Everyone likes a bargain. Potential homebuyers often think that buying a “fixer-upper” will ultimately, after exerting a little effort and investing a few bucks in repairs, give them their dream home at a bargain price.
This may be true, if the effort you put forth is reasonable and the monies expended remain within budget.
Here are some things to consider before you buy that fixer-upper and attempt to transform it into a home that the rest of the neighbors will envy.
Some of the most desirable qualities in a home are the same for most people whether or not you want a bargain-priced fixer-upper or turnkey home. The location is one of the most important qualities. Desirable neighborhoods with good schools, close to shopping, and with good resale values mean the location is a good one.
Ask your real estate agent to show you homes in need of renovation in desirable neighborhoods, such as those with great schools or with a healthy resale market. Curb appeal is another general quality. For a fixer-upper, you need to have a little imagination and look beyond the current appearance.
No matter how much of a bargain a home may be, unless it has the functional space your family needs, it likely will not work for you. Perhaps the rooms only need some drywall repair and a little paint and, because of this, the home is priced lower than others with a similar layout. If the design is not right for you, despite the low price and minimal repair costs, you and your family may not be comfortable in it.
One of the first things to do when buying a home is to create a budget. How much are you willing to pay for the house, including when you add in the cost of repairs? Get a good contractor to estimate the costs of the repairs and renovations, then add at least ten to twenty percent for overruns and unanticipated problems.
How much time are you willing to put into fixing up your new home? How long are you willing to live in a state of disrepair while you are in the midst of renovations? Be realistic about the money and time you can afford to invest in your fixer-upper before committing to purchasing it.
Get the home inspected prior to purchase. This is of particular importance to someone buying a fixer-upper. There may be visible repairs and improvements that you must budget for, but there may also exist hidden problems that only a good home inspector will uncover. You won’t be able to budget properly until you get the home inspected and understand all the costs associated with fixing the house up to your specifications.
Perhaps your fixer-upper requires several stages of repair or renovation before it can evolve into your dream property. You need to prioritize the work, especially if you are on a tight budget.
For example, it makes little sense to redo your kitchen if ultimately you must replace the plumbing throughout the house. Discuss the priorities with your real estate agent. Set priorities based on your budget and the work required. In general, structural work should be done first, while cosmetic repairs can wait.
When looking at potential bargain fixer-upper properties, remember that older homes often have electrical issues—things like ground fault circuit interrupters (GFCIs) for safety or older wiring that could be a fire hazard and which must be replaced.
Another area to investigate before buying a fixer-upper is the plumbing. Galvanized and cast iron pipe typically have a lifetime of about fifty years. After five decades or so, the deteriorating pipes can affect water quality, and leaks can become more frequent.
Asbestos is commonly found in older homes where it was often used in insulation, siding, and flooring. Asbestos must be removed by a certified professional. Many older homes, specifically those built prior to 1978, contain lead-based paint, and may require an additional inspection and certification.
Cedar shake or shingle used to be a traditional form of roofing material. If you are looking for an older home and it has a roof made of these materials, the existing roof might need to be reinforced or ventilated by using newer, better quality, roofing materials.
Many cosmetic repairs you can do yourself. For example, if the carpeting is old and worn out, pulling it up and replacing it is something most people can easily learn to do. If wallpaper is outdated or peeling, stripping it off and replacing it or painting falls within the skill set of most people. Cosmetic enhancements are an easy way to add value to your home.
A professional and experienced real estate agent can assist you in determining the pros and cons of buying a fixer-upper. If the renovations are major and the cost will be significant, negotiate a lower price or look elsewhere. A seasoned real estate agent can advise and help you determine if a fixer-upper is a perfect fit for you.