A small percentage of homes on the market will not be in move-in condition. You would not even think about moving your family into this home, until you made some major changes.

A home may be under power-of-sale and the prior owners will not see a cent from its sale and they do not care about the home’s condition. In fact, in some cases, prior owners of power-of-sale homes may have torn out major items such as sinks or bathtubs and all the light fixtures.

A home may have been rented by an absentee owner who was not around to see the damage that the renters were doing to the home. Now the home is on the market and it needs a lot of work.

Warning: When you first walk into many fix-up homes, you will feel very discouraged. You may wonder, “How could anybody ever leave a home like this?” You will certainly question how you could ever move in and live in “this disaster.” But if you have the tools, the skills, the time and the patience to take a fix-up home and restore it to live-in condition, you will be able to buy the home at 10 per cent to 15 per cent below what its market value would be if it were in good condition.

Not only does a fix-up home present an opportunity to buy the home at a lower price than its potential market value, it also gives you the opportunity to renovate the home to your design. Maybe you want to tear down the dining room wall and make a small kitchen and a small dining room into one large and bright combination kitchen/family room. You might want to tear up the carpet that is in terrible condition and replace it with new hardwood floors.

It takes imagination to walk into a fix-up home and picture how it would look after you renovate it. It will take a lot of patience to move in and live with the mess while those major and minor renovations are being done.

If you do have the time, the skill and inclination to buy a fix-up house and make it into a home, there are several options you may want to consider.

If you can delay moving into the fix-up home until you have completed major renovations, you will avoid the hassles of living in the middle of a major mess. You can agree to an early closing but stay in your current residence for another 60 to 90 days. Make your offer contingent on the seller paying your current rent or mortgage payment through the 60 to 90 days until you move in. This approach gives you the home at below market price and it gives you time to renovate it to your liking.

A dangerous option is to negotiate authorization to renovate the home prior to closing. This proposition is risky as something could go wrong with your deal and all the time and money you spent on improvements could be lost. If the home is in terrible condition, it is probably under power-of-sale. A home under power-of-sale may have other legal complications which could delay or even void your offer to buy.

Before you make an offer of any kind on a fix-
up home, be sure that you and your real estate sales
representative have spent some time with your lawyer. A local lawyer may have a better knowledge of the legal conditions pertaining to the home in which you are about to invest your life savings.
Move fast to get your offer in and secure the home at the price you are willing to spend. Move slowly and cautiously by leaving yourself several escape clauses so that if there are legal complications or serious defects in the home, you can walk away from the deal and get your money back or negotiate a better price.

A fix-up home, whether it is under power-of-sale or just on the market, can be an excellent bargain for the right buyer. It can also be a legal quagmire, so be sure to take extra care with your real estate sales representative and a local lawyer to protect your investment.