The home inspector will uncover hidden issues in need of replacement or repair. Include inspection contingencies in your offerĭon’t rely on your friends or your contractor to eyeball your fixer-upper house. Have a conversation with your trusty Realtor to determine if it’s a good idea to share your cost estimates with the sellers to prove your offer is fair.ħ. Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs. You have a binding written estimate for the repairsīe sure you have enough money for a down payment, closing costs, and repairs without draining your savings. If you’re planning to fund the repairs with a home equity or home improvement loan, get yourself pre-approved for both loans before you make an offer. You’re sure you’ve uncovered the extent of the problems Get written estimates for repairs before you commit to buying a home with structural issues and do not purchase unless: If your fixer-upper needs major structural work, spend a couple hundies to hire a structural engineer to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit so factor that into your timeline too.Ĥ. Getting permits can be time-consuming and frustrating. Doing work without a permit may save money, but it’ll cause problems when you resell your home or neighbor decides to rat you out. Oh boy.Īsk local officials if the work you’re going to do requires a permit and how much that permit costs. There are a million little pieces that go into renovations, inviting a million little surprises. Either way, tack on 10% to 20% to cover unforeseen problems that are guaranteed to arise. If you’re doing the work yourself, price the supplies. Get your contractor into the house to do a walk-through, so they can give you a written cost estimate on the tasks they’re going to do. Price the cost of repairs and remodeling before you make an offer. Can you take time off work to renovate? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends? Prob.Ģ. Something else to consider is whether or not you really have the time and desire to do it. In the real world, attempting a difficult remodeling job that you don’t know how to do will take longer than you think and can lead to less-than-professional results that won’t increase the value of the home. Be honest when assessing your skill set – stripping wallpaper and painting? OK. HGTV shows make home improvement work look like a snap. When you buy a fixer-upper house, you can save a ton of money, or get yourself in a real financial pickle.įollow these steps to know how much you can afford, how much to offer, and whether a fixer-upper is right for you.
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