Everything To Know About Buying A Fixer-Upper

According to Mina Starsiak Hawk, half of the mother-daughter duo on HGTV’s home renovation show Good Bones, preparing your mindset for inevitable issues is key.

“Even in the best-case scenarios, there can be factors out of your control, like delays in city permits or repairs that come to a halt because of weather conditions,” Hawk says. “So when looking at fixer-uppers, approach it like there will be problems down the line.”

Another potential unforeseen circumstance: If you’re buying a foreclosure, you could be buying a home that’s still occupied (in other words, not vacant), so you’ll need to deal with the eviction process, which can be costly and time-consuming.

2. Expect your life to be disrupted during renovations

With material shortages, unexpected weather and other hiccups bound to happen, you can and should expect the project to take longer than anticipated. Consider your lifestyle: Do you intend to live in the home while it’s being renovated, or do you want something that’s move-in ready? If you work from home or have young children, for example, living in a home that’s under construction for several months might be a deal-breaker.

“Like the saying goes, the true test of any relationship is if you can live in a renovation together because there are lots of things to consider like your usual habits and standards of living,” says Karen E. Laine, Hawk’s mother and co-host of their HGTV show. “Think carefully about whether you can live without things like a bathroom or a fully functioning kitchen when you’re fixing up your home.”

If living through the hum of chainsaws and bangs of hammers isn’t appealing, you can spread out the remodeling projects over time to minimize the disruption.

3. Focus on location when looking for a property

Location, location, location. It’s the oft-repeated mantra in real estate, and for good reason. You can always fix up a home, but you can’t change its location. An ideal fixer-upper is in a desirable neighborhood that you love. The same goes for future buyers if and when you sell.

You might be able to score a great deal on an older, dilapidated home, but if you dislike your surroundings or property values are struggling in the area, you might be left with buyer’s remorse.

“Seek the help of an experienced [real estate agent] to help you understand the neighborhood,” Reynolds says. Putting the work into a shabbier home in a sought-after neighborhood, he adds, means you get to “live in an area you might otherwise not have been able to afford.”

One of the best ways to find fixer-uppers is to drive around your target neighborhoods and make note of any properties that look like they might be in need of some TLC. If you spot a home in rough shape, consider whether the owner has simply neglected the place or that the overall area is in decline.

Aside from this hands-on approach, you can also look online for listings that have been on the market for a while, or research local property auctions.

When looking for a fixer-upper, consider the neighborhood’s attributes, such as the school district, crime statistics and proximity to shopping, dining and parks. Are the surrounding homes well maintained? Is the fixer-upper located on a busy intersection or close to places like a railway or a landfill? Are there any municipal projects in the works, such as road widening, that could impact home values?

Reynolds also suggests considering whether the renovations you plan on making will make sense for the area.

“Pay attention to the after-renovation value (ARV) so you can estimate whether or not these improvements will give you a return on your investment,” Reynolds says.

In other words, your home could increase in value after you renovate, but you might not be able to recoup all of the money you put into repairs. An experienced real estate agent can help you determine the ARV by comparing properties in the local area to estimate the value after the repairs you want to make.

Keep in mind that not every improvement nets you a dollar-for-dollar return. If this is a home you plan to live in, however, some improvements might pay off for you in other ways in terms of aesthetics or functionality.

4. Get the right type of home inspection

Laine, Hawk and Reynolds all agree that when you’re ready to put in an offer, it’s a wise move to bring along a contractor or engineer. That’s because these professionals can point out potential flaws or other critical issues that could present problems later on.

“You want to have someone look at things like the overall structure of the home, crawlspaces, insulation and especially the foundation,” Hawk says. “If the property doesn’t have a good foundation, it may not be the right one for you because it can end up being a money pit.”

It’s also important to not let cosmetic flaws deter you from a home you love. Things like broken windows, paint, fixtures and trim, to name a few, can be easily fixed.

Instead, focus on the major components of a home so you can anticipate how much you might need to budget and how long it might take to make repairs, such as:

• Electrical, plumbing and sewer systems
• Air conditioning and heating (HVAC) systems
• Roofing
• Driveway, decks or steps
• Extensive work needed on bathrooms and kitchen
• Foundation
• Structural soundness
• Environmental issues

Before closing on a fixer-upper, consider a specialized home inspection for a detailed report on the house. Here’s what to consider getting done, in addition to a standard home inspection:

• Pest inspection
  • If a home has sustained damage from pests like termites, ants or beetles, it can cause major headaches for you down the line.
• Sewer lines
  • Getting a sewer line scope and septic tank inspection can help you figure out if they’re in need of repair or replacement, especially with older properties.
• Thermal imaging
  • With thermal imaging, a home inspector uses infrared light technology to identify potential issues that might not be apparent to the naked eye. This includes heat loss and air leakage, insufficient insulation, moisture damage and abnormal electrical components.

There are additional services your home inspector might offer, as well, so speak with a reputable professional to see if you might need more specialized inspections.

5. Find the right financing

Remodeling a fixer-upper can get pricey, so it’s critical to have the right financing lined up. Some home renovation mortgages even allow you to roll remodeling costs into your loan amount with a single mortgage. Here’s an overview of some of these programs: