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So you want to buy a “project property”

Zerillo

 

So you’re sitting on the sofa watching one of those home improvement show and thinking to yourself, “This is easy! I can do that”! But what you don’t see are all the mistakes and outtakes, and the enormous amount of time and effort that ends up on the cutting room floor.

Don’t let a 30-minute television show convince you that it’s easy to whip a fixer-upper into line. Before you ask your realtor to begin the search for a “project property” as we call it in the profession, you need to ask yourself a couple of important questions.

No. 1? Can you really do it? Some things are easy like painting and possibly installing a new bathroom vanity, but others like plumbing and electrical can be difficult and dangerous if you really do not know what you are doing. No. 2? Do you have thetime? A project that may take the pros a couple of days may take a lot longer without the proper knowledge and most importantly the correct tools. Can you spare that much time in the evenings and on weekends, or can you take that much time off of work?

Before jumping into a rehab project bring in a qualified contractor to take a look and estimate the cost of what needs to be completed. If you plan on tackling the project yourself, shop the material out prior to purchasing. Don’t forget to add a cushion to the cost since most projects end up going over budget.

When looking to be a project property, be sure to check for structural issues. The cost of hiring a structural engineer can be more than offset by the discovery of undisclosed or undiscovered structural issues that could knock thousands of dollars off the purchase price of the home.

A proper home inspection can help in the renegotiation of the purchase price. A home inspection will also give you proper list of items that you will need to complete in your project. They will find issues that may not be visible to the eye like a dangerous electrical box hidden in a ceiling or a pipe leaking behind the wall. Many inspectors can also detect such things as radon gas or signs of unwanted guests in a crawl space or attic. Make sure your purchase contract includes a home contingency clause.

When making an offer, always include the proper comparable properties in the package and estimate of the repairs to justify your offer. Use your inspectors later in the negotiations to renegotiate the purchase price if the inspection reveals that the property is not up to par. Remember, an old furnace may not justify a renegotiation but an undisclosed non-functioning furnace is!

Also, check local municipal codes regarding permits for your future repairs as well. The cost of permits can add up quickly and without them you could run into a problem on the future sale of the property. Permits take time and could have extra costs in code upgrades to items you didn’t plan on replacing. Always ask these questions before closing. Permits are also there to ensure the work is completed properly.

As always, consult a properly trained real estate professional and a real estate attorney.

Happy rehabbing!

To contact me, call 847-292-4700, e-mail gz@zerillorealty.com or visit www.zerillorealty.com.

 

About Giuseppe Zerillo

Giuseppe Zerillo is the managing broker and owner of Zerillo Realty Inc. He is active on many boards, serving as sergeant-at-arms for the village of Harwood Heights and corporate secretary for Casa Italia. In 2011, he received the IANU Foundation’s 2011 David Award for outstanding promise in the field of real estate, and in 2012 he was honored by the Illinois State Crime Commission for his community outreach. Constantly seeking opportunities to give back, he donates to several charities and raises money for children with disabilities.