Should you buy a fixer-upper?
While it appears that the vast majority of buyers in today’s real estate market are looking for a home that is “move-in-ready” there are a few brave souls that have tweaked to the idea that a fixer-upper may offer better value.
Here are some things to consider if you are thinking about buying a home that needs some work.
Determine your renovating budget:
What absolutely needs to be done to the house and what can wait? “Lip-stick renos” where the home only needs paint and maybe new flooring are the easiest fixer-uppers to deal with. These homes often represent the best value because most buyers will pass on them (they’re not pretty enough!). You do need to do your homework though. Do some comparison shopping at the local carpet stores and find out what the cost of carpet and underlay will be. Surprisingly, most people will over-estimate the costs of doing minor upgrades like this.
If the house you are considering needs some major renovations like a new roof, dry wall, plumbing or electrical work, you should get an estimate from a reputable company before making your offer.
Take a look around the neighbourhood. Do the homes in the area appear well kept or is the neighbourhood on the decline? Compare the price of the fixer-upper with the price of home in better condition that have sold over the past few months to determine if the list price of the home is truly reflective of the costs to improve it.
Be realistic about the time renovations will take:
If you are going to do the needed renovations yourself, set some realistic goals for your projects to be completed. If you will be relying on contractors, ask how much lead time they will need to get you on their schedule.