Thinking about buying a fixer upper house? We’ve got some pointers on what to consider.
In a seller’s market, you start to see some very interesting pricing scenarios. Homes that would have been tough to move a few years ago are now selling as-is for eye-popping amounts. This situation means some homeowners end up having to decide just how much of a fixer-upper home they really want.
Or, maybe you’re actually looking for a bargain—either to help you get into your first home, or to reap the benefits of the Raleigh, NC area’s rising prices and strong rental market.
Of course, upfront bargains can also come with longer-term costs. So, if you’re thinking about buying a home that needs significant work, it pays to figure out what you’re really willing to live with before you start putting earnest or due diligence monies down.
1. What’s our renovation wish list?
Make sure you know the home’s condition. Check the roof, windows, plumbing, electrical and heating systems, etc. Which appliances are working properly? How are the floors (what are those carpets hiding?). Your goal is to make sure you’re aware of potential problems.
Many of the biggest costs in working on a fixer-upper comes from the surprises you may find behind the walls, under the floors and in other areas you can’t see. Depending on what the home is likely to need, you might want to bring a contractor along on your walk-through; get their help in reviewing the home inspection if you get to the accepted-offer stage.
2. How much can be handled DIY vs by professionals?
As you walk the property, be honest about whether you can truly do the repairs yourself, or whether you’ll have to hire professionals to handle things. This doesn’t have to be an all-or-nothing situation: even those without handyman skills may be able to help with demolition. But try to avoid the temptation to think you can learn to be a pro via YouTube!
3. Can we afford the time & effort of buying a fixer upper house?
Before committing yourself to a big renovation, you should carefully weigh how much time and effort will be needed, vs how much you are willing and able to spend on the project.
- Are you buying something to live in, or to rent or flip?
- Will you want (or even be able to), live in the home while work is going on? If not, where will you be, and how reasonable is it for you and your family to make do until the project is complete?
- Given the long wait times for construction materials and appliances right now, how will you manage if your projects are on hold for 6 months or a year?
- How do you and your family do under pressure? Renovations can put a big strain on people; encourage open conversations about the impact of what will likely be months (or more) of a somewhat unsettled life.
4. What permits will we need?
If a home is not currently lived in, is historic, or simply will require significant work, it’s a good idea to double check with your local town authorities about any rules and regulations that may pertain to renovating the house, as well as permit costs. You don’t want to decide a home will be perfect when it’s fixed up with a dream addition, only to find you can’t get a permit. Your real estate agent’s expertise can be of huge value here!
And it probably goes without saying: make sure that the renovations that you plan to make to the house are legal—otherwise you’ll regret it when it comes time to sell.
5. What will the tools, equipment and materials cost?
If you’re planning to renovate the house yourself, you’ll want to carefully plan a realistic budget. Don’t forget to account for any tools and equipment you would need to buy or rent to complete the work. Tools are a great investment, but can also get very expensive, very quickly! While you’re at the supply stores, find out what the lag time is on materials, so you’ll know the best resources when the time comes.
6. Can any major systems and/or appliances be saved?
It never hurts to ask: if the furnace needs repair, will the owner get it repaired? If the sink leaks will they handle it? How old is the HVAC system? Even for an as-is sale, it’s possible that some fixtures, appliances and systems may be in reasonably good working order and won’t need to be added to your fix-it list. It’s always a good idea to do a little digging, rather than assume one way or the other.
7. What types of mortgages are available?
There are specialized loans designed to help buyers who know they’ll need to renovate from the get-go. The types vary depending on your financial situation, as well as on the amount of work that will be required. Aim to speak with several lenders who specialize in this area to help you find the best option.
Buying a fixer upper house can be a source of pride as well as a good financial decision. And in today’s market, you may be tempted to take on more than you would have expected. But if you do your research and aim to be as realistic as possible, this could be a winning move! We’ve got plenty of experience to help you navigate the process—just give us a call to get started.