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Finding Fixer Upper Homes
Finding fixer upper homes is an involved process. But they can prove to be good investments if you find the right ones. They can be found even in very expensive cities, but for a fraction of regular home costs. In a town where the average home lists for about $200,000 you can find one that may run only $35,000. This happens more often than you might think. But when buying a fixer upper, there are some things you need to know so you don’t end up with a wash-out.
If you’re going to fix the house up yourself, are you sure that you can fix this one you’re considering? Or are you going to hire it done? And how much will you have to put into it to get it into shape? You need to know if the difference between what you pay and what it’s worth is enough to have the equity that makes it worth doing. If you can gain $20,000 in equity, is the work you’ll have to do going to be worth it? You can run into a lot of headaches once you get started fixing up a home.
When you find a home that you’re considering buying as a fixer upper home, you need to make yourself a list of what it needs. Like carpeting, or a roof, new windows, or a paint job. Even the small things like faucets or locks need to be figured into the assessment. Use your real estate agent in order to figure out how much this house would bring if it was fixed the way you plan on fixing it. Use this information in determining what kind of offer you’ll make on the house.
Let’s say you found one that, after you fix it up, should bring around $180,000. And you’re going to have to install carpet, add new doors, put in new appliances, paint it, do some yard work, and repair some walls and ceilings. You need to take this information and call around for some quotes unless you intend to do it all yourself. And let’s say that after getting your quotes you find that all this work will run you approximately $15,000. You then subtract this figure from the $180,000, which is $165,000.
Now figure in another $3,000 for any unforeseen costs that may pop up. This brings the total down to $162,000. Now you have the figure you need to help you make an offer. If you plan on making an equity boost of at least $12,000, then your offer will be $150,000 for the home. If more, your offer will be less.
It’s always a good idea to offer even less than this figure just in case they might go for it. Nothing wrong with making more on the deal if you can. It’s just a starting point for negotiation, so maybe your starting offer will be around $130,000, and see where it goes from there. But these tips are just to give you some idea of what’s involved in purchasing a fixer upper home, and to act as a guideline for figuring your costs.
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