To Fixer Upper or Not, that is the question
A fixer-upper is a home that requires either significant renovations or a lot of updates to bring it up to the norm. While they can be an excellent opportunity for a homeowner to add value and personalize a home, they can also come with some challenges.
One of the main pros of purchasing a fixer-upper is the potential for cost savings. Because they often require a significant amount of work, fixer-uppers can be purchased at a lower price than fully updated, move-in-ready homes. Right now, we’re seeing an influx of homes hit the market that had damage and/or flooding from Hurricanes Ian and Nicole. In many cases, the bones of the home are in great shape, but the buyer would have a good deal of work ahead of them to get the home back into livable condition.
Another major advantage of buying a fixer-upper is it can be a great opportunity for homeowners to add their own personal touches and create their dream home. Sometimes, it’s tough for buyers to find that perfect home that checks off every single box on their list. Even when not purchasing a true fixer-upper, most buyers settle for at least one or two things that aren’t exactly as they would have chosen. Buyers often look past things like paint colors or flooring that they can change down the road when the rest of the house is what they’re looking for. But for a true fixer-upper, buyers pretty much have a blank slate to add their personal touches and create their dream home by choosing everything from paint color, flooring, kitchen, fixtures, and so on.
There are downsides to consider when it comes to buying a fixer-upper though. The most significant con is the cost of renovations. Depending on the scope of the work, renovations can be costly and time-consuming. It’s not easy to find a contractor in today’s market that can get you on the schedule quickly and most building materials are not only expensive but some take weeks or even months to come in. In addition, it’s important to consider the potential for unexpected issues or complications that may arise when doing the renovations.
The next con of purchasing a fixer-upper is financing may not be an option when purchasing a home that requires significant renovations. Depending on the scope needed, you may need to come to the table with quite a bit of cash- first for the purchase of the home and then additional cash to make the repairs. And of course, there’s always the question of, whether can you live in the home while it’s undergoing renovations or if will you need to float a second home to live in until the house is ready. You may be able to qualify for a Rehab Loan, or FHA 203(k), which basically means both the price of the home and the repair costs are wrapped into the mortgage. There are some minimum requirements for both the buyer and the property in this type of loan, so you’ll want to talk to a lender for specifics, but it is good to know this product might be available.
Bottom line, fixer-uppers can be a great opportunity for homeowners looking to add value and personalize a home, but it’s important to carefully consider the pros and cons before making a decision. For a lot of people, move-in ready offers less cash up front, less downtime, and fewer headaches. On the other hand, we’ve seen some pretty incredible before and afters when it comes to people who chose the fixer-upper route.