mortgage

Watch: Buying a home as-is

 

 

INTRO: There's a lot of good home buys in this current real estate market - but gambling on an as-is house can be either a bargain or a bust for potential homeowners. So, how do you determine whether it's a sound financial move? Let's take a look.

TAKE VO: When buying an as-is home ... what you see is what you get. But what you don't see can cost you money -- lots of money and can ruin any potential bargain you thought you got when you purchased your home, as-is.

(NAT sound of inspector examining the home and making notes and comments)

"As-is" means the seller will make no repairs and is making a blanket statement that any problems that come up during the inspection are at the buyer's risk. Such is the case with short-sale properties ... where the owner's mortgage balance exceeds the property value. You may not be able to negotiate any repairs, but you can ask the owner about the home's condition, sometimes eliminating many what-ifs.

That's not the case with real estate owned or 'REO' owned homes. These are bank owned homes after foreclosure. While the banks don't know the condition the house is in ... many times, repairs can be negotiated.

A home-inspection can give you a solid idea of how much money you're going to have spend to make necessary repairs.

SOT: Perry Lap, INSPECTOR - CGC Home Inspections, LLC

("You need to definitely call a qualified home inspector to check the house out thoroughly ... more so than a house for sale under normal circumstances because when you're buying a home as-is, you're inheriting all the problems of that home. So, a home inspector will to identify everything that needs to be done to it so that you can find out what the real total-cost is going to be.")

CONTINUE VO: That inspection report either makes or breaks a home purchase. In some cases the problems can be too steep for buyers will little cash or skills to make major repairs.

SOT: Perry Lap

("It's very important to make sure that you start off with a roof that is in great shape, otherwise on a house in our area would average maybe $25,000 to replace. Then you want to make sure that the mechanical systems are in good order ... the HVAC system or the air-conditioning system...if it's old, if it's very inefficient that could be another $10,000, for example. You want to make sure the plumbing is good, the water heater is ok and that the electrical system is intact. Those are big ticket items.")

(Talks about what warning signs he sees that would make a buyer back out of home - cracked or sinking foundation, termites or other rodent infestations, rotted wood, bad plumbing, heating/AC problems).

CONTINUE VO: On the other hand, some of the homes can be great deals ... it's a matter of weighing the condition of the home versus price.

To learn more on navigating the current real estate market, visit Bankrate.com mortgage trends guide. I'm Kristin Arnold.

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