Why the Cheapest Home Isn’t Always the Best Deal

Affordable homes for sale are a rare find in many markets, and it can be tempting to jump at the opportunity for a great deal. But are these homes a good investment? Just like a car, you should be suspicious of surprisingly low prices.

With cheap homes for sale, there are often hidden issues like missing or degraded insulation, electrical problems, or foundation cracks. Knowing what to look for and what questions to ask is key to avoiding the dreaded money pit.

Hidden Flaws in Cheap Homes for Sale

When you’re touring homes, you don’t have a lot of time to do a close examination. With a coat of paint, some flashy upgrades, and professional staging, sellers can create a dazzling gem that distracts buyers from serious issues.

Here are some problems that aren’t immediately obvious when you first tour a home:

Structural and Foundation Issues

Cracks in the foundation or drywall, sloping or uneven floors, walls that don’t meet at right angles, and doors and windows that don’t close properly are all signs of settling, shifting, or other foundation problems. These are commonly seen in affordable homes for sale. Repair costs can go anywhere from $500 to seal minor cracks to $25,000+ to underpin the foundation.

Water Damage and Mold

It’s not unusual for affordable homes for sale in Central Florida, Coastal Texas, and other flood-prone regions to have water damage that hasn’t been properly remediated. Mold can quickly grow in places that are difficult to access without removing drywall and insulation.

Water damage is quite easy to cover up with fresh paint and wallpaper, carefully placed furniture, and an air freshener to disguise musty odors. However, these are not permanent fixes, and water and mold can cause structural rot as well as serious health issues.

Patching a small leak might cost as little as $300, but mold remediation can be very expensive, up to $10,000. Replacing rotted framing can be even costlier depending on the extent of the damage.

 Electrical Problems

The electrical issues in cheap homes for sale often go far beyond a shortage of electrical outlets; old or worn wiring and overloaded panels are fire hazards and building code violations. In some cases, you may just need to replace an outlet or install new ones, but this comes at the cost of hiring a licensed electrician, who could charge $150/hr just to show up at your house. If you need to rewire your entire house, it could cost you over $20,000.

Plumbing Issues

When you tour a home, it’s standard to try all the taps to make sure the water pressure is sufficient. However, this won’t tell you everything you need to know about potential plumbing problems in the home. Leaky pipes and previous sewage backups are easy to hide. If there’s a leak inside a wall, the sellers may not even know about it.

Small leaks are straightforward to repair, and an experienced DIYer can handle these jobs. However, if you need to replace some piping, install a backflow valve, or replace your sewer line, you will need a professional. Like electricians, plumbers don’t come cheap, and they may need to pull down drywall or remove flooring to do a proper repair. These jobs can easily run over $10,000.

Outdated HVAC and Ventilation, and Poor Insulation

Air movement, cooling and heating, and an efficient furnace and AC unit are essential for a home that’s safe, healthy, and comfortable for inhabitants. Pay close attention to HVAC issues if you’re looking at affordable homes for sale in Los Angeles and other cities where air quality is sometimes poor.

Whereas minor duct repair can be inexpensive, replacing a furnace and AC unit can cost over $10,000, and full HVAC replacement can be over $20,000.

If the homes you’re looking at are listed for surprisingly low prices, be wary of these issues and others that aren’t immediately obvious. Never skip the home inspection, no matter how much you want the house and how much pressure there is to close the deal.

Location Matters in Cheap Homes for Sale

When looking at affordable homes for sale, ask yourself if the location plays a role. Proximity to good schools, transportation routes, parks, and other amenities increases your enjoyment of the home and also helps with resale value.

Choose areas that have access to great amenities or that have development plans in place to build them. Opt for parts of your city with low crime rates, a growing business core, and pride of ownership. Although you may have to pay a premium for these features, it’s a much better investment than a cheap home for sale in a declining neighborhood, which may never appreciate in value.

Financing and Insurance Considerations

Affordable homes for sale are sometimes in such poor condition that they don’t qualify for traditional financing. In those cases, you might need alternative financing, which will come at a much higher interest rate.

Getting insurance can also be problematic, especially if the home is priced low because it’s in a disaster-prone area. Homes in flood zones, areas where hurricanes are more likely, and regions that have wildfires are sometimes uninsurable. Even if they can get their fixer-upper insured, home buyers need to be mindful of the number of claims they can make before their policy is cancelled.

Affordable Homes for Sale

Whether you’re looking for affordable homes for sale in Denver, great deals in Chicago, or bargain properties in Portland, the same rules apply:

• Do your due diligence and never skip the home inspection.
• Don’t get distracted by fancy features; if a home seems like it’s been fully renovated, but it’s still priced below market, suspect unseen issues.
• Approach your home purchase as an investment: ask yourself if it’s likely to appreciate in value and if you’ll be able to sell it down the line.
• Use a real estate agent with extensive experience in the area.

By following these guidelines and getting advice from a trusted real estate agent, you’ll find a home that has true value and not just a low sticker price.