Before you make the decision to purchase a fixer-upper home, you should make sure you do your homework so you understand these types of homes. While fixer-uppers can often present a good deal, there are some important points to be aware of so you understand the realities.
Myth: I can make a ton of money in the market by purchasing a fixer-upper, for far less money, and then selling it for full price or more.
Fact: Most homeowners looking to sell their fixer-upper home understand that they will have to list their home at a price that reflects the cost involved in restoring the home to its original condition. The asking price of a fixer upper is usually calculated so that the savings represented by the lower than average market price is roughly equal to the amount of money that a buyer could expect to spend on any necessary renovations.
Myth: if I’m buying a fixer-upper home, I don’t need to bother with the added cost of a home inspection since I already know what I’m getting into.
Fact: a home inspection should always be included in a real estate agreement, and likely even more important in the purchase of a fixer-upper. Structural defects are normally not visible to the untrained eye, yet will cost much more to repair than the obvious cosmetic fix-ups. Most licensed home inspectors will not only detail the defects that they uncover, but can also give you a good idea of the costs involved in fixing them.
Myth: It’s better to pay less for a fixer-upper in an undesirable area, than to pay more for one in a ‘better’ neighbourhood.
Fact: most of us have heard the quote, “the three most important things to look for when buying a home are: location….location…and location!” While this is obviously meant to be funny, and is a somewhat oversimplified rule of home buying, it does drive home the point of how important it is to consider where you will buy your home.
