December 21, 2018
Whether or Not to Buy a Fixer-Upper Property
There are among the prospective buying set a certain subset of individuals who consider themselves handyman deal-hunters—those who will make it their mission to find a home that they can purchase for well short of what a home in good condition would cost: a fixer-upper. And the truth is, for some people who are realistic about their abilities to renovate a home and bring its value into line with properties that have been well taken care of, this does make a valid strategy for finding a home. But it’s important that prospective buyers know, in determining whether they will truly fall among this set, what they are in for. To actually make such an effort worthwhile, a buyer needs to recognize that they may have to do a lot of thinking up-front.
For one thing, the prospective buyer should consider how intensive the renovations may need to be. Cosmetic changes are always preferable in a fixer-upper. This includes things like renovations of the bathrooms or kitchen, siding repair/replacement, new floors. These are easier issues to manage than major structural troubles, which might end up costing more to fix than the home is worth.
Either way, before making an offer on the house, a buyer should hire a contractor to examine the property in order to bid on the potential renovation. This at the very least gives a buyer a sense for what a professional considers the given repairs to be worth, which can be helpful in doing the math to determine whether the lower cost up-front will actually make a deal of the property in the long run—whether the buyer hires the contractor or does the renovating themselves. When considering a property’s future cost, a buyer would do best to consider whether they would be able make a profit on the home, even if they intend at the time of purchase to remain in the home for the remainder of their lives. Life can be unpredictable.
It’s also worth considering the market value of the homes in the surrounding neighborhood. Should home values be good—and the homes in good repair—they can bring up the inherent value of the property being purchased by mere proximity, once the repairs are made. If a buyer spends around 25% less on the fixer-upper than on what they would spend on a comparable property of good repair in the area, they’re likely getting just about the right deal on the home to make allowance for renovations and resale value.
Whether a buyer finds that great fixer-upper deal or not, we here at Topouzis & Associates, P.C. do everything we can to be absolutely sure our clients are conveying and purchasing title clear of judgments and defects, which can only serve to strengthen the security a home-buyer will feel about their new property. And we help our clients put into place a good policy of title insurance to lower the risk of issues of ownership in the past coming up in the future. Contact us if you’d like us to do this for you.
