Is buying a fixer upper right for you?
Is buying a fixer upper house right for you? It’s no secret that you can get more house for your dollar in Grays Harbor than nearly anywhere else in the state! Hoquiam was recently listed as the fifth most affordable city!
Interest rates are still low, too which may help you to consider buying a house!
The down side is that inventory of “for sale” properties is currently low, giving sellers a potential advantage. That fact might entice some buyers who wouldn’t normally consider a less expensive “fixer upper,” to do so. Frankly, not all “fixer uppers” are created equal; nor are all new homeowners equipped to be fixer-uppers!
How do you know which repairs you can handle? How can you tell the difference between a diamond in the rough and a money-pit? We hope to shed some light on the topic today.
Did you know that sellers and realtors are required to inform a potential buyer of any “material facts” they know about a property? This would include any information that could substantially and adversely affect the value of the property, your decision to purchase or the price you would pay for it had you been informed.
The Disclosure Statement is required to be filled in by the seller. They must disclose what they know, for example, if the house has been flooded or the roof leaks, or the residence has an invasion of carpenter ants.
However, there could be plenty that the seller and even the realtor simply don’t know about the house – and that is what you need to know before you make a decision.
KNOW BEFORE YOU BUY
A whole-house inspection by a certified, insured inspector is a very important part of a buyer’s due diligence. You need to know the current condition of every aspect of a home that may affect your desire to buy it, your ability to fix it and how long you can expect certain expensive components to last such as electrical system, foundation, roof or furnace. Even newer homes need full inspections!
INSPECTION CAN CALM FEARS
A good inspection can alleviate any lingering fears that there might be hidden problems when, in reality, there are none or that they are few and easier to repair if done in a timely fashion.
When an inspection reveals that a home has some problems, it shouldn’t mean that purchase is out of the question. A good inspection will educate you to the essential needs of a property, from which you can make good decisions to buy or not. It can also be useful as a negotiating tool on the final price.
THE FIXER-UPPER OPTION
For those experienced in home repair, a fixer-upper house is definitely worth considering. For one thing, houses that require extensive work to make them attractive and livable residences can cost less if the work is done “in-house,”, but it must be done well and with permits where required.
In addition, buying a fixer upper could allow you to buy into a neighborhood that you might not have afforded otherwise.
CONSIDER THESE THINGS
The key thing to remember is that once you’re done fixin’, your “sweat equity” and money spent on materials may or may not increase the value of the house.
You might consider the following:
Even if you spend a lot of time and money on a fixer upper as a “flipper,” you could “over build” for the neighborhood. However, if you’re going to stay in the house, do it the way you want.
The cost of repairs are often hard to estimate and can easily exceed the value of the improvements.
If you can’t live in the home while work is proceeding, you may have to pay the additional expense of another mortgage or rent payment plus electricity, water, garbage, insurance and taxes.
If you are unable to finish the job – for whatever reason – you could be stuck with an undesirable, hard-to-sell property.
COST OF IMPROVEMENTS
A key factor with a fixer-upper is the cost of the improvements.
Therefore you should always:
Estimate a budget for repairs generously.
Be realistic about how much of your time the job will require. Trips to the store should count!
Use professionals to help you assess what’s needed and to counter-balance wishful thinking.
Refrain from attempting repairs you cannot do well.
Get professional help for plumbing, roofing and electrical work connected to permits, inspections and warranties.
Again, whatever you do, be as close to professional standard as you can get and have all permits inspected and ok’d for “Final.”
When you sell, you will be filling in a Disclosure Statement!