Home Buyer's Guide - closer look at...
If you're considering a home that needs some work it's even more important to do all of you homework. A fixer upper can turn out to be your dream home - or a nightmare of delays and cost overruns - so it's essential to learn everything you can at the outset.
Don't Forget the Contingencies
Make sure your purchase contract includes sufficient contingencies to allow you to have the property reviewed by a home inspector and a contractor - and to back out if you don't like what they tell you.
Is There Potential?
If you make the effort, do the work, and spend the money...will you have what you hope you will? Some fixer uppers can be wonderful homes once they are restored - but not all.
Inspections, Inspections, Inspections
The number one goal when buying a fixer upper is avoiding surprises. Surprises in home renovation are almost always bad - and expensive. Before you close title on any fixer upper it is essential to have a comprehensive, top to bottom, inspection done. Find out what is wrong before you close, not after.
Are the Bones Good?
Installing trim, fixing sheetrock, and painting walls is one thing - major structural work is another. Make sure your fixer upper is sound structurally. Unless you are very familiar with construction work it is probably best to avoid a property with any major foundation or framing problems.
Price What You Can
It's probably impossible to get solid pricing before the closing on every repair and improvement you are planning to do, but it is essential to get a reliable approximate cost for the project. Have your contractor inspect the property with you and give you firm pricing on the major projects - and some guidance on the rest.
Financing the Fixer Upper
One thing is certain - you'll still be spending money after the closing. Possibly a lot of money. Make sure you include the improvement costs in your budget - and add a generous contingency factor as well. Poor funding is probably the #1 cause of home improvement problems, so make sure your financing program will provide the money you require.
Do It Yourself Fixer Upper
It can be very dangerous to purchase a fixer upper based on the assumption that you will do the repairs yourself. Homeowners often find they lack the skill, tools, time, or motivation to complete improvement projects themselves - often in the middle of the work. This is bad enough, but if you buy a property you can only afford to improve if you do the work yourself - and then find out you can't finish - you could have serious troubles. Be careful.
Buying a fixer upper is a time honored way of getting into an upscale community that would otherwise be out of reach. A home in a great neighborhood that shows poorly can turn out to be a wise investment. A house in a high end community will probably enjoy a larger increase in value from a major renovation than one in a lower priced area. Buying the "worst house on the block" is a tried and true strategy.