07 Jul What you don’t know about buying a fixer upper

GoldenGirlFinance.com | GoldenGirlFinance.com – Mon, 24 Jun, 2013

It’s cute, it’s got character and you’re ready to fall in love. Fixer upper homes, despite all their flaws, can still sweep home buyers off their feet. We see potential. We see profit. What we often don’t see is that this is one complicated love affair – one that could end badly.

Thinking about sinking money into a “handyman’s special”? Here are a few things you should know before saying “I do”.

They aren’t all the same

Many homebuyers set out to buy a fixer upper assuming that any battered abode with a beaten down price has promise. Not so. Each home has its own set of problems, and some have a lot more potential than others. Part of the appeal in buying a fixer upper is that you can get more house than you might otherwise be able to afford – but only if you choose carefully based on the home’s price, its problems and what it’ll cost to fix them. If you fall in love based on non-financial factors, you’ll have a lot to lose.

Not everything can be fixed

If you’re considering a fixer upper, get a thorough, professional inspection to uncover the home’s flaws. And by flaws, we don’t mean shag carpeting and old wallpaper. We mean serious flaws in the home’s structure, many of which can’t be fixed, or at least not at a cost that will be worth your while. If you can find a home with mostly cosmetic warts, it might be a good bet. If the problems are structural or more serious, buying the house may mean taking a big financial risk.

It’ll cost more than you think

Ask anyone who’s undergone a serious remodel if it cost what they expected. Chances are, the answer is (resoundingly) “no!” According to a 2012 report by the Canadian Mortgage and Housing Corporation, 37 percent of homeowners blow their budgets. This is remarkably easy to do – especially in a major renovation, because things often turn out to be way more complicated once someone starts swinging a hammer. You might tear open a wall to find water damage or bad wiring. Or find you need tools you didn’t know existed. Or you could be stuck ordering take-out for weeks at a time when your kitchen is out of commission. The point is that a major renovation is always a bit of a gamble. A good inspection and lots of research can help reduce your risk, but when you’re estimating how much your renovations will cost, shoot high and think about worst-case scenarios. If you can’t afford that number, you might not be able to afford the house.

Welcome to renovation hell

Have you ever seen “The Amazing Race”? Or, more specifically, have you ever seen apparently happy relationships devolve into bitter acrimony when put under pressure? A major renovation can be just like that…or worse. Renovating is messy, it involves a lot of big decisions, and it can stretch on for what seems like forever. It also gets very expensive, very quickly. Arguments over money figure high on the list of reasons for divorce. If your marriage is on a shaky foundation, renovating is more likely to tear it down than build it up. And check out how many lawyers advertise services for “renovation divorce” (really). ‘Nuff said.

Someone has to do the work

Buying a major fixer upper isn’t for people who don’t like getting their hands dirty. Sure, you can hire someone to do everything for you, but that isn’t as easy as it sounds. Not only are contractors and other home renovation pros expensive, but it can be hard to find people who will do smaller jobs like installing your new baseboards or painstakingly painting your crown molding. Plus, even if you aren’t a renovation expert, being willing to do simple jobs like demolition and painting can go a long way toward getting the job done more quickly and at a lower cost.

It’s only a deal if you get it cheap

Most fixer upper homes are discounted, but unless the price is discounted enough to make the time and expense of renovations worthwhile, you’re probably better off buying a house down the street that requires less work. When you consider what to pay for a fixer upper, consider the results of the inspection, the estimated costs for renovation, and the time and stress of getting the job done. Then offer accordingly. The idea is to bring your house up to the average price in the neighborhood – or, if you’re lucky, slightly above it – without spending more than that amount. If you can’t manage that, you aren’t getting any sort of deal.

Assess the baggage

Fixer upper homes come with a lot of baggage. Buying one can be the path to a beautiful home in a great neighborhood – or a fast-track to financial (and possibly personal) disaster. Before letting original woodwork or other details steal your heart, look past potential and focus on potential problems. That way, you won’t end up saying “I do” to a dump.

http://ca.finance.yahoo.com/news/don-t-know-buying-fixer-upper-143246038.html

Pam Martin, Invis, Kelowna Mortgage Broker, Mortgage Broker Kelowna, Best Mortgage Rates, Okanagan Mortgage Broker, Vancouver Mortgage Broker, BC Mortgage Broker, Canada Mortgage Broker