With every good deal there are always some hidden items that need to be addressed. First of all, finding the bank-owned house that meets all of your criteria can be a bit of a task. Then negotiating an agreeable sales price and date with the lien holder(s) can be difficult. Lastly, the financing can be a real hurdle, especially if the home needs a significant amount of repairs or updating to meet your needs. None of these items can be taken lightly, and all of them require the right amount of guidance from seasoned professionals to make the process as smooth as possible.

Once a home has been found that seems to match most of your criteria, the next most critical step is determining what remodeling or repair work needs to be done to get the house into move-in condition. Even brand new homes that are being auctioned off generally will have extra costs associated with them for deferred maintenance or items that the original builder did not finish. The whole rest of the process of purchasing the home hinges on this one step, for without developing a cost for construction there is really no way to make an informed offer to purchase the home.

To determine the cost of the repairs sounds simple; just call a couple contractors and get some estimates. Sounds easy enough, right? Not exactly. The best way to go is to get the home inspected by a reputable home inspector, and preferably one who is experienced in building science, meaning they can distinguish between cosmetic issues and real problems. You should let the inspector know what your plans are for the home so that he can build his inspection around your intended remodeling or updating. If the house has any cracks of appreciable size or unknown origin I would strongly advise that a licensed structural engineer be brought in for an inspection. Your home inspector, unless licensed as a structural engineer, cannot advise you on how to correct structural deficiencies, so it is very important that if abnormal cracking is seen in foundation or sheetrock walls that a structural engineer be called in for a separate inspection.

With the inspection(s) complete it is now possible to move forward with the cost estimating. Determine what items you will fix, what will be updated, and what will be remodeled entirely. Also, will you be performing the work yourself or will a contractor be involved? That is a question that only you can answer, but it needs to be decided at this point, and if there is any question about tasks that you may or may not perform yourself then for now plan on having the contractor take care of them. This way you will lessen the chance for budget surprises on down the road. Using a contractor may be the right move for you, and if it is then the time is now to quickly get the estimate for construction put together. Be careful to work with a contractor that is well-versed in home remodeling and renovation, and be sure that they are very detail-oriented. Remember, the offer you make will be based upon what the estimated cost of construction is, and once you have an accepted offer there are no “do-overs”.

Following a good process and relying on experienced professionals can allow you to make the right purchase, and customize the home to your liking without breaking the bank. For personal use or investment, purchasing bank-owned property can be an excellent investment. For more tips on purchasing foreclosures check out The safest ways to buy foreclosures.

Prior to 1978 there were many products used in the construction of housing that contained lead, such as paint, stains, varnishes, and other surface coatings. Lead was added to these products to improve durability and color. The use of lead in these building products was banned in 1978 by the Consumer Products Safety Commission as the health risks to humans posed by lead became apparent. Lead exposure causes permanent health damage and is especially hazardous to children and pregnant women.

The activities typically associated with renovation, such as sanding, cutting, and demolition can create large amounts of lead dust and chips when done in homes containing lead-based surfaces. The new RRP rule went into effect on April 22, 2010, and it requires that all contractors who work on projects in pre-1978 housing must be certified and follow specific work practices to prevent lead contamination. Contractors must take an eight-hour EPA approved training course from an EPA-approved training provider which teaches specifically how to test for lead, contain the work area, minimize dust, and clean up thoroughly.

Few exceptions to the new RRP rule exist. Homes that were built pre-1978 and even some built shortly thereafter need to be tested for lead using an EPA-approved lead test wherever renovation activities are to take place. If lead is detected on any surfaces then homeowners can opt to do the work themselves on their own residence, but if they use a contractor to complete the work the contractor must have RRP certification and follow the RRP lead-safe work practices. Rental homes are not exempt from this rule and cannot be worked on with any renovation activities disturbing lead-based surfaces unless the landlord or the contractor has their RRP certification.

The effects of the new RRP rule are far-reaching, and significantly change the cost of renovation to pre-1978 housing. Maximum civil penalties for non-compliance can be up to $32,500 for each violation, regardless of whether firms are certified or not, so ignoring the rule is not a good option. Following lead-safe work practices adds significant time and materials to any project, not to mention the up-front cost of testing to determine if lead is present. Before even developing a scope of work the contractor should test for lead in the areas to be renovated, simply because if lead is found it will significantly change how the scope of work will be performed and the estimated costs. Also, those considering the purchase of a home built pre-1978 may also want to have some spot-testing done on the home that they choose, as the presence of lead-based surfaces will impact their abilities to perform renovation projects in the future. Some projects will become cost-prohibitive if lead is present due to the overwhelming additional cost of meeting the RRP rule standards.

To find out more about the new RRP rule you can go to the EPA website, http://www.epa.gov/lead/pubs/renovation.htm. We are a RRP certified firm so you are also more than welcome to contact us for more information as well.