Buying a newly renovated property? Ask this…
AS property prices rise, so does the number of people buying “fixer-upper” homes, not to live in, but to renovate and modernise as quickly as possible and then resell at a profit.
“They make their money by purchasing homes that are in a rundown state for less than the average market value for the area, revamping them and then putting them back on the market, hopefully to sell at somewhat more than the average local price,” says Richard Gray, CEO of Harcourts Real Estate.
“And overall, we think the efforts of these property entrepreneurs should be applauded. They are generally willing to risk substantial amounts of their own money to do this, and at the same time are not only ‘rescuing’ and refurbishing older homes for reuse, but also helping to upgrade the neighbourhood and underpin property values.”
What is more, he says many other people see the benefit in buying a home that has recently had a makeover, especially if they are short of time or cash to spend on property maintenance.
These buyers would much prefer to buy a property with all-new fittings and fixtures and minimal to-do list, even if it does come at something of a premium initially.
“However, that does not mean that they should let the smell of fresh paint and the gleam of new tiles go to their heads,” says Gray.
“As with all property purchases, they will need to do some homework and make sure that the improvements they will be paying for are real and not just cosmetic fixes.”
For example, he says you may see what looks like a new kitchen, but it is possible that the seller just put in a new sink, cupboards and countertops without changing any of the original wiring or plumbing, and if the house was actually built 50 years ago, that could be a serious problem for you later on.
“You should ask to see receipts for all the major work the seller says has been done, as well as any certificates of compliance that are legally required.”
Similarly, Gray says you need to establish whether any structural changes have been made, like taking out a wall to “open up” the living areas and create a more modern layout, and if these have been signed off by an engineer or architect.
“And, of course, you should check for any cracks, leaks or damp patches that could signal foundation or roof problems, as these can also be expensive and tricky to fix.”
He says the property will most likely be empty, so you should also take the opportunity to ‘test drive’ it, and gauge the renovator’s workmanship by turning on taps to check for water pressure, flushing the toilets, checking that all the stove plates work, flipping the light switches, and opening and closing windows, doors and cupboards.
In most instances, he says, everything will work really well, but if you do find small problems, the seller should be willing to fix them immediately in order to secure a sale.
“For a renovator, every month that a finished house goes unsold equals holding costs that diminish the potential profit,” says Gay.
“You shouldn’t hesitate to negotiate and make sure the property really will be move-in-ready, and that you will be able to enjoy your lovely new home without any worries.”- Property24.com