Is A Fixer Upper The Right Choice For You?

A fixer-upper can be one of the best deals in any housing market — if you're prepared.

Many people, especially first-time home buyers, start their search at the top of the budget range they can afford or get financed. However, the decision to take on a fixer-upper can not only save lots of money, but it gives you a special sense of pride as you put your mark on your future dream home. The choice to consider a fixer-upper will open a whole new segment of the market for you.

But: It's important to take some extra precautions with this kind of "home improvement." The process of finding the right fixer-upper comes down to three big steps:

1. Insist on a Home Inspection
   A complete inspection is absolutely essential for any fixer-upper, especially if the home is offered "as-is." An as-is property doesn't always have serious problems, but it's more likely. An inspection often costs only a few hundred dollars and can alert you to issues that may be too costly to fix.
   
   Some big problems to look out for include: Old or faulty wiring and electrical system; Major problems with plumbing or well water; Presence of termite damage or signs of pests; Mold or mildew anywhere in the structure; A weakening of the building's foundation.
   
   Remember, some government-backed mortgage programs require inspections and won't approve funding of a home with significant safety concerns, regardless of planned home improvement.
   
   
2. Develop Priorities and a Budget
   With an inspection report in hand, you have the opportunity to figure out what your top priorities are. Planning should begin with repairs or fixes that will make things safer, then those that make you more comfortable in your new home, followed by aesthetics.
   
   Once you've written a list, the next step is to clarify which home improvement items you would like to do yourself versus which ones you'll want a contractor's help for. You can get bids for anything that needs to get done fast. Visit your local hardware store to price supplies for DIY.
   
   Ideally, you should also factor time into the equation. If you're interested in a "fix and flip," then you'll usually have to move pretty quickly to take advantage of favorable market conditions. On the other hand, if you're planning to stay, you have all the time you could need.
   
   
3. See If It's Still a Good Deal
   Once you have a handle on what a fixer-upper will ultimately cost, you can determine if it is still a true bargain. Your real estate agent will be able to advise you on your other options and the trade-offs that could be involved in your choice: For example, by looking at smaller homes, you could find attractive prices without the challenge of having to do major renovations.
   
   In many cases, there are relatively small issues that make a fixer-upper look like it's in worse shape than it really is. This is especially true in larger and older homes. If previous owners just haven't had time to keep up with maintenance, a property might simply need some paint and TLC.

Many buyers — from first-time homeowners to "fix and flip" investors — seek out fixer-uppers all the time. Fixer-uppers are not only uniquely satisfying, but they also present other opportunities as well. For example, a low-priced fixer-upper might make it easier for you to obtain financing.

Whatever the case, finding the right real estate agent for you is essential. Personalized advice from an expert you can trust will make the process easier and help you avoid oversights.

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