Buying a Fixer Upper: A Checklist
If you are in the housing market and like the idea of scoring a deal on a house, a fixer upper might be the right choice for you. Fixer upper houses can be a great way to purchase a house below market value, and who doesn’t like the sound of that? But before you make an offer on a fixer upper, it is important to consider exactly what you are getting into. Take a realistic assessment of your finances, capabilities, and the condition of the house before buying a fixer upper. Here are some important points to consider before entering into a sales agreement:
Questions to Ask Before Considering a Fixer Upper
What Home Improvement Skills Do You Possess?
Don’t just jump into a fixer upper if you have no experience working on a house. Do you really want your on-the-job training to be your own home? Are you willing to live with the mistakes if you do? Think about any handyman skills you actually possess. Painting, plumbing, or tearing out the carpet- the work that the fixer-upper actually needs. If you can handle the home repairs yourself, that’s great. If not, consider whether you can learn how to handle those repairs, or if you are willing and if you can afford to contract them out.
How Much Time Will The Actual Fixing Up Take?
Don’t employ “magical thinking” here. Work out a realistic timeline for the necessary home repairs. Some projects are quick, like repainting a ghastly living room. Others, like fixer upper kitchens or bathrooms, are a little more time intensive. Are you willing to put in the nights and weekends to fix the house up? Can you live in the house in the duration, or will you need to live somewhere else? Can you afford two mortgages while you work on the house?
How Much Will The Improvements Cost?
If you plan to work on the house yourself, price out the supplies you will need. For any projects that you plan to contract out, bring in a contractor and get an estimate. Prepare for something to go wrong, and budget for that in advance. Add 10-20% to your estimate to account for unexpected repairs. Make sure that you have the cash for these projects before you close on the house.
Does Your Offer Reflect the Cost of the Home Improvements?
If a house needs drastic improvements, your offer should reflect that, and the seller should expect an offer that is lower than comparable houses in better shape. Look at similar houses in the neighborhood that do not need repairs. Simply take that price and subtract the fair cost of the improvements you will make. If the seller will not accept an offer in that ballpark, walk away. You don’t want to pay too much for a fixer-upper, only to find yourself without the money to fix it up.
Is Your Offer Contingent On A Home Inspection?
Even when you know just from a quick walk-through that a house needs work, make sure that your offer is contingent on passing a home inspection. A home inspector will look for serious problems that a walk-through will not reveal, such as major problems with the septic system or wells, mold, pests, leaks, radon, or lead-based paint. If an inspection reveals these issues, you can still work with the seller by lowering the price or getting cash back at the closing. The seller won’t negotiate? Then this isn’t the house for you.
If you are looking for a home in the Lancaster area, reach out to The Jeremy Ganse Home Selling Team. Our real estate agents would love to help you find your dream home–fixer upper or not!