Imagine you’re shopping for a new home and come across a listing that seems ideal. It’s in a great neighbourhood. It has all the characteristics on your “must-have” list. You can see yourself living there.
However, there are a couple of serious maintenance issues that are likely to need attention within the next year or two. For example, the roof shingles need replacing or the wiring needs to be updated.
Those fixes are going to be expensive. Does that mean you should take a pass on making an offer?
Not necessarily. While it’s nice to buy a home that is move-in ready (or close to it), it can be advantageous to purchase a property that needs some repairs and upgrades.
Depending on market conditions, a home with such issues may be priced lower than comparable properties. So the money you save can be put towards the work. In addition, other buyers are seeing the same issues and, as a result, may not make an offer. That means fewer buyers and less competition.
On the other hand, you need to weigh those advantages with the estimated cost of the required repairs and upgrades. Will you have room in your budget to get the work done when the time comes? How much will that work likely cost?
(Chances are, you can get a rough estimate of the cost of the repairs and upgrades required before you make an offer.)
The bottom line is, you need to get all the information you can and then make a strategic decision. Often, it is worth purchasing the property.
