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Matthew King
Matthew King

Buying A House With Deferred Maintenance



Hello -We have been living for about 5 years in a house we bought after only 2 days of looking. We moved to this town with a one-year-old child and a dog, and decided to get into a place quickly rather than rent at all. We grabbed the house that fit our needs best that was up for sale that week and in our price range.




buying a house with deferred maintenance


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My husband is a music teacher, I'm a graphic designer and was a stay-at-home mom for the first 3 years we were here, until our child went into preschool. We were living on sort of a desperate shoestring for those years I wasn't working. Things are better now that I am working, but there is quite a bit of deferred maintenance on the house. We have spent quite a bit of time trying to recover from that income deficit, and things have begun to look up financially.


Now that we've been living here some years we have a better idea of the neighborhoods available and also have different ideas of what we want in a house. The house we're in now was built in 1973, and built so cheaply, it's really kind of awful. Popcorn ceilings in every room, for instance. The people we bought it from did a quick flip with it, used the cheapest materials they could, put in carpeting without stretching it...you name it. We could put a bunch of money into getting the ceilings scraped and all the trim replaced and the cheesy, featherlight doors replaced...but it's just not going to make it into a nice house.


My question is: how much of the deferred maintenance has to be done before we sell? I know buyers want a house they don't have to work on, but if we're going to have to pay for the work either out of the house price or out of our pockets, it would be a lot less disruptive of our lives to let it come out of the house price.


Will we be ahead money-wise if we do the work first? Are we likely to recoup the cost of the work in the sales price? Will there be an advantage to US? I know there is a perceived advantage to the realtor and the buyer - the realtor wants a pretty, easy house to sell and so on. However, if we were looking at spending 40K on deferred maintenance, and just knocked 40K off the house price instead, wouldn't that be even (and would have the added benefit for us of not having to live through the disruption).


One problem you'll face if you don't take care of the deferred maintenance yourself is that buyers will always over estimate how much it will take to fix a problem. Another problem is that you'll find a lot of buyers that will take a look at all the deferred maintenance items they can see on the surface and wonder what problems are there that they can't see.


Some of the issues you state aren't really deferred maintenance, but rather updating. The popcorn ceilings, and kitchen cabinets are really just updating. The rest of your items are deferred maintenance and should definitely be done before listing.


It sounds like this is a starter home. A STARTER BUYER is not going to be able to come up with the money to fix that stuff. They are looking for a place that while higher in price can be incorporated into their mortgage. They are not going to have the cash they need to fix all that. And if YOU think repairs are disruptive, I'm sure a buyer will think so, too. It's stressful enough for buyers just buying and moving into a home without having to do all those extra tasks. You will DEFINITELY get less money for it in the present condition and may only appeal to an investor at a very low-ball figure.


I agree with Cordovamom - some of what you listed aren't necessarily maintenance issues but update or upgrade ones. If that's the entire list, I would paint the exterior (and maybe get a new front door), replace the roof, and replace the carpeting. Then, I would address anything that is damaged (e.g., laminate floor?) or broken (light fixtures, for example) or failing.


My logic is that the inheritance money (maybe 50K) will make us less dependent on getting so much out of the house we're selling. Otherwise with our current financial picture, we would need to maximize our profit from our old house to be able to get into a better one.


But the inheritance money changes that dynamic, and I'm pretty confident that the market is going to recover within a few years, so I don't feel it would be a bad investment. I do feel it might be a bad investment to use the inheritance money to try to make this house into what it isn't: a borderline rental house/starter house/flipper's house.


I think you'll be able to sell it with no updating, provided it's priced appropriately. My mother was able to sell our old house quite a few years ago without putting a lot into it. She sometimes mentions that she's sure the buyers got a lot more for it when they sold... but part of the benefit for her was that she didn't have to mess with all of it.


