Home Purchase | St. Thomas US Virgin Islands Real Estate

From Ashes to Assets: Making an Informed
Decision on Buying a Damaged House- this is a guest blog by Courtney Rosenfeld

Buying a home is one of the biggest investments anyone can make, which is why
it’s essential to perform the necessary due diligence when making such a
significant purchase. However, what happens when you’ve found the perfect
property, only to discover that it has suffered significant damage? Whether from
a natural disaster, burst pipe, fire, or other catastrophic event, discovering
damage in a potential home can present a dilemma for buyers. Should you move
forward with the purchase, negotiate repairs, or back out of the deal altogether?
In this article from Real Solutions Real Estate & Management Services, we’ll
explore what to do when buying a home with significant damage.

Navigating the Complexities: Hire an Attorney
The first step to take when discovering significant damage in a potential home is
to hire a real estate attorney. A real estate attorney can help provide legal advice
throughout the process and ensure that all aspects of the transaction are
handled properly. They can also review the home sale contract and assist in
negotiating the terms of the sale.

Consulting an Expert: Discussing Options with Your Agent
Next, call your real estate agent to assess your options. They have years of
experience in the industry and can guide you in deciding whether to continue with
the purchase or renegotiate the price based on the repairs required. They can
also help navigate the inspection process and negotiate with the seller. In
addition, your real estate agent can offer valuable insights on the potential resale
value of the property after repairs, helping you determine if the investment is
worth it in the long run. They can also provide recommendations for local lenders
who are familiar with financing options for damaged properties, ensuring a
smoother mortgage approval process.

Don’t Get Overwhelmed: Organized Housing Documents
Organize your housing documents by color-coding files. This seemingly simple
step can help you keep track of all necessary documents, including inspection
reports, insurance information, and repair estimates. Color-coding and labeling
files specific to a particular repair or issue can help you find what you need
quickly in the future.

Examine the Details of the Contract
Review the home sale contract and understand its terms. This contract should
stipulate what should happen if any damage is discovered during the inspection
process. It should also outline whether the seller or buyer is responsible for
repairs. Understanding the terms of the contract can help you decide whether to
move forward with the purchase, renegotiate, or back out altogether.

Seeing Clearly: Having an Evaluation
After reviewing the contract, have a home inspector and contractor assess the
damage. Having professionals assess the damage can help you better
understand the severity of the issues and the necessary repairs. They can also
provide estimates for repair costs, which can aid in negotiations with sellers.

Negotiating the Big Picture
Finally, do a thorough walkthrough before closing. This walkthrough provides an
opportunity to ensure that all necessary repairs have been made and that the
property is in the condition agreed upon in the contract. If there are any
outstanding repair issues, negotiations can continue to allow for necessary
repairs before closing.
Purchasing a damaged house can be a risky yet rewarding endeavor. By taking
the necessary precautions and seeking professional advice from a real estate
attorney and agent, you can make an informed decision. Organizing your housing
documents with color-coded files will help you stay on top of the process and
ensure a smooth transaction. Remember, turning ashes into assets is possible
when you approach the situation with caution, diligence, and the right resources.

For boutique realty services in the US Virgin Islands, contact Real Solutions Real
Estate & Management Services today!

For many Americans, purchasing a home is not only about establishing roots in a community, but it’s also a step towards building generational wealth.

However, barriers exist and, for Black Americans in particular, homeownership dreams have been historically diminished or denied and their neighborhoods and communities devalued.

Ayesha Selden grew up in the ’80s in a Philadelphia neighborhood which she describes as, “The kind of neighborhood where you played outside at your own risk. It was rough, however, it was just walking distance to downtown Philly.”

When Selden was nine years old, her mother purchased a small home where she, her sister and grandmother lived until her mother married and decided to sell the home. At this same time, Ayesha was moving on to begin her studies at nearby Temple University, but she advised her mom not to sell — Selden had a feeling the house would be worth more in the future.

Selden was correct in her housing market predictions. By the time Selden was 24 and able to purchase her first home, she’d been priced out of the neighborhood she grew up in. The neighborhood, revitalized with green space, is now seen as desirable for its walkability and proximity to downtown. Selden says the house her mom once owned is worth over $600,000. Her mom had sold it in the late ’90s for just under $40,000.

Selden, now a successful certified financial planner, private wealth advisor and real estate investor, tells her clients and followers on social media to “not sell grandma’s house” in an effort to protect Black communities against housing instability and focus on ownership. “I knew our communities would turn,” Selden reflects. “The only way we get out of the rent being too high, is through ownership.”

Unfortunately, Selden’s experiences are not unusual. Her advice to Black communities to maintain prior generations’ assets to build wealth is wise. What’s more, it could take root for more people as lasting efforts to address these inequities by changing policies and lending practices to create more equitable access to homeownership.

A young couple moving items into their home.

Black homeownership historically

A 2015 Social Science Research Council report commissioned by the ACLU notes that the 2008 crisis all-but wiped out the gains of homeownership amongst Black Americans that hadn’t been seen since the 1960s. Compounding that, the current pandemic has exacerbated housing instability for Black families across the country.

However, this inequity is not just the result of economic ups and downs over the last few decades.

“Because of anti-Black legislation, many Black residents or residents of Black majority neighborhoods of the past could not pass on wealth to their children, and those children could not pass on wealth to their children,” explains Dr. Andre Perry, a senior fellow at the Brookings Institution.

Dr. Perry’s research points not just to barriers to homeownership, but also to how Black homes in Black neighborhoods are often devalued by as much as 23%, or about $48,000 per home, resulting in about $156 billion in lost equity.

“It goes without saying, we also need to remove the dredge of racism that extracts wealth from those neighborhoods: like bad appraisal practices, bad real estate agent behavior and predatory lending,” Dr. Perry says.

Two young girls run through stacks of moving boxes.

Policy plus affordability

Dr. Perry’s proposals for equity around homeownership also include the creation of new mortgage products that will enable low-income renters to purchase low-priced homes. “There are thousands of homes throughout the United States that are priced below a point that a bank will back with a mortgage,” Dr. Perry states. “So, we need to figure out ways to enable low-income renters to move into those homes.”

Alternative credit scoring systems may also help, Dr. Perry contends. “When you don’t have wealth, it’s much more likely you’ll fall into debt, and that’s one of the reasons why Black people, in general, have lower credit scores, is because we have lower wealth historically,” Dr. Perry explains.

Dr. Perry notes that a comprehensive approach is not focused only on individual homeownership alone. “We need policies that really revisit how we got out of the Great Depression, [where] we invested in people in the form of low-interest loans and down payment assistance. But we also need to invest in place. Many of the areas that Black and brown people live in have been, and are impoverished, because of a lack of investment in those areas,” Dr. Perry says.

Access to home loans

Homebuyers’ access to homes that are affordable goes hand in hand with access to home loans that can help them finance their purchase.

Quote

Homebuyers’ access to homes that are affordable goes hand in hand with access to home loans that can help them finance their purchase.

End Quote

While efforts to make capital more accessible to Black citizens seeking to purchase is key, it also requires a community. Selden even suggests that new homeowners “house hack”: rent out a spare bedroom to help with payments and find unique ways to use their homeownership to help put others in a position to buy a home of their own.

“Group economics will give [Black people] the ability to accomplish more together than individually. We need to make sure that we put [Black communities] in a position to win,” says Selden.

Sherrell Dorsey is founder, and CEO of The Plug, the go-to business media and insights platform examining the Black innovation economy. You can view more of her work at tpinsights.com.