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FIXER UPPER FACTS AND MYTHS FOR BEFORE YOU BUY

FIXER UPPER FACTS AND MYTHS FOR BEFORE YOU BUY

Before deciding whether or not a fixer upper is right for you, do some homework on what to expect
when purchasing these types of homes. Fixer-uppers can often be a good deal, but there is normally a
lot of money and hard work to make it fit your wants and needs. Here are some myths and facts that a
homebuyer should know before making an offer.

Myth 1.
I can save a lot of money by buying a run-down home under market value and fix it up to make it my
dream home.
Fact 1.
The asking price for a “fixer upper” is normally equal to the amount of money needed to complete
necessary renovations – not upgrades. Homeowners who are selling a fixer upper will price their home
according to costs and repairs that need to be done, which can give the illusion of a great deal. Since this
price does not include the cost of updating the look of the home, buyers should be careful not to spend
so much money on renovations that you are unable to recover your investment.

Myth 2.
If I’m buying a fixer upper, I don’t need to do a home inspection, because I am already aware the house
is run-down.
Fact 2.
A home inspection should always be included in an Offer to Purchase and Sale Agreement. It should be
high priority when looking for a home – even a fixer upper. Home inspectors can tell you about
structural damage that is hard to see for the average buyer. Structural problems are costly and can
quickly chew up your budget, a home inspector can give you an idea of what is wrong with the property,
but also how to fix the problem!

Myth 3.
It’s better to buy a fixer upper in an undesirable area to lower costs, than to buy a more expensive fixer
upper in a desirable area.
Fact 3.
Location is very important to consider when fixing up a house. While you can have a beautiful high-end
property, if its in a dangerous area you will have a hard time finding a buyer that will pay the price you
want in that neighborhood. There’s a high chance your home will sit on the market for months and
months costing you thousands. The return on buying a property in a desirable or up-and-coming
neighborhood is much higher.

Myth 4.
Once I fix a house, I will sell it and make twice what I spent.
Fact 4.
You can’t sell a house for more than it’s worth. There are many factors that contribute to this number,
the location, neighborhood, and surroundings all factor in to price as well. The neighborhood the home
is in can determine which type of buyer you will attract, and almost always predetermines the range of
price for the property. Look into the cost of other homes in the area. Take into consideration property
size, condition, and any special features that would increase the homes’ value in the home itself or
surrounding areas.

Myth 5.
I can make a lot more money if I turn a single-family home into a multi-family home.
Fact 5.
While you can add value to a single-family residence by making it a multi-family unit, but it might not be
possible or legal. Zoning laws dictate the maximum occupancy per household per lot, and can also
dictate the size and design of any new home additions to an existing structure.
There are many variables you have to take into consideration when buying a fixer upper. It’s
good to break down the costs and have an idea of profit either in the future or when flipping the home.
Here’s an example of factors to consider when buying a fixer upper:

  1. List Price of fixer upper
  2. Average recent sales of homes in your area
  3. Estimate cost of repairs
  4. Buffer Amount (for unexpected repair costs)
  5. Selling Expenses
  6. Amount of Profit

If you’re looking to live in the house for a couple of years before selling, the long-term profit could
potentially be much higher than the short term profit.