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Latest News on Design and Architecture: “When Buying A Fixer-Upper, Where Should You Draw the Line?” by Terri Williams discusses factors to consider when buying a “fixer-upper”.
“Fixer-upper, remodeling and design shows have attracted large audiences and have romanticized the process to the point that buyers and homeowners believe that it is not a big deal to create their dream home,” says Karen Kostiw of Warburg Realty in New York, NY. However, she says these reality shows don’t provide the guidance you need to decide on a fixer-upper. If you’re transforming your basement, adding rooms and making other changes to the home’s footprint, there’s a lot to consider…
“One of the most important factors when considering a fixer-upper is whether you can customize the home to your design aesthetic and functionality needs at a lower purchase price than an already renovated home,” Kostiw says. “Typically, you can purchase a larger home with the same purchase budget [when you choose a fixer-upper]. That home can be purchased in a more desirable neighborhood due to lower cost,” she adds. Kostiw says that today’s buyers are more likely to want new or updated homes. There’s less competition if you want to buy a fixer-upper…
When buying a fixer-upper, you’re competing in a different arena. “Fixer-upper purchasers must compete with builders and investors, which will drive up the purchase price,” Kostiw explains. And she says you may need to be a cash purchaser since some lenders will not approve a fixer-upper property.
Kostiw also says you should prepare to spend at least 20 percent over budget during the renovation. That’s why you need to create a fixed budget before work begins. “Be firm on the final cost you’re willing to invest before renovations begin or the project can quickly get out of control…
Depending on how extensive the renovations are, it could take a while. So consider the time factor in your decision. “The purchaser must be prepared for long and expensive renovations and longer timelines than originally planned,” Kostiw warns. “Often, if a large amount of work is required on a home, a purchaser may not be able to move in until work is complete, which could take six months or longer,” she says…
The fixer-upper shows fit projects into 30-minute or 60-minute time frames, so they don’t cover everything that goes into renovating a house. “Many of the shows do not highlight the permit process or the reality of workers not showing up, which delays a project timeline,” Kostiw says. And these delays create a ripple effect. “The expense of labor and labor delays, product changes due to construction materials out of stock or a serious unexpected issue that arose on the job site could contribute to costing more than buying a new or already renovated home,” she says.
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Bankrate created a guide provides tips and considerations for buying a fixer upper to help buyers understand what to expect during the process. Their guide provides a list of financing programs buyers can use to help with the cost of remodeling their home.
