Home Buyers + Construction Pros = Due Diligence

Most people who are in the market for buying a home that is in need of repair or renovation are not home-construction experts — and they don’t know what the various necessary upgrades will cost them. That’s why it makes sense to reach out to a reputable local construction expert for information before you make the offer on a property purchase. We get calls from people in this position often, and this is the advice we give them:

• Your real estate agent, who is working on your behalf, should provide you with comparable values for the property you are considering. Your agent can also tell you where that property may be falling short, in terms of value and saleability. For example, does it have enough bathrooms? Is it up to date? What other features should it have to be at the top of comparable values in the area? Are those features that you are willing to invest in?
• Once you find a property you want to put a serious offer on, you should reach out to a building professional for some assistance in developing your renovation budget. That budget should be weighed against what the comps and your offer will be. If you do not yet have a relationship with that construction pro, you should expect to compensate them for their time. A good carpenter might bill you $70/hour; a design-build pro might run $120/hour or more. Small structural repairs and a bathroom refit with no design might be perfect for the carpenter, while a complicated project like a kitchen or addition require a design/build professional who has experience in those types of projects.
• Most property buyers do not need to have full plans and exact budgets to formulate their offer. If you come away from discussions with your building pro with a ballpark range of expected costs — with a 10-15% cushion added for contingencies that might be found once walls are opened up — you should be in good shape to make your offer.
• Once you close on your property purchase, reach out to the construction pro who helped you with the purchase and offer them the work on your new home. In this way, you develop trust with a valuable ally on your wealth-building team.

P.S. This article also appeared as a guest blog this week for The Somers Team of Philadelphia.