The fixer-upper properties on the market will give you more purchasing power when shopping for a new home. Bargains can be found in homes that have been foreclosed, seized by the government or just fallen out of repair due to homeowner neglect. While it is true that you will save thousands of dollars on these homes that will need lots of work, there are hidden costs that buyers fail to consider. Ask yourself if it’s worth it and know your options.
Know exactly what you are getting into
Don’t underestimate the cost of renovations and repairs. A home inspection will let you know the fundamental repairs and maintenance that must be done to the home. Without a home inspector, you may end up over paying for the fixer-upper anyway.
The inspector will evaluate any problems with the interior and appliances, roofing, heating and cooling system, plumbing, electrical wiring, insulation and ventilation, and the structural foundation, exterior faults and more. Fixer-uppers may have a lot of problems with these parts of the home, and a realtor can downplay the extent of the issues because of their stake in the outcome of the sale. A home inspector is worth hiring to get an unbiased perspective and uncover problems you can’t see yourself.
You ultimately have to decide how much money you are actually saving by buying the fixer-upper once you add in the costs. Once you spend all the money on repairs to make it habitable, will you still be satisfied with your choice? Will you hire someone to do the repairs or do you have the patience and skill to do it yourself?
Consider a FHA insured HUD 203(K)
It is worth checking to see if you qualify for a program known as HUD 203(k). It allows the buyer to purchase a fixer-upper with a FHA guaranteed loan, and the best part is that it protects you from extra costs if the “fixing” part costs more than estimated. You must submit a comprehensive list of repairs with corresponding cost estimates with your application, so you will need to get a home inspector, have the cost of labor and repair determined, and prepare your detailed plan for accomplishing it all for the FHA and your creditor.
The ideal fixer-upper would consist of superficial revamps rather than major appliance, ventilation, or structural repairs. Minor renovations would be painting inside and out, installing ceiling fans and light fixtures, and replacing carpets, windows, or doors.
Fixing up the house might take longer than you originally planned, but it can be well worth it. Remodeling and minor repairs will most likely take longer than you expect, especially if you are haven’t dealt with this before. You chose to save money with a fixer-upper. It takes time to give a house the proper care that will result in a comfortable house to call your home. Do your homework and make an informed decision.