This is the third post in a blog series on tips on home buying that will protect you in bidding war scenarios. If you’re just joining us, you can read Part 1 and Part 2 first.
Tips on Home Buying – Analyzing Risk and Reward
If you added my clients’ maximum sales price to the cost of the amount of work the home needed to get the home up to the after-renovated value of other homes in the subdivision, the total was a little under this value. Since my clients were planning on living in the property over the next few years and not fixing and flipping it, they were okay with not making a ton of money after they fixed it up. Since they aren’t professional investors, they're not really looking for a sizeable profit margin.
Long story short, the sellers in this scenario went with another offer. My buyer clients were mildly disappointed, but felt good about the fact that they didn’t overpay for this property. I found out from the listing agent that the offer the sellers chose had a higher sales price and the buyers didn’t even have a home inspection!
Often, buyers of fixer-upper properties will waive their right to a home inspection as a way of making their offer more attractive to sellers. This is fine for investors who have a greater tolerance for risk and who know contractors who can take care of a lot of work for cheaper prices. However, for an average buyer, especially first time home buyers, an inspection is an absolute must.
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