When purchasing any property, it is a good idea to get a home inspection. Once you have the inspection report, what next? Review the findings, determine if they are cosmetic, structural or will require extensive repairs. If you have a repair limit on your contract, then you will need to prioritize your repairs and document those that you would like completed. An addendum or the inspection report will need to be provided to the seller. However, if your repairs exceed the repair limit or you have an as-is contract - you face a dilema: Withdraw or Not?
Only you can truly know when it is appropriate to withdraw your offer to purchase. In order to make this determination, you should look at the home inspection, termite inspection and any contractor’s estimates together with the agreed sales price of the home. If the total to purchase and repair is higher than:
a. The values in the neighborhood.
b. The amount of money you have available to spend.
c. The amount of money you can qualify to borrow.
OR
d. All of the above
Then you should walk away from the purchase. It would be impossible for almost anyone to know in the approximately 20 to 40 minutes you spend initially looking at a house to determine if this is the right purchase for you. Remember that the bank has no knowledge of the issues and/or repairs a home has undergone in most cases. When buying foreclosed properties you have to be an investigator before an investor. Use caution, good sense and as many resources as you have available in making this major investment in your life.