Thursday, January 8, 2009

Preliminary Groundwork

Hi All!

Here's a photo of the repo. As I said, it's been vacant for a while hence the summertime photo. It was built in 1946 and remodeled in the late 1960's or early 1970's.

I would recommend that you get your insurance negotiated before your closing if you are paying cash. The insurance agent made me privy to claims on the property that gave me clues as to what to look for. For example, the previous winter $3,000 worth of water damage claim was made against the property. Ice dams in the eaves? Frozen and burst pipes? The insurance agent wasn't able to give me more information than that.

Of course, I had the inspection but because we are in the dead of winter and the house is winterized, the water could not be turned on. The inspector gave me a list of items to improve upon, many of which, gratefully, are quite minor and will eat up alot of my HGTV (Home/Garden telelvision channel) watching time. These are things like improper joist support nails, crawlspace uncovered creating a potential radon gas seepage, screens for all windows, deadlock bolts on doorways not in place... the list goes on but are fairly easily remedied.

The city inspector has a list as well and where I am this significantly impacts property sales. The city inspector double checks all property improvements against permits that have been pulled in the past. No permit, then the new owner has to pull the permit have the work checked over and possibly redone by a certified contractor and have it inspected by the city. That way the city is certain all work is done to code. The problem is a contractor must estimate the cost of bringing the property up to code (including cost of permits) and then the city requires the buyer to put that amount of money plus an additional half into an escrow account held by the city until the work is completed and inspected. One draw on the escrow money can be made in the time estimated for completion then the balance at the end. In my case, I had to put $6,000.00 into escrow ($4,000.00 in estimated repairs by the contractor plus a half more of $2,000.00). Personally, I'm not opposed to this as it ensures all the houses in this area are quality homes. But, I do see where in some cases the escrow amount can be formidable for some buyers of repos.

So, I'll leave you with a short quote: "Think big, start small." ~ Patricia Fripp ~

Have to go make some plans for improvements!

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