Five Tips for Avoiding a Money Pit

more+
less-
more+
less-

Some good news — finally — when it comes to the housing market in the Atlanta area: If you want to sell your house, now might be the time.

Why? Because median list prices for homes are on the rise. If you want to sell a house, perhaps to buy something more affordable, this is good news. However, as a buyer, you still want to avoid purchasing a home that could leave you mired in repair costs — a house often referred to as a money pit.

Although foreclosures and flipped homes — those purchased in poor condition and renovated for quick resale — may seem like bargains at first, you should consider the following before buying one:

  1. Make sure the structure of the house is sound. Pay particular attention to the basement, if there is one, because it is usually where you can examine the condition of the plumbing, electrical and HVAC systems, the repairs for which are often extremely expensive.

  2. Examine the foundation. If there are large trees close to the house, it may indicate an issue, as their roots can cause foundation damage. Also, examine the floor and drywall inside for cracks and openings.

  3. Look for signs of water damage. Check bathrooms and the kitchen, caulking around showers and sinks, and ceiling fixtures for signs of moisture, mildew and cracks. Water damage is very costly to repair and common, especially in older homes.

  4. Would you need to make extensive cosmetic changes? Changing the paint in a room or two isn’t a costly enterprise, but if you really dislike a lot of the house’s design and décor, you may find yourself making a barrage of changes that can quickly add up to far more than you expected.

  5. Evaluate the mortgage options and budget in the monthly payments. Above all else, be certain you can afford what you want to buy without having to dedicate most of your pay to keeping the home. Also consider the taxes, heating and air conditioning costs, and every other regular payment related to the house you would need to take on. Being house-poor is a common problem and a frequent contributor to the need to declare bankruptcy.