5 Strategies to Avoid Buying a Money Pit

One of the worst nightmares that a new homeowner can face is buying a house and discovering the hidden horrors that lay beneath the surface. Sadly, that is exactly what happened to Steve and Michelle Hicks.

The couple bought a two-story, mid-1920 Dutch colonial on three-quarters of an acre in Millburn, New Jersey in 2012.  Soon after moving in, the disasters underneath started to reveal themselves. The problems included pipes that weren’t insulated, heating that didn’t heat the upstairs past 46 degrees, and walls that were torn down that should have been supported. The Hicks did have an inspection of the house prior to closing on it and small hints came to the surface, but they were not enough to drive them away from buying their dream home.

Homeowners know that when they buy a house, there is the risk of it possibly turning into a money pit. However, no one thinks it could actually happen to them. Every wise homeowner wants to do whatever they can to avoid this possibility. To help to keep this from happening to you, here are 5 ways to avoid buying a money pit.

  1. Be Willing to Walk Away After Inspection

Every buyer should get a home inspection done before they close on the house. The home inspection should check basics including electrical, plumbing, mold, etc. If you feel any concerns after the inspection, don’t be afraid to ask additional professionals to come in and examine the house to help answer any questions. If red flags begin to come up, check into them. Most importantly, be willing to walk away. That can be the hardest part.

  1. Have Realistic Expectations

When buying an older house, a new homeowner needs to be prepared for unexpected costs. Having money set aside is important. Items that you want to be aware of causing problems include plumbing, electrical, insects, mold, and asbestos.  If you don’t want a money pit, a newly constructed house might be a better decision. Buying an older home is an investment and one you need to be prepared to put money into.

  1. Ask for a Home Warranty and Understand What it Covers

Depending on the market where you buy a house, the buyer can request that the sellers pay for a home warranty. This can be helpful for items that break down in the first year such as a washer, dryer, water heater, or the furnace. However, it might not cover other costly issues, so reading the fine print is important to make sure you understand what exactly is involved. 

  1. Understand Your Homeowner’s Insurance

Homeowner’s insurance is different from your home warranty. This is something you work out with your insurance company before you move in. Each policy covers different things, so again, it is important to understand the fine print of what is specifically covered. Typically, you can expect that theft or vandalism, damage caused by such perils as fire, windstorms, hail, and lightning will be covered. Additional homeowner’s insurance for floods and earthquakes are not included and would need to be bought at additional cost.

  1. Ask the Neighbors

If the house you are buying has the potential to flood, ask the neighbors in the area about their experience. Check to see if they are aware of any flooding that may have happened to the house that you would like to buy. Another option is to put the house’s address in a search engine on the Internet and check to see what might come up.

Take Away

When buying a house, it is almost impossible to know every possible detail and problem. However, these five strategies are ways to ensure that you can walk into your new home with your eyes as wide open as possible.

Having an experienced real estate agent by your side is also essential. An experienced realtor knows the warning signs of a potential money pit. The Jamey Kramer Group would be honored to help you find the home of your dreams. Please call our office today.