Considering if a Fixer-Upper is right for you?
What factors do you need to consider when making the choice to buy or not to buy a fixer-upper?
According to the National Association of Realtors®[1], 58% of U.S. adults say that they’d be willing to take steps or make concessions to find housing that is more affordable, which includes purchasing a fixer-upper.
‘Condition of the home’ is tied for second as the most likely reason couples disagree about the home-buying process (second to ‘price of the home’, tied with ‘location of the home’.)[2]
If you’re on the fence about whether a fixer-upper is right for you, we want to help you make your decision. Before you start your search, you also need to know (and tell your Realtor®!) whether fixer-upper status is essential to your home search (as in, you ONLY want to look at homes that need a lot of work) or nonessential and something you will only consider under the right circumstances and for the right price.
Here are the PROs and CONs to consider when buying a fixer-upper:
PRO: Easier Path to Homeownership
If you’ve been searching for a home or following reports on the housing market, you’ve heard that housing inventory has been low and interest rates have been high. With fewer homes for sale, your willingness to buy a home that needs renovating opens your options considerably and also lessens your competition. Simply put, your willingness to buy a fixer-upper gives you a lot more options.
CON: Significant Time Investment
Fixer-uppers can take months, even years, to completely renovate. Are you willing to live in a construction zone while plumbing, electric, and other major work is accomplished? Or can you afford to live elsewhere while you and/or hired professionals complete the necessary work to make your new home move-in ready? You’ll be paying the mortgage on the home, plus rent or other living expenses elsewhere, and the cost of labor and materials for the renovation.
Be sure you know exactly what you’re willing to live with, what you can afford, and what you cannot live without from Day One. E.g., you’ll need a kitchen and a bathroom that are operational, but you can probably live without a fully finished basement for the time it’ll take to renovate.
PRO: Bigger Home for the Price
All other things being equal, you may end up with the ability to get more square footage or acreage on a property that requires more T.L.C. than one that is entirely move-in ready. This might be a strong consideration if your heart is set on a specific neighborhood, if you’re planning for a growing family or multi-generational household, or if you or your significant other work from home.
The bigger home that needs work may be comparable in price to the smaller home that’s fully renovated. For example, you might be able to afford a four-bedroom fixer-upper in a neighborhood where you could only afford a two-bedroom move-in ready home.
CON: Special Skills Required
Home construction, improvement, and repair is best done by tradesmen who follow industry standards to ensure homes are safe and up-to-code[3]. Despite what we often see online, we are not all able to DIY everything, using tons of time to learn new trade skills, take engineering classes, spending money on specialty tools to use once. A fixer-upper will require the attention of professionals, not just your own two hands. If you don’t bring in tradesmen, you will end up with safety hazards or costly inefficiencies that would best be avoided.
PRO: Lower Initial Cost
Your Realtor® may be able to negotiate on your behalf for a lower closing price if renovations are structurally necessary. A lower initial cost means lower mortgage payments. If you’re able to renovate over time, you might save yourself serious money by going with a fixer-upper.
CON: You Could Lose Money, Too
No renovation is a guaranteed value proposition. Even professional home flippers make the mistake of renovating homes with features that don’t pay themselves back. While a renovated feature may seem like an upgrade to you, it may be a hassle, a safety hazard, or an out-of-date trend to a future buyer. (Think pools, fireplaces, floating stairs, balconies, etc.)
Consider your renovations carefully, get quotes, and speak with a Realtor® about what renovations are worth the expense[1].
PRO: Personalize it and Make it Yours!
Arguably, the best aspect of buying a fixer-upper is the ability to customize details throughout the house to best match your personal taste. A house with a beautifully, newly designed kitchen is very nice to have – but maybe you’d prefer the chance to do that designing yourself to create the warmth and vibrancy that best reflects your sense of home.
CON: It may be more than you bargained for.
Even if the quirkiness of a fixer-upper appeals to you, you never know what’s lurking under the surface. A fixer-upper will always be in need of repairs you don’t expect and will likely need to continuously be worked on over time. With a renovated, move-in ready home, you can expect everything in the home to be fairly new and operational. With a fixer-upper, you’ll find things to repair and replace regularly.
Check out this quick reference infographic to help you decide whether a fixer upper is right for you.
It’s Your Choice
The saying “One man’s trash is another man’s treasure” applies to fixer-uppers in real estate. What one person will see as a waste of time and effort, another will see as an uncut gem, brimming with potential. Educate yourself on the Pros and Cons of Buying a Fixer-Upper and be an enlightened homeowner that is prepared for the journey ahead.
Whether you’ve made your decision or not, speak with a Realtor® to begin your home shopping journey. Visit www.onekeymls.com/Directory to find your licensed real estate professional today.
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