How to Avoid Buying a Money Pit Home

Well, it’s happened again in Colorado Springs.  A buyer bought a home that had a previous history of condemnation! An Investor bought it, did some patching up so that it’s flaws weren’t noticed, then resold it at a premium price. It looked beautiful inside and the buyer fell in love with it not knowing she was buying a money pit and basically a home that should never have been sold in the first place! It had slipped through the cracks between Regional Building and Code Enforcement but through its history on the MLS, there were red flags. Red flags that an experience and knowledgeable Realtor would hopefully notice.

This is nothing new. Unless you’re working with a savvy Realtor who will do their due diligence for their buyer, purchases can go seriously wrong. There are certain clues that an experienced Realtor will look for and advise the buyer of what they suspect. Keep in mind that a Realtor is NOT an inspector however they should be looking for clues and signs that there could be something wrong with the home. They should also be looking at the home listing history as well as pulling building permits so that they can provide their buyer with the most information possible so that their buyers can make the best decision possible for themselves!

When I looked at the previous listing history of this home, the red flags were flying. Keep in mind, homes built around the turn of the century weren’t suppose to last 100 years. They were built on rock or cinderblock foundations which crumble over time. There are telltale signs to look for…some more obvious than others but just by looking at its history told so much that could have warned this buyer before she bought it.

Even the best remodeled home will show signs of problems IF you know what you’re looking for. From there, if the buyers still want to write an offer, it is an agents duty to add in certain terms to the offer to help protect their buyer as well as putting some responsibility on the seller to remedy if they want the sale such as having a full structural engineers evaluation performed at the sellers expense.

Buyers also have the right to any inspector they want to hire. Unfortunately, some buyers look for the cheapest inspector – you get what you pay for, needless to say. Inspectors do NOT have to be licensed but there are certifications that they can get that will set them apart of Mr. Joe Inspector. A good Realtor will accompany their buyer throughout the inspection as well so that they can relay any deficiencies in written form to the sellers agent. So basically speaking, a Realtor isn’t there “just” to open the door to let their buyers inside. A Realtor should do as much as possible and obtain as much information as possible to help their buyers make that final decision.

Beware working with a For Sale By Owner ( FSBO ) or buying a bank owned home. Without proper representation by a qualified and knowledgeable Realtor, the money you think you’re saving could amount to tens of thousands of dollars in repairs.