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If you’re in the market for a fixer-upper, chances are your competition is slim. That’s great news because it means the odds for scoring a sweet deal are in your favor.
But buying a fixer-upper can be a double-edged sword. You could either find yourself neck-deep in a money pit or sitting on top of a gold mine. That’s why it’s important to know what to look for before you set out on your search.
Let’s start with the qualities you should look for in any home you buy. The first is location. No matter how perfect the renovation, if your home’s in a stale part of town, buyers won’t knock down your door when it’s time to sell. Ask your real estate agent to show you fixer-uppers in desirable areas with A+ schools and healthy market growth.
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It’s also important to purchase a home with good bones. Look for a home that’s attractive from the curb (or that will be with a little TLC) and a layout that flows naturally from one room to another. Large windows and custom woodwork are great bonus features. Before you spend money dressing a home up, be sure each room works for you on a functional level first. No amount of stainless or granite can fix a cramped kitchen.
It’s no surprise that a fixer-upper will come with a laundry list of things to do, but that doesn’t mean you should skip the home inspection altogether. Hire a qualified home inspector to perform a thorough inspection so you know exactly what you’re getting before you buy. Work with your real estate agent to review the findings and set priorities based on your budget and willingness to tackle major renovations.
Watch out for structural problems like foundation issues or outdated electrical wiring. You could pour a lot of money into these fixes without seeing a return on your investment since they’re not noticeable upgrades.
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If the décor hasn’t been updated since Elvis was alive, don’t get so shook up that you walk out on a great deal. Look at it this way: Lime-green shag carpet and avocado appliances are the color of money! An eyesore that can be ripped out and replaced offers an easy way to add equity to your home. Just make sure you pay cash for any improvements and don’t price yourself out of the neighborhood.
Before you sign on the dotted line, do a basic cost analysis based on the worst-case scenario. Plan for at least one budget-buster by adding an extra 12% to your renovation estimate. If the cost to renovate pushes your home’s value above and beyond everyone else on the street, you may not get back what you spend. Either lower your offer or look for a better deal somewhere else.
The Value of an Expert Eye
Before you throw your life savings into a fixer-upper, talk with an experienced real estate agent. A true pro will steer you away from the money pit and negotiate the best deal on the home that’s right for you. Looking for an agent you can trust? We can put you in touch with one Dave recommends in your area.