By Todd Lewys
After looking for a home for what seems like ages, you’ve finally found a home that fits your budget.
However, there’s a catch: the home is being sold as-is.
On the one hand, the home represents an opportunity to acquire your dream home at an affordable price. On the other, that seemingly-affordable home might not be as affordable as you first thought once you start renovating it.
In short, there are pros and cons associated with buying a home in as-is condition. Here are a few to consider if you’re thinking of making an as-is home purchase.
• There will be less competition. When a home needs work, there are typically fewer people interested in it, so chances are good that your offer may be the only one a vendor receives. And if the home has been on the market for a long time, they may well be more receptive to a lower (but still reasonable) offer.
• Freedom to design your dream home. In this sense, a dated/neglected home is essentially a blank slate. Old wallpaper can be removed, walls can be repainted, new fixtures can be installed and flooring can be updated. With a little elbow grease, you can customize the home to your exact tastes and needs.
• A chance to get into a desirable neighbourhood. Every now and then, the opportunity to buy a dated home in a prime neighbourhood presents itself. If you happen to be Johnny-on-the spot, you may be able to snag a solid but dated home in a great neighbourhood that costs significantly less than that move-in-ready marvel down the street.
• You are now a home owner. Granted, the home you’ve just bought will need a little (okay, a lot) of work to bring it up to speed. No matter; you are now a home owner, the king of your own castle. You now have equity — equity that will increase as you bring the home up to contemporary standards in the coming years.
• Ability to do renovations yourself. Provided you’re handy, you can save thousands of dollars in labour by doing the renovations yourself. Not only that, but the renos will be truly custom!
• Unexpected costs. Bearing in mind that you’ve bought the home as-is, it could cost more — much more — than you expected to renovate the home. Consequently, it’s a good idea to pad your renovation budget by 20 to 25 per cent. Doing that will account for any unexpected costs — costs that will inevitably arise once you open up a wall or decide to go for higher-end flooring.
• Labour costs. If you aren’t a DIY expert on renovations, then you’re going to have to hire someone to renovate the home for you. Not only is it more expensive to go this route, but you will also need to serve as a general contractor, coordinating trades and ordering in materials.
• Biting off more than you can chew. Because the home is in as-is condition —i.e., it needs a lot of work — there’s a chance that the project could be far more complex than first anticipated. Work permits will need to be obtained, you’ll have to be home for deliveries (and to supervise contractors) — and your home will be a dusty mess for weeks, possibly months.
• Renovating a home is stressful. Performing a makeover on a home requires time, money and a willingness to be displaced by all the chaos that comes with bringing a home up to speed. Are you willing to deal with all that stress for several months, a full year or longer?
If there’s one key to successfully negotiating an as-is home purchase, it would be this: be prepared for challenges. Providing you go into the process knowing things won’t be easy, you won’t become frustrated and will enjoy the journey more.
Work with your REALTOR® who can provide expert advice on the “as-is” home, and help you with finding industry experts. With their expertise and industry connections, they can help you find your dream home.