Do you love the history, elegance, or feel of an old house, or does the thought of buying a rundown home and transforming it into your dream home thrill you? Maybe you’re considering buying an older home that’s below your budget and fixing and remodeling it to create the house you’ve always wanted. Before you sign the contract, however, there are a few important things you need to consider. Fixer uppers aren’t for everyone. Make sure you know what you're getting into, and then decide whether you’re the right kind of person for the job!
What’s a fair price for a fixer upper?
Before you buy a house, even if the price seems way under your budget, you need to make some calculations to see if you can truly afford the house after making all your intended updates. Have the condition of the house assessed by an expert so you know what needs to be updated or renovated and what can be kept as is. The inspector should highlight any serious problems and help you determine if the home will be a good investment for you. You may be able to use what you learn to negotiate the price with the seller.
Come up with an estimate of what it will cost to make the renovations you want. Be as accurate as possible, including all labor and materials costs required to get the job done properly. According to This Old House, you should determine the predicted market value of your newly renovated home and subtract your detailed, thorough renovation estimate price. Then, deduct another 5 to 10 percent, at least; this extra deduction offers you a little wiggle room in case hidden or additional expenses surface throughout the remodeling process (which they almost always do). The amount you have left is how much you should offer to pay for the house.
When to Say No
Many experts recommend avoiding houses that have major structural issues. These often include serious foundation, roof, wall, electrical, or plumbing problems. Dealing with these “behind the scenes” issues usually won't increase the value of a home, but they can be very costly repairs to make, meaning you could lose a lot of money by having to deal with them. Other major projects that don’t offer high market returns are additions, such as adding a bedroom, sunroom, or family room simply to bring it up to market standards. As a rule of thumb, to get the maximum resale value out of your home, your remodeling investments shouldn’t raise your home’s value more than 10-15% over the median sale price of houses in your market or neighborhood.
When to Say Yes
Look at what needs to be done, and ask yourself if you’re able to realistically do it yourself or afford hiring someone to do it for you. If the fixer upper mainly requires cosmetic changes, you may be able to get a great deal on it. These often include painting, updating flooring and drywall, replacing doors, installing lighting fixtures, and making updates in the kitchen and bathrooms.
In Part 2, we’ll discuss what you (the homeowner) should be willing to do to make a fixer upper worth your investment.
Ames Home Improvement
If you've recently bought a fixer upper that needs renovating, or if you want to finally get started on that home remodeling project you've been putting off for months, give us a call or fill out our short online form, and we'll reach out to you! We offer free remodeling consultations. We'd love to help you with your home improvement project if you live in or around Ames, Boone, or Story County. If you're interested in learning more about our financing options, click on the button below. We look forward to working with you!