The Money Pit

By
Real Estate Sales Representative with Prudential Select Real Estate

 

As a Realtor, (and a slightly capricious 27 year-old), this is a bit hard for me to admit, but the fact of the matter is, I seem to own a money pit!

I bought my first home last year, after being in the business for two years. I was picky and wanted a specific style of house, and since I show houses all the time, I wasn't willing to settle, unless it was a fantastic DEAL!  Just like so many first-time home-buyers, I got my "Deal", and I ended up buying a proverbial "fixer-upper".

I really love the area my house is in. It's the City I graduated from High School in, the downtown location of the home had a lot of appeal, both for myself and my family, and also for rental and resale value. I did my all my homework. I performed a Comparative Market Analysis to see if, statistically, my home was a good deal, and in a solid neighborhood. I had it inspected by the City, and also paid for a private home inspection. I looked over the list of City code violations, did the math, and decided the repairs were within the scope of my ability to fix, thinking I was getting an excellent deal...

Come to find out, the Sagely advice of some fellow Realtors that, "Your first year is the hardest" couldn't have rang more true!

A month after moving in, my basement flooded. I didn't see THAT coming! I had to have my basement pipes snaked out. My insurance didn't cover any of the property I lost because even though I had coverage for a finished basement, (which would replace drywall, carpeting and appliances if damaged) I didn't have any coverage for the personal items I stored downstairs.

Lessons learned:

  1. Don't call your insurance 24 hour service line. Instead, call your Insurance Agent ASAP to make sure you aren't filing a useless claim. Also, make sure if you have things of value downstairs, that they are listed on your insurance policy. Your premium might be a little higher, but if you don't want to have to pay for replacing those things, its worth every penny.
  2. It costs about $80-$100 to have both of your drain pipes snaked, and that is not something I would have thought to have done BEFORE moving into my house. I can tell you it's well worth the money, if it will prevent the loss of your personal property and the hassle of having to clean up all that water!

Issues with repairing my house also arose, inevitably. I had a lot of what you might call "latent defects," which are defined as follows by law.com:

Latent Defect. n. a hidden flaw, weakness or imperfection in an article which a seller knows about, but the buyer cannot discover by reasonable inspection. It includes a hidden defect in the title to land, such as an incorrect property description. Generally, this entitles the purchaser to get his/her money back (rescind the deal) or get a replacement without a defect on the basis of "implied" warranty of quality that a buyer could expect ("merchantability"). Even an "as is" purchase could be rescinded if it could be shown the seller knew of the flaw.

The problem with my purchase?

It was a rental for 7 years before the seller decided he didn't want to deal with it anymore. Being that he hadn't lived in the property, and sold the house "as-is" he wouldn't have known about all these troubles, or could maybe claim that his tenants had never told him about the issues I was coming across.

Some of the things I encountered that I didn't expect:

  1. First was that leaky, backed-up basement, which I have already elaborated on.
  2. Most of my electrical fixtures and outlets were NOT in junction boxes, or properly installed. I had no idea how bad it was until I actually had a contractor come out to do my repairs. The cost of having my code violations fixed was initially quoted at $900, but by the time he fixed those violations, and all the OTHER things that turned out to be unsafe, I ended up spending $1900, plus another $150 on buying new fixtures. Which is over DOUBLE what I thought I would be spending. It's not something my home inspector would have been able to find, and wasn't an issue on the city code violations, but it obviously was a fire-hazard, and needed to be repaired anyway.
  3. The wiring in the garage was not to City code. I had the choice of A-spending more money to pay to have it fixed right, plus $70 for a permit from the City, or B-I could rip out the wires, and fix it later. Having just dropped a mint on the inside work, I opted to tear the wires out. None of the original work had been done right, and I am oddly enough, glad I took it out. The way it was installed seemed to have "fire, waiting to happen" written all over it!
  4. Above the drop ceiling in my kitchen was a giant hole in the sub flooring of my bathroom. I found this one when my cat crawled in behind my tub access panel upstairs, and ended up on my kitchen floor, knocking down half my ceiling tiles. I didn't find this with either of my inspections, and was easy enough for me to cover, just like the tenants did, by re-installing my ceiling tiles and nailing the access panel back on so Mr. Kitty couldn't get back in there anymore. But it's still something I'll have to deal with fixing when I remodel the kitchen in a few years.
  5. I saw on the City Inspection report that I needed to paint A LOT of things on the outside of my house. I just didn't realize that when it came time to try and get a quote for doing this work that paying a crew to paint the peaks of a 3-story Colonial was going to run me over $3,000, and that's just the BEGINNING of what I need to repaint outside!

Lessons learned:

  1. Don't just look at that City Inspection. Make sure you use your 7 day inspection clause to it's fullest and GET QUOTES BEFORE you take it all the way to the closing table! If I had done this, I might have decided I didn't want to spend all my extra cash and spare time for the next few years doing nothing but working on my house. I didn't set out to  "house poor" but that is exactly what I am! 
  2. Have your inspectors be extra intrusive. You are paying them to look EVERYTHING over, so make sure they are checking your roof,  looking above your tile ceilings, etc. so you don't find as many surprises as I did!

Moral of this story:

I have learned from a lot of tough personal experience that sometimes, a fixer-upper isn't that great of a deal! If you spend an extra five to ten thousand dollars, chances are that small variance in your mortgage payment might be much more affordable than a $3,000 surprise every few months.

Talk to a mortgage broker about what you can qualify for BEFORE you go house hunting. That way, you can find a house that suits your pocketbook as much as your schedule! Don't be house poor!

I'll be working on my house during the 4th of July Holiday, and probably many more Holidays to come.

I hope your Independence Day is more fun than mine!

*Sereana*

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Tags:
inspections
fixerupper
asis
first time home buyers
money pit
home repairs
latent defects

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