As of May 2019, the average selling price of new homes in the US is $377,200. For many Americans, this is a number that’s simply too high, especially for first-time homebuyers.
While many want a brand new home, others can make small sacrifices to purchase something not quite as nice, but still something to call their own. Something to consider would be a fixer-upper house; this is a home that needs a little love and is below market value.
Interested in fixer-upper homes? Then read on for everything you need to know about them.
Look in Good Neighborhoods
It’s true that if you look in subpar neighborhoods, you’ll have a higher chance of finding a fixer-upper home. But if practically every house on the block is a fixer-upper, then your own home isn’t going to be worth very much, even after you renovate it.
Instead, you should only look in good neighborhoods. Work with a real estate agent to find a fixer-upper that will significantly increase in value based on the location.
Think About the Home’s Layout
You’re definitely putting money into a remodel, but that doesn’t mean you have to gut the entire house. When you’re looking at a potential home to buy, look at how the rooms are connected with one another.
Older models will divide the property into many small rooms. While this can be nice for housing larger families, it can cause your home to feel smaller than it really is.
If you prefer to have an open floor plan, avoid properties like the one we just described. It’ll take a lot of money and hard work to get looking like you envisioned.
Instead, try and find other houses that have open floor plans already. This will save you a lot of trouble in the future.
Find out What Permits You Need
With any renovation project, you’ll need permits from the local government. When you’re interested in a property, think about what type of work will go into making it habitable.
Once you have a rough idea, talk with the local government to find out how much permitting will cost. Then, you can factor that into what you have to pay out of pocket to buy a particular home.
Choose a Property That’s Recently Been Lived In
A home that’s recently been lived in means all major systems should be in reasonably good working condition. Plus, it scares away critters like mice and bats.
While a foreclosed house seems like it has an attractive price tag, it may come with a whole host of problems since it’s been unoccupied for so long. These problems are most likely rectifiable but will add to the money coming out of your pocket.
Check Every Avenue
There’s the regular avenue of contacting real estate agents and websites. This can yield you some good results, but not all of them.
What you need to do is think outside of the box. Any channel where things can be bought or sold, you need to check them. That way, your search parameters are much wider and there’s a bigger chance you’ll find a fixer-upper that’s ideal for you.
For example, while Craigslist is used for small-ticket items, you’ll find that some people list their houses there as well. While many listings are scams, there are a few gems, if you look hard enough. Click here to read more about home sales on Craigslist.
Make Sure to Get Specialized Inspections
Don’t confuse specialized inspections with general home inspections; these two things are different. A general home inspection isn’t as targeted in its search since the home’s assumed to be in relatively good condition.
A specialized inspection, on the other hand, will check the property’s major systems. These include the sewage system, roof, and structural engineering.
They’ll also check for any pests so you’re aware of major damage, such as that from termites. Should they find any pests, you can ask the seller to pay for the repairs before you buy the house.
Consider the Repair Costs in Your Bid
These homes are called “fixer-uppers” for a reason. Their price tags are very attractive since they need some repairs done.
Do a thorough analysis of what you need to work on for the house, and put that into consideration when you bid on a house. For example, if the asking price is $60,000 but the renovation costs add up to $40,000, you might want to reassess whether the home is worth buying or not.
If you do decide to go ahead with the purchase but can’t afford the remodeling project upfront, all hope isn’t lost. You can look into mortgages and loans that’ll enable you to finance the repairs as you go along.
Look into the Federal Housing Administration (FHA) 203k Loan
The 203k loan was created by the FHA and US Department of Housing and Urban Development. This loan encourages Americans to fix up older homes and give them new life.
Should you be struggling to pull together the money for a home, even if it’s a fixer-upper, then you’ll want to look into the 203k loan. But before you apply, make sure you read the terms and conditions carefully so you know what you’re getting into.
Fixer-Upper Homes Can Be Worth It
If you’re a first-time homebuyer, fixer-upper homes can be a wise investment of your money. You can get the potential house of your dreams for just a fraction of the price it’d go for if it were in perfect shape.
But this doesn’t mean you can just purchase any fixer-upper and call it a day. It’ll take lots of hard work and time to find the perfect home, but once you do, it’ll be worth it.
Want to read more on houses? Then check out our home improvement section.