Find a home that looks too good to be true
... it may be.
One of my long time subscribers just called me the other day inquiring about a home for sale in one of the nicest neighborhoods in the Charleston real estate market and wondered what I could find out about it.
The home for sale caught his attention because it was priced about $200,000 below market value for that neighborhood. There was a mention in the listing the home was priced below market value because of repairs required by the Architectural Review Board of the Homeowners Association. And of course, the home is bank owned and being sold as is.
So what repairs might be required.
A little landscaping, new cement walk, a little work on the back deck and upgrade the front entry to the status quo of the neighborhood. And...
brickwork and flashing.
Architectural review boards and homeowners associations are sometimes misunderstood by buyers from other areas of the country who are looking to relocate to Charleston. Most Charleston neighborhoods have a homeowners association formed to take care of the common areas and put covenants and restrictions in place to maintain the integrity and property values in the neighborhood. Some neighborhoods are highly restrictive with lots of rules and regulations, others have common sense rules that are easy to abide by. (When you are looking to buy in a neighborhood that has covenants and restrictions, obtain a copy and review it before writing a contract so that you would feel comfortable living there.)
But back to what may (or may not) be wrong with this home.
The ARB did not inspect the home for structural deficiencies but noted that 2 different color bricks were used on one side of the home, the brick work at the lower part of the home is badly stained and discolored and considerable variation in mortar color and quality. Several noted gaps between the flashing and the bricks could lead to water flowing behind the bricks.
Uh, oh. That might be bad and very expensive to fix.
Of course, you are going to have to bring in several home inspectors and if you choose not to go forward with the purchase, you still have to pay for the inspections. Since you don't own the home but are simply looking to analyze what potential repairs might have to be made, you can't tear up the house to find hidden damage that may or may not be lurking.
Does this look too good to be true or is there real value here.
I've also seen several instances of homes for sale in the Charleston real estate market where the builder ran out of funds and a to be completed home was being offered for sale subject to the buyer finishing construction. As you review listings, the low listing price will generally jump out at you and catch your attention until you notice that you may have to spend serious money for flooring, cabinets and countertops, appliances, fixtures, etc., etc. You may be able to pick up a bargain. Maybe not.
The question you have to ask yourself is whether the low purchase price plus the cost of repairs or finishing a home will still be a bargain at the end of the day. Remember the old saying before you jump in, if it looks too good to be true, it may be.