The Do’s & Dont’s of Closing and Renovating
You’ve got a Pinterest board for every room of your newly purchased home, but are you ready to start your home renovation?
Editor’s Note: This post was originally published on July 31, 2014, and updated recently. So you’re in the process of buying a home and you have immediate home renovation plans in mind. Congratulations! This is an exciting time and you’re eager to get going right away. When exactly can you start the renovation process? Sweeten, a free service matching homeowners with vetted contractors, outlines best practices and what to avoid.
A. When you make an offer?
B. When you have an accepted offer?
C. When you have an accepted offer and a deal sheet from your broker?
D. When your attorney is preparing the contract and conducting a due diligence review of the property and building?
E. When you have a signed contract and the deposit has changed hands?
F. When the condo or co-op board approves the transaction (for NYC properties)?
G. After you close?
To confirm the correct answer, we talked to James Jantarasami, a New York attorney with expertise in housing and real estate. James walked us through a few do’s and dont’s of closing and renovating:
DON’T shop around for a contractor before you have a place. Maybe this is obvious, but we sometimes see prospective owners jump the gun and try to interview contractors about a theoretical project. You will not be able to have a productive conversation with an architect, designer, or general contractor without knowing exact details about the space you will be undertaking. Don’t start this conversation without an existing layout. If you are in contract to buy a place, you can bring your architect or contractor to take measurements and start planning. However, in order to begin the work, you’ll need certainty of ownership, confirmation of condo or co-op building requirements, and confirmation of your city or town’s department of buildings’ requirements. All building and city or town DOB requirements have to be satisfied whether you’re buying a condo, co-op, or a single family home in the suburbs.
DON’T start designing until, at a minimum, you are already in contract and the deposit has changed hands. Anything can happen between an accepted offer and a signed contract; you don’t want to spend money on design only to have the purchase fall through. The safest play is to wait until closing before you engage an architect or design pro, but if you can’t wait, a signed contract at least gives you a reasonable expectation that you are going to own the property.
DON’T DON’T DON’T try to touch anything until you have closed and formally own the property, have approval from your city or town’s DOB, and, for co-op and condo purchases, have made it through the approval process with the building’s board. No major alterations and no cosmetic changes until the deed changes hands and all paperwork is signed!
DO consider your home renovation plans before you make your offer. As a prospective purchaser, you can build the cost of the work needed into your offering price, or alternatively, ask the seller to handle some renovations or repairs before you close as part of the offer negotiation. However, keep in mind that this is rarely a viable option unless the seller is a developer since most sellers aren’t going to be interested in doing home renovation work prior to closing, and even if they are, you’ll have to be willing to wait potentially months for permits and sign-offs to be obtained prior to closing. Sweeten’s kitchen and bathroom estimators can help you get closer to what your renovation might cost you.
If your seller agrees to handle a few upgrades, you might save time and effort by letting them navigate the building’s and DOB’s requirements and completing the work before you close. The same goes if you’re purchasing a single family home, but instead of dealing with a building’s requirements, the seller will only need to meet the DOB’s requirements. If your seller agrees to a discount so that you can cover certain repairs or renovations, you’ll need to handle the logistics and wait until you close, but you may find that you have more control over the process and outcome and you won’t run the risk of any disagreements with the seller over the quality of the finished work.
DO plan for delays and variables during the contract and closing process. Delays from the lender are one of the most common reasons a closing stalls. Condo and co-op board approvals can also add a month or more to your closing date, and you’ll still need approval from your city or town’s DOB. If you’re buying a single family home, you’ll only need approval from the local DOB, so there’s one less step for you as the buyer. Your attorney should be looking at everything that can go wrong: debts or liens against the seller, judgments or mortgages against the home, damage to the home that occurs between contract signing and closing (a water leak, floor or wall damage, appliance issues, etc.), and, if buying a condo or co-op, any fiscal problems in a NYC building’s financial reports that might spook the lender. Hopefully, none of these issues will derail the closing altogether, but you won’t be able to begin any work until all signatures are in.
DO budget for in-between time. Since you can’t start home renovation work on a new home until you close, you may need to find another place to live while work is underway, or account for a period of time without rental income if you are renovating before tenants move in.
So to recap, where do you fit the design and build stages in the offer, contract, and closing process? You can start designing once you are in contract, and you can start building once you close and have an official thumbs-up from your city or town’s DOB and if you have a co-op or condo, your building’s management.
If you’ve closed on a new place (congrats!) and are ready to find your general contractor, post your project on Sweeten to get started!
Sweeten handpicks the best general contractors to match each project’s location, budget, and scope, helping until project completion. Follow the blog for renovation ideas and inspiration and when you’re ready to renovate, start your renovation on Sweeten.