You're in a tough spot because of the slow market. From your description of deferred maint. 40k sounds right for updating a 2700 sqft house. In this market you will not get top dollar even if you put top items into the house. People are looking for a steal, that is, IF people are even looking.


There is no such thing as selling high & buying low. If you choose to sell the house as is, you will have to sell it really low. The buyers perception of work is always magnified. Sure, you will get a deal, but you will have to practically GIVE your current house away, given the shape it's in.


for the ceilings, throw on a coat of bright white ceiling paint and be done. popcorn does not look right with any other color! my house has all popcorn ceilings, as do almost every house around here, and you honestly do not even look at them.


I've done a little market research. There are comparable houses in our neighborhood on the market for 129K, 143K, and 152K. By comparable I mean in year built, square footage, type of house (bi or tri level), number of beds and baths. The more expensive ones have had the vinyl flooring and carpeting replaced with wood flooring, and the most expensive one has a fireplace and updated kitchen.


We have been living for about 5 years in a house we bought after only 2 days of looking... and decided to get into a place quickly rather than rent at all. We grabbed the house that fit our needs best that was up for sale that week and in our price range.My husband is a music teacher, I'm a graphic designer and was a stay-at-home mom...now that we've been living here some years we have a better idea of the neighborhoods available and also have different ideas of what we want in a house. The house we're in now was built in 1973, and built so cheaply, it's really kind of awful. Popcorn ceilings in every room, for instance. The people we bought it from did a quick flip with it, used the cheapest materials they could, put in carpeting without stretching it...you name it. We could put a bunch of money into getting the ceilings scraped and all the trim replaced and the cheesy, featherlight doors replaced...but it's just not going to make it into a nice house.


If something is prohibiting you from maintaining the house now it will only get harder with a tenant. Your rights and access to the property will become limited and your ability to do normal homeowner type repairs without hiring a professional might also be affected. Depending on how much of a mortgage payment you have on the house you may not be able to demand enough in rent to cover it (rent increases generally have not kept pace with housing prices). The house could also be vacant for periods of time leaving you to pay the entire mortgage. What if the tenant "falls behind" on rent? - How long will it take you to evict them while you pay the entire mortgage? 1 month? 3 months? Court dates? What about your insurance policy? I haven't heard much good about property management companies, what is their downside while your property is vacant, would they want to rent the properties that they own before yours?The condition and location of the house didn't sound like you will be getting your choice of renters without doing the repairs anyway- would you rent it?


I agree with cheapheap. Your question merely changes to "What needs to be done before I can rent out the house?" You will still need to maintain the house and that means taking the time (and money!) to get it into shape before putting it on the market be it to rent or to sell.


I have been living vicariously (thank goodness) through a friend who has two rental houses (they decided not to sell their houses but to rent them). Well, there have been months where they have no tenants (but they still have the mortgage payments!). They have to interview potential tenants and with both spouses working, this becomes an amazing dance involving the tenants' work schedule, the friend's work schedule, children's school schedule and activities. If you get a dud tenant (one that doesn't pay on time or ever), apparently it takes a long time to evict them or get them to leave. I saw my friend go through 8 months of trying to either 1) get the rent money or 2) evict a particular tenant. In other words, it's easy to say 'let's rent out the old house' but it's not as easy to do.


Real estate Is generally the largest investment an individual or family makes financially. As with any investment, it is important to stay on top of how environmental conditions and other circumstances affect your investment. Deferred maintenance is when the needed attention is not given to the investment. When basic maintenance and repairs are put off too long or not attended to at all, the cost can add up to get back to working order.


The condition is a consideration in the value of the house in how the real estate agent will price it and the appraiser will value it. Examples of this would be lack of pressure washing siding over the years, cracked outlets, holes in sheetrock, compromised window seals, and failing to keep up caulking where needed. These are only a few of many ways the costs can add up. As the repair list grows, the value decreases. Eventually, with a lack of proper maintenance, the repairs can reach a cost so high that the house has no value and can only be sold for land value. 041b061a72


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