Buying a Fixer-Upper – 5 Facts to Consider

Fixer Upper House That Needs a Lot of WorkMost buyers are lured by the low asking prices and the opportunity to buy a property they can afford in a good neighborhood, school district or with a larger lot to expand. However, it’s often less costly to buy the more expensive house.

Here are some reasons why:

#1 Fundamental repairs to foundation, structure, plumbing, electrical, roof, etc.can be huge ticket items. These issues need to be addressed first. Meanwhile buyers are really dreaming about on the granite counters, designer paint colors and creating their spa bathroom retreat with all the luxury bells and whistles they see on HGTV.

#2 I work with excellent contractors who really know the costs of remodeling; however, even so they cannot predict all unforeseen ‘surprises.’ Unanticipated costs of 10%-25% are more the norm than the exception. For instance, Houselogic.com states a middle-of-the-road bathroom remodel runs from $100-$200 per sf. An average kitchen costs approx. $60,000. and HGTV estimates a gourmet kitchen over $80,000. Buyer frankly can run out of money.

#3 Yes, there is the FHA 203K loan. But, there are specific time lines, approvals, appraisal required to utilize this loan program. mortgage company guidelines restrict how much money a buyer qualifies to receive. Also, good contractors are busy in summer making it hard to coordinate the FHA required estimates and deadlines.

#4 Fixers tend to be older homes. And with older homes come potential health and safety risks such as lead based paint or asbestos. Remediation can be costly and your contractors must have the appropriate EPA certification.

#5 Sellers would often rather find a buyer using all cash that can close quickly with no contingencies rather than working with a 203K loan scenario.

After major renovations are complete buyers will have a custom home, exactly to their liking and tastes, but it won’t come cheap. And, I always caution clients about over improving. An option to consider might be a more ‘cosmetic’ fixer as old appliances, fixtures, faucets, wallpaper, shag carpet and linoleum are easier and cheaper to renovate!

Ready to go “bargain” hunting?

SEMINAR May 2: Selling Your Home in Today’s Market

FREE SEMINAR: Selling You Home in Today’s Market

Get the facts about what is involved in selling a home in today’s market and the Top 10 Mistakes to Avoid! Whether you are planning to sell this month or not for a few years, do your homework now and be prepared!

REGISTER: By phone 925-788-6582 or online http://savvyseniorsliving.com/schedule/

Join us for additional candid conversations with local experts focused on the unique and complex housing-related issues facing California’s mature homeowners & families.

January 17th – 55+ Senior Living Options
February 7th – Tax, Legal & Financial Issues
March 7th – Senior Scams
April 4th – Aging in Place-AKA Stayin’ Put
May 2nd – Selling your Home in Today’s Market
June 6th – How to Pay for Senior Living
July 11th – Assisting Living Options
August 15th – Understanding Continuing Care Retirement Communities
September 5th – The New Reverse Mortgages-Fact vs. Myth
October 3rd – Independent Living Options
November 7th – Estate Liquidation Strategies
December 5th – Downsizing Lessons from People Who’ve Done It