How to Protect Yourself When Buying a Historic Home

January 11, 2023
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Historic homes are beautiful houses that have a long and interesting history. You might have your eye on one that the same family owned for years or one that has national, regional, or local recognition. While these homes are gorgeous, they come with some drawbacks that might make you think twice about owning one. They may require more work to bring up to code or make more modern and have features that you never saw in a previous home. Learn how to protect yourself when buying a historic home to save time and money.

Look for Restrictions of Historic Home

One thing you need to know about historic homes is that they often have restrictions that prevent you from doing some of the work you planned. A good example is a home that is on the National Register of Historic Places as you may find that you cannot make any changes to the home without approval from the Department of the Interior. If you buy a home in a homeowner’s association (HOA), the HOA will require that you use their guidebook when you make improvements or upgrades. You usually need to ask for approval and submit your plans before you can do any work.

Get an Inspection

When the market is hot, buyers often make offers on homes without getting an inspection first. You should never buy a historic home without first getting an inspection. The inspector will make a list of anything they find that you will need to fix later such as broken tiles on the roof and signs of flooding in the basement. You’ll also find out if the home is safe for your family. The inspection gives you a way to negotiate on a historic home, too. You can ask the sellers to reduce their asking price or make some repairs for you. The cost of a home inspection ranges from around $200 to more than $500.

Focus on More Than Just the Historic Home

You should always look at more than just the historic house because many of these homes have outbuildings that are on the property. An old farm, for example, may have one or more barns, a corn crib, and a smokehouse. Even if you buy a historic home in the middle of the city, it can include a garage and/or carriage house. You need to look at all of the buildings to see how much work they need. Working with restoration contractors in Denver or your local city can help you get a better understanding of how extensive the restoration will be.

Historic Home

Pay for an Appraisal

An appraisal is different from an inspection. While an inspection reveals any potential problems with the house, the appraisal simply tells you how much it’s worth. The professional will compare similar homes that recently sold along with the home’s features, overall size, lot size, and other factors to give you the bottom line. The appraisal can help you see if you can afford to buy the home based on the mortgage you got. You can also use the appraisal to see if the home is worth your money based on the tax credits you receive. Many states have programs that reduce the amount of taxes you owe based on how much you spend to renovate a historic home.

Seek Lender Approval First

Never look at historic homes for sale in your area until you get lender approval. Most lenders have a pre-approval process that lets you qualify for a mortgage before you start shopping. Make sure the lender knows that you have an interest in older homes. Some lenders are leery about loaning money to borrowers for older homes because they require so much extra work. There are a few government loan programs that help first-time and other borrowers qualify for loans for these homes. Keep in mind that you usually cannot borrow money to pay for any repairs though. You’re responsible for covering those costs out of your pocket.

Looking at all of these factors is a good way to see if buying a historic home is right for you. To protect your investment, you need to get an appraisal and inspection. Make sure you look at any renovation restrictions you might face and all of the buildings that are on the property, too.

Regardless of what you do, finances are always the issue. There is nothing unusual in your desire to save some money, but sometimes this is not the most recommendable course of action. When you are buying a home, chances are good that this purchase you will have to do only once in your lifetime. Trying to save money here can cause some serious problems in the future. One of the ways not to spend as much is to go bargain-hunting on your own, without a professional help and this can sometimes be equal to walking into a trap.

Avoid lowballing

First of all, every property has its price. It can be easily assessed how much some property or the building is worth but keep in mind that real-estate agents are also there for a profit. Lowballing the price cuts their profit and that is something they won’t look kindly upon. There are also some common lowballing mistakes that buyers are making and that you should be aware of like not understanding the market or not backing up your price.

Although you should always think of your budget first, try to put yourself in the shoes of people in the real-estate business. Acknowledge the risk they took and their own financial interests. This should help you see just how far you can go in your aspirations to lower the price of the property.

Image source: Flickr
Image source: Flickr

Keep up with the competition

Even though there are a lot of people out there who go bargain-hunting on their own, a lot of home buyers prefer to get a professional help. Let’s face it, there are many advantages that a good real-estate agent brings at the table. Just keep in mind that someone who trades in homes for living knows all the tricks of the trade and is not a force to be reckoned with. This means that once you find a truly great deal, you need to act fast in order for it not to be snatched in front of you.

Too good to be true?

If some offer sounds too good to be true it usually is. True bargains are a rare commodity and some homes might come at a great price but require a lot of work. Every once in a while it happens that this additional work makes a purchase not worth even at a significantly lower price. The most important thing, not just of bargain-hunting but of property purchase in general, is to recognize a money pit when you see one. Sometimes, you need to pay more in order to save a substantial amount in the future.

On the other hand, sometimes with just a bit of work you can increase the price of your property many times over. Because of this, it is often a great idea to hire a contractor as a consultant or just ask for an advice before you purchase a home. Do you mathematics right and you should be on the right path already.

Image source: Flickr
Image source: Flickr

Price alone is meaningless

Although price is an important factor in home purchasing, it should never be a determining one. First of all, you need to have a clear vision of what you want in a home. Buying a home that doesn’t suit your needs only because it is affordable is never a good idea. Remember, this is a purchase that takes place once in a lifetime so treat it as such.

One thing is certain, when buying a home on your own you can never be too careful. This journey is a perilous one even with all the help and you have just decided to take it alone. However, this does not mean that you are automatically doomed to failure. Watch your every step, measure your every action and, if the need arises, do not be afraid to ask for help.