Fix It Before You Sell It?

The subject of many real estate-related conversations seems to be the number of vacant homes on the market.  Within the Twin Cities metro area and out around the rest of the country, foreclosures have increased the supply of available houses far past buyer demand.  To deal with the excess vacant houses, several suburbs are considering controversial policies which require home sellers to make repairs before the house can be bought. 

St. Paul began requiring vacant homes in rough shape be inspected and brought up to code.  Brooklyn Park requires that all houses be inspected and brought up to code before they can be sold.  Robbinsdale and Coon Rapids have had discussions on similar programs.

These cities are trying to maintain quality housing stock. At the same time, empty houses are falling into disrepair.  Investors are buying vacant houses in attempts to flip them, not bothering to undertake the necessary fixes.  People are buying houses at cheap prices without knowing that it requires up to $100,000 in repairs.  The effects can be devastating, on home owners and entire neighborhoods.

Often called "point-of-sale" ordinances, some people say that requiring repairs when homes are sold saves neighborhoods. Others say that it may keep home vacant by adding an extra step to an already complicated process, interfering with owners' rights, and burdening sellers. Opponents point to "truth-in-housing" programs are preferable, such as Minneapolis', which require an inspection for the sake of disclosure, but don't require fixes.

Cities' programs differ, sometimes dramatically. Ordinance required that all homes in Brooklyn Park be inspected and repaired, while St. Paul requires them for only certain classifications of vacant houses. Homes in Hopkins can be evaluated by independent inspectors, while Brooklyn Park requires that they be done by city staff. The cost of an inspection also varies, from about $50 to $200.

Many cities allow buyers and sellers to set up an escrow for the repairs. All cities say they focus inspections on "hazardous" conditions, not cosmetic issues.

Some cities have had home inspection and home repair requirements for several years. Because of Osseo’s aging housing stock, its program began in 2000. Bloomington and St. Louis Park have long-standing home inspection and repair programs as well. More cities are exploring the idea now because of the increase in vacant and foreclosed properties.

Plymouth and Columbia Heights are two cities which made similar proposals, but opted against them in the end. 

As a home buyer, you probably should get a home inspection on any home you are considering purchasing regardless of whether or not there is a city ordinance that requires it.  Unless it is brand new, it is better to be safe and make your home purchase contingent on it passing an independent inspection.  The last thing you want is for that dream home turn into a nightmare of a money pit in need of expensive repairs.

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