What is a Neglected Home?
Neglected Homes, also known as ‘Fixer-Uppers’, have experienced long periods without basic maintenance and repairs. In a typical Neglected Home repairs were delayed, not performed at all, or were inadequate or un-professionally done.
Why buy a Neglected Home?
The main advantage to buying a ‘Fixer-Upper’ or a Neglected Home is the opportunity to purchase a property at a discount. Sometimes it is obvious to all parties that the condition of the house is poor and the house is priced accordingly. Buyers with the right skill set, repair network and appetite for renovations can potentially add value and profit from this opportunity.
What are the Risks of buying a Neglected Home?
Seller Overvalues Home
Sometimes the extent of the neglect is not obvious to the seller or the seller otherwise over-values the home. The seller may have un-reasonable expectations of the sale price or may be un-willing to re-negotiate once under contract. Some sellers don’t re-evaluate their asking price until a buyer or two have backed out of a contract. If a buyer is looking for a discounted opportunity they should find a seller with realistic expectations or a seller that has already been ‘humbled’ by a terminated contract or two.
Buyer Overvalues Home
Sometimes the extent of the neglect is not obvious to the buyer or the buyer otherwise over-values the home. New appliances and paint may disguise conditions in the attic, crawl space or behind the finishes. An inexperienced buyer may under-estimate the extent of damage and repair costs or over-estimate their ability to manage or perform their own repairs. An experienced buyer will budget for hidden damages, extensive repairs, and cosmetic damages but it is sometimes impossible to know the final cost, even with good estimates and a contingency factor.
Hidden damages should always be expected with Neglected Homes. After purchasing a Neglected Home it is likely that a buyer will experience ‘surprises’ such as hidden water damage/framing/structural damage, sudden failure of components, and other issues — many of these items will not be in the report as hidden defects are beyond the scope of a home inspection. With Neglected homes the home inspector can only expose the first layer of the onion, so to speak– exploratory demolition and further evaluation will be needed and many other defects will be discovered when repairs are already under way.
Extensive damages should always be expected with Neglected Homes. The buyer should always assume that the defects found in an inspection report are only representational and that there are likely many more issues that were not photographed or documented because of the extent of the damages. Even contractors and sub-contractors that follow up with repairs will not understand the extent of the damages until the repairs are well underway. Buyers of neglected homes should budget for extensive repairs of entire categories — for example, with distressed homes it is often cheaper to simply replace all the gutters, decking and siding than to attempt to repair individual items.
Cosmetic damages should always be expected with Neglected Homes. Damaged finishes or ‘cosmetic’ items can often be repaired by the homeowner as the skills required are not highly specialized. Potential buyers might say to themselves, ‘I can paint that, I can replace that, no big deal! ‘, and indeed they can however it is easy to under-estimate the time and costs required to complete these projects. Paint, hardware, trim, plumbing fixtures, insulation upgrades, light fixtures, kitchen/laundry appliances, outlets, flooring repair/replacement– even when the owners are doing these projects themselves these projects can add up to tens of thousands of dollars. It is important that the potential buyer take these costs and their own labor into full consideration. Buyers tempted to do their own work should always get a professional quote on these categories even if they intend to do the work themselves to help understand the costs involved.
Other Considerations of Buying a Neglected Home
Neglected homes are more likely to experience disruptive events like sudden failed appliances, plumbing and electrical failures. Buyers should take into consideration the inconvenience this may cause.
Inconvenience or Lost Rents
Neglected homes are not ‘turn-key’ and move in ready which means the buyer has two options:
- Delay moving into the home until after renovations are complete which will result in the buyer having to find somewhere else to stay and the additional cost of rent/mortgage
- Move into the home and endure the conditions of a typical ‘Neglected’ home with its smells, energy-efficiency, cosmetic imperfections, and other many issues. The buyer will also have to suffer the noise and inconvenience of co-habiting with contractors during repairs/renovations and even if they are doing the work themselves they will be living in their own construction site. Steps should be taken to protect personal belongings from dust and construction debris.
Even after full renovations it is quite common for evidence to remain that the house was once neglected– it is cost prohibitive to bring a Neglected Home back to the way it was when it was new or in great condition. With framing repairs, for example, decayed or damaged framing is often left in place while supplemental supports or framing are added. Home Inspectors can often see the history of wood destroying insect or wood destroying fungus damage- these things may be talking points for the new buyers when it is time to sell this home- even after extensive repairs. Foundation wall issues may still be present. Odors and even some air quality issues may remain. Buyers of Neglected Homes should not expect that the house will ever compare to a home that was always well maintained.
Other Advice for Buyers of Neglected Homes
Many different categories are involved in a Neglected Home which is why it is recommended to seek out a General Contractor that can coordinate all the moving parts of a renovation project. An experienced General Contractor will have their own network of sub-contractors and are already familiar with their pricing. Buyers of Neglected Homes should hire a general contractor over trying to coordinate and manage many different sub-contractors (be their own general contractor). More on Repairs here.
Estimates and Contingency Factors
A good general contractor will always include a ‘contingency’ factor in their estimate – this category includes the surprises that are impossible to anticipate at the outset of a renovation project. A contingency factor for new construction might only be 5%, but this percentage should be much higher for renovations of older or neglected homes.
Buying a Neglected Home in the Asheville area?
Builder Buddy is your resource for Neglected Home Inspections in the Asheville area. We also provide Fixer-Upper Home Inspections, Flipped Home Inspections, Foreclosure Home Inspections, Foreclosed Home Inspections, Auctioned Home Inspections, Bank-Owned Home Inspections, Short Sale Home Inspections, Radon testing, Mold testing, Water testing, Well Inspections, and Septic Inspections. Schedule online or call with questions.