Buying a home that needs some repair at a lower cost could get you the home you’ve dreamed of a location you love. When is it worth buying a fixer-upper, and when should you walk away?
COST ANALYSIS
A cost analysis should be done first based on a thorough assessment of the state of the house and the estimation of time and money that it will cost to renovate. Subtract the renovation cost from the home's potential market value after renovations plus another five to ten percent for any unforeseen circumstances. The final calculation will give you the amount that you can comfortably offer on the house.
INSPECTION CLAUSE
The agreement for the fixer-upper should be written to include an inspection to guarantee you are making a wise investment. This clause will give you a way to abandon the deal if any significant issues are found. Many experts advise against buying a fixer-upper that has considerable structural problems. That's because foundation issues, extensive roof and wall repair, plumbing and electrical work, or any other substantial restorations are usually 'invisible' and do little to raise the home's value enough to offset the cost to upgrade.
Finding a serious problem or two isn't necessarily a deal-breaker. Your real estate agent can use these inspection findings to negotiate the sale of the price down to cover the cost or get the seller to pay for repairs.
READY TO REMODEL
So, you've bought the fixer-upper, and you're eager to turn it into the home of your dreams. When making your renovation plans, be sure not to over-improve for the area. For the best resale value, be sure not to raise the value of your house by more than 10 to 15 percent over the average sale price of the other homes in your area.
The most cost-effective solution is to have the homeowners chip into the renovation work, but finding the right general contractor specializing in extensive renovations is critical when this is not possible. Your Poole Realty Real Estate Agent can help connect you with exactly the right team to make your dream home a reality.
If you’re looking to buy a fixer-upper and want to ensure that you're making a wise investment, we're here to help! Give us a call today.