Purchasing a home with water damage can be a risky investment, but it can be a huge pay day if you can repair the damage. A home might have water damage for many different reasons, including flooding, a burst pipe, leaky roof, or neglect. Water damage may lead to other hazards, such as unsound walls and mold. The cause of the damage needs to be inspected to ensure the problem can be fixed and prevented.
Have the home examined by a professional home inspector. Find out the extent of the water damage and the estimated cost to fix it. Add 25% of to the estimate the inspector gives you. Also, ask the inspector the additional cost of repair if the water damage persists after repairs. Get a copy of the home inspection report.
Choose a contractor that specializes in water related damage. Shop him/her the home inspection report and get an estimate on the repairs. At the end of the day you will be paying the contractor, not the home inspector, to repair the home. Besides, it is always good to have a second opinion. Have the contractor see and evaluate the home if possible. Contact multiple contractors to get an even better idea of the damage.
Write down the estimated cost of repairs. There is more than one way to do this: you can average all of the estimates, choose the one you think is most accurate, or utilize your own criteria.
Then, get the market value of the home by asking real estate agents for sales data for comparable houses in the neighborhood. You can expect to sell the home for about the same price as these houses once the home is brought up to the same condition.
Subtract the costs of the repair from the property’s market value. That is the approximate value of the home before restoration. Your initial bid should be at least this low, and possibly lower, since you are going through all the trouble to repair the home (which has value in itself).
Include in your offer that your bid is factoring in the water damage to the home in Michigan. If you are using a real estate agent then he/she will present the bid to the seller/selling agent.
Review the contract to ensure all the terms are correct and any contingencies you added, such as the home being able to qualify for homeowner's insurance, are present. Contact an attorney to have the contract reviewed if you are unsure about any terms. Sign the contract when ready.
Obtain loan quotes from multiple lenders to ensure you are getting the best terms available to you. Unless you plan to pay for the water damage out of pocket, then you will probably include the costs of repair in the mortgage.
Once the mortgage papers are signed and the deed is filed, the house is now legally yours. Begin work on the home as soon as possible before you move in or sign in a renter.
Aaron’s Restoration has been providing Michigan restoration services to residents in Macomb, Oakland, Wayne, St. Clair, Lapeer, Washtenaw, Monroe, and Livingston counties. A veteran-owned business, Aaron’s Restoration has been helping Michigan residents with water damage for over 15 years..
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