Inheriting a Fixer Upper

What do you do if you inherit a home that has not been looked after? The family members that lived in the home did not have the financial strength to look after the home. They also did not have the physical abilities to do some or any of the maintenance on the home. As a result, the home declined over time until there was so much work that needed to be done, it is hard to know where to start.

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Should you sell it as is? Should you invest in the home and fix all of the things that have degraded and then sell it? Perhaps the home is part of an estate and there are other heirs that have a say in what is going to be done with the home. It may take a large amount of cash to fix up the home to get into a state where it can be placed on the market. Is this something that you and the other heirs want to take on before listing the home on the market?

With the help of home inspectors, real estate agents, local contractors and your bank, you can gather all of he information needed to make a decision. A step by step process could look like this.

Arrange for a Home Inspection

The first step is to complete an inventory of all of the maintenance and repair items that need to be completed. A home inspector can prepare a full report on all of the issues in the home and what needs to be repaired. They provide a detailed report that can be itemized and will give you an idea of what needs to be done.

Consult a Real Estate Agent

The home inspector does not cover improvements from a marketing perspective. Perhaps the kitchen is fully functional but very dated. The realtor can provide an assessment of what improvements can be considered to raise the market value of the home. You will also need an assessment of the current market value of the home in its present condition if it were to be placed on the market as is. This is really a fixer upper at this stage.

You should also request an assessment of the market value assuming all of the repairs and maintenance items have been looked after. Finally, what could the house sell for if all of the improvements were completed. With these three numbers you can move onto the next step.

Obtain Estimates

Next, you will need to ask local contractors for estimates for all of the repairs and the improvements that are being considered. You may have to deal with several different contractors. Roofing contractors, landscapers, general repairs, kitchen and bathroom specialists, plumbers and electricians.

It can be a lot of work and also time consuming. Dealing with all of the details in just getting good estimates, making decisions regarding the style, the quality, colors etc. can take a great deal of time.

Talk to your Financial Institution

If your family members did not have enough money to keep the house up, they likely did not leave you a lot of spare cash either. You may have to arrange for a bank loan to finance the improvements and repairs. This can be difficult for many people who have just inherited a home. They may not have the credit rating, they may not have the equity and the income to support a loan of this type, etc.

If the home is in probate, will the bank lend the money to the estate or do the heirs have to all agree to the loan and sign loan documents? These are all questions that need to be sorted through leading to a final decision.

Make Your Decision

Many people at this point would just call their realtor and tell them to list the home for sale as is. With all of the work involved and questionable market value after the improvements, they may just want to sell the home as is and distribute the proceeds to the heirs as per the will.

It is a difficult decision. Your real estate agent and family members can help with making the decision. Assess all of the facts and decide if you will have the time and the knowledge to fix up the home or it would be better to just sell it as is.

 

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