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So You Think You Want a Fixer-Upper?

The hidden costs in the unknowns



Residential single-family home sale prices soared to new heights over the past few years. A huge spike began in late winter and early spring of this year, leaving many wondering if there are easy alternatives to achieve their dream home, at a discounted price. Some have looked into purchasing bare land and building a new home and others have considered purchasing a home that has been loved hard over the years and is in need of maintenance and repairs. 

The long story short is that there are no real "deals" to be had in real estate right now, but there are ways to make a reasonable purchase. Building a home from scratch is not a small feat and can be more expensive than one would expect, but finding a home that needs some TLC can be an excellent option. While purchasing a home that is in need of repair comes with the risk of the unknown, it can also be a smart way to add instant equity by bringing a home back to its former glory.

  • stevepb/Pixabay

One of the biggest considerations is to make sure there are appropriate finances in place to take on a fixer-upper. In other words, only take on the level of repairs the budget can handle. Most homebuyers are saving money for their down payment and closing costs and don't have a large contingency fund to offset unknown costs that may accumulate when unforeseen issues arise. Determining how much can be spent on repairs after closing on a home will help find the appropriate level of "fixer." If the budget is tight, it may be better to take on a home that has been taken care of but needs a few cosmetic inexpensive DIY updates, such as painting some rooms or repairing minor damage from wear and tear. If more funds are available, then taking on a home with structural issues or severe neglect may be very worthwhile. The more visible work there is, the better the chance there's work needed that is not visible. 

After identifying a potential home, with the help of a trained eye of an experienced realtor or contractor, a realistic estimate of visible repairs can be provided. Prior to writing an offer is the time when it should be determined whether moving forward with the home is doable. Once a home is in contract, the professional home inspection is completed, which provides a homeowner with a list of suggested repairs. Using this list the homebuyer can research the costs and feasibility of these repairs. The key is to be as informed as possible with what to expect and be realistic with capabilities, both in skill and budget. It's also the time to prioritize which repairs can be completed right away and which can wait until the budget allows them to be addressed.

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