Buy A Fixer Upper Or A Move In Ready Home?
Decisions, decisions. That’s what buying a home is all about. Probably the most crucial decision – once you’ve chosen a location and price point – is whether to buy a fixer upper or a move-in ready house. Popular TV shows like “Property Brothers,” “This Old House,” and the late great “Fixer Upper” make DIY home improvement look like a piece of cake … but is it really?
For guidance in the right type of home purchase for you, check out this professional advice from Kate Wright, Associate Broker at Better Homes and Gardens Real Estate Metro Brokers.
How would you define “Fixer Upper” vs “Move-In Ready”?
My definition of a Fixer Upper is a home that will need significant work either prior to -- or right after -- moving in.
Move-In-Ready would be ready for you to move in, get settled, and enjoy the home immediately upon closing. This includes scenarios where you might choose to do small projects, like swapping out some light fixtures or changing paint colors. However, these projects are not “musts” nor do they affect the integrity of the house.
What are the advantages of buying a Fixer Upper?
If you’re able to put in monetary resources, time, and perhaps sweat equity, you get to create the home that you wanted, specific to your own taste. Often if you budget correctly and do the projects to scale you’re able to grow your equity.
And the advantages of a Move-In-Ready house?
In addition to the ease of the transaction, you won’t have to pay out of pocket to renovate. Any buyers strapped for cash should be pursuing a Move-In Ready home.
How can buyers decide which suits them best?
Consider your resources, time/flexibility, and energy level! I would never encourage someone with a demanding job, tight budget, busy schedule, no patience, etc. to take on a Fixer Upper.
Consult family members or close friends who’ve done large-scale home projects, so you know whether you’re up for the challenge. Fixer Uppers are no walk in the park and more often than not, they turn up many more to-do items than were expected or budgeted.
Do sellers of Fixer Uppers tend to price realistically?
Depends on the circumstances. Yes, if they’ve been there for a while, understand the market and have a good REALTOR. Many won’t price realistically If they overinvested and need to get out before the market has appreciated enough to recoup their value. It’s essential to avoid over-improving!
How do you compare costs in an “apples to oranges” scenario?
Whatever you’re budgeting for on reno/improvements, go ahead and add a quarter of that number on top of it! It’s pricey. Unless you have lots of experience and can DIY big-ticket items, it’s going to cost you. Not only will it cost you money, but doing these projects right takes time. So add about another quarter (or more) of the time you estimated into the equation too.
Then you can compare costs to buy a Fixer-Upper or Move-In Ready home more accurately.
What footwork should buyers do before making a purchase offer on a Fixer Upper?
Find reliable remodeling contractors and vendors in advance. Have them vetted and at the ready to give you estimates as soon as you find potential opportunities. Be sure you have a flexible budget with sufficient time and money.
How do you calculate a fair offer?
Select an experienced, quality REALTOR to help you review comps to the potential budget for the project and allow them to guide you through that process.
What contingencies should you include in the offer?
A financing contingency is necessary for either type of house if you’re obtaining a mortgage, whether conventional or 203(k). For a Fixer Upper, include a Due Diligence long enough to get quotes in hand from your preselected vendors/contractors, as well as quality home inspection at the front end of the Due Diligence to help you know what you’re going to be facing.
What differences are advisable in the home inspection process?
Discuss with your REALTOR and carefully select an inspector who has a lot of experience with older homes and will go the extra mile.
Laura Firszt writes for networx.com.
Looking for a Pro? Call us(866) 441-6648