by Lisa Williams, CRS, GRI, ABR
Williams & Associates Realty
Homes needing renovation are often the best buys available, but most buyers have to know when you buy a fixer-upper house, you can save a ton of money, or get yourself in a financial fix.
Follow these seven steps, and you’ll know how much you can afford, how much to offer, and whether a fixer-upper house is right for you.
1. Decide what you can do yourself
TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don’t know how to do will take longer than you think and can lead to less-than-professional results that won’t increase the value of your fixer-upper house.
2. Price the cost of repairs and remodeling before you make an offer
Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do. Tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.
3. Check permit costs
Ask if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it’ll cause problems when you resell your home.
4. Double-check pricing on structural work
If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems. Get written estimates for repairs before you commit to buying a home with structural issues.
5. Check the cost of financing
Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.
6. Calculate your fair purchase offer
Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.
7. Include inspection contingencies in your offer
This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair.
Feel free to contact Lisa Williams, CRS, GRI, ABR of Williams & Associates Realty for more information at (414) 463-9948 or www.williams-realtors.com