternatives there are when both parties are unable to negotiate a successful agreement on who foots the bill for the repairs. Let's review these concerns one by one:
1) Can The Problems Be Corrected? - Consult with an inspector or independent contractor to see if the flaws can be corrected and find out what it will cost you. A sinking foundation can't be repaired, but an improperly wired guest unit can be repaired.
Once you determine the problem is too difficult to renovate, you need to reconsider if you're still interested in purchasing the property. Completing a large repair job will easily take several weeks and may force you to check out other properties. Reviews of some state regulations permit a seller the opportunity to remedy the problems before you're allowed to terminate the deal. If the defect ends up being virtually irreparable, you have a good chance of canceling the deal.
2) Who Will Fund The Renovations? - Your initial gut reaction may be the seller should foot the bill for all the required renovations, but if you try to negotiate for the seller to be responsible for too many repairs, he or she may walk away from the deal. However, if you know the seller is desperate to unload the property, you may be able to ask the seller to cover a majority of the repairs. But if you're trying to buy in a super hot real estate market, you can't afford to be picky, otherwise the seller will pass your offer for the next one in line.
3) How To Coordinate The Repairs - After agreeing on who will handle the repairs, you can coordinate the services by:
a) Have The Seller Transfer Funds At The Time Of Closing - You can request the seller transfer money into an account specifically designated for repairs you both consented to. Once you're ready to hire a contractor, you can withdraw funds from the account to pay for the work.
b) Reduce The Purchase Price By The Cost Of The Renovation - If you can accomplish this with the seller, you'll benefit with reduced property taxes (if applicable) due to a lower sales price.
c) Let The Seller Make The Repairs - This should be one of your last options. The quality of repair work can be inferior as a seller will save money by using a cheap handyman or, even worse, try to do the repair themselves.
d) Have The Seller Pay For The Contractor You Hire - While this may sound like a great idea, you could run into problems closing the transaction on time if the repair work takes longer than planned.
If you're using traditional financing, your lender may require you to perform the repairs before your sale is completed. If you're stuck playing for those repairs, you may be able to negotiate with your bank to include the repair costs into your mortgage loan.
Want to find out more about Chino Hills homes for sale, then check out these local Chino Hills Realtors to find one.