Real estate investors in North Carolina often like to buy older, poorly-maintained homes. Buying a fixer-upper for cash gives you the opportunity to turn a significant profit. Through investment and sweat equity, you can turn a nightmare house into someone’s dream home.
It is amazing what some new wires, fresh paint and new floors can do to improve the purchase price of a property. If you intend to list and sell a residential property that you recently rehabbed, is the best solution to the property in as-is condition?
North Carolina requires specific disclosures
At first, you might think that listing a property as-is makes perfect sense for an investor. You want people to make a decision based on impulse and the appearance of the property, not the condition it was in when you bought it.
The good news is that you don’t have to disclose every issue that was there when you purchased the property, only the defects that you did not address while working on the home. North Carolina requires that you disclose anything that would affect the safety of the new occupants, as well as any known defects that could impact the value or use of the property.
If you know, for example, that the foundation is uneven, you have an obligation to disclose that information to the buyers. Intentionally hiding known issues with a property can lead to liability and possibly a civil lawsuit brought by the buyer who did not make an informed decision because of the information you with help.
Sharing everything up front protects you and could lead to profit
Choosing not to list every issue with the property or repair that you made might make a property look more attractive at first glance. However, if the buyer learns that you purchased the property to rehab it, disclosing all of the investments and repairs you made may actually help.
They will be able to understand the increase in price based on the work you invested in the property. They may also feel more inclined to make a purchase if someone else has already invested substantially in the property, making any future repairs seem like a good investment and not a waste of resources.
When you inform potential buyers of not only the issues that still exist in a property but also all the problems you have corrected, you give them all the information they need to make the right decision about buying your investment property. Learning about the rules that govern real estate closings in North Carolina can help you protect yourself and your business.