Bank owned homes for sale in Grand Rapids can be a great opportunity to get an excellent deal on a house. However, they often come with additional challenges.
Many of these houses are in rougher shape, and access can be limited. How can you successfully estimate your repair costs on a house like this? Fixer-upper houses can be great, but you don’t want to find yourself with a money-pit you can’t escape. Here are a few tips to help you nail your costs.
1. Establish Times to Visit
Bank owned homes for sale typically offer limited access times. You won’t be able to get inside them as easily as you can with homes listed on the MLS, so be ready to dig!
Banks have different rules for their properties. They will likely have a lock box on the property, and they may be willing to share the access code with you. Alternatively, you may need to work with a realtor, or a bank-appointed agent. This can take some time, and can get frustrating. However, if you get a house at 50% off, it is well worth it. So stay in contact with the bank, follow the bread crumbs, and get as much access as you can.
In some cases, you may not be able to get inside the home. If you can’t properly check out the inside, exercise caution with your offers. Without being able to check for things like HVAC and foundation costs, you might get into trouble if you don’t have a large cash reserve.
2. Take maximum advantage of your visit to the house.
Since you will have limited access to the home, come prepared. The most efficient method is to bring an inspector and contractor with you. While they may not be able to do a multi-hour inspection, they can point out major areas of concern.
If this isn’t possible, do what you can on your own. Bring a checklist of repair items, and take extensive notes. Take as many pictures as you can, and make sure to heavily document any rough areas.
Too many people make the mistake of the ‘quick walk through’ with a property. Bank owned homes for sale require a very solid bid number, and the due diligence period doesn’t allow for as much back-and-forth in regards to repairs. Getting good information from your walk through is crucial!
3. Analyze your information.
This step is very dependent on your knowledge of home repairs. If you are very repair-savvy, this phase will be easier. However, if you aren’t as confident in how much various fixes cost, it’s time to do your homework.
Your best, and most efficient, resource will be other professionals. Contact a reputable contractor, and see if they are willing to estimate repair costs with you. Be prepared to pay them for this work. This is their job, and their time and expertise are valuable!
You can also use some quality resources online to help your effort. HomeAdvisor, HouseLogic, and HomeWyse can all get you pointed in the right direction, although be aware that these are more general resources. In addition, if you can purchase many excellent books, such as J Scott’s Book on Estimating Rehab Costs. These will give you a good idea of your repairs based on your quality walk-through.
4. Be conservative in your estimates.
Unless you’re looking at a best case scenario, where you had an inspector and contractor walk through a property and provide cost estimates, you will be making some educated guesses. As a result, be conservative in your estimates.
Assume that you have missed a few costs, or that your repairs will run higher than you expected. First of all, this creates a margin of safety for you. Second, if you under-estimate your costs, you are in for a world of stress. Avoid this stress whenever possible!
It’s much better to guess high on repair costs and be pleasantly surprised when you come in under-budget. Bank owned houses for sale often have hidden surprises once you start working. Be ready for that, and you can snag yourself a great deal!