You get what you pay for. You’ve heard it countless times. And it’s never truer than when you’re searching for a new home. Before you decide on something that is going to require renovations,New Home Inc.wants you to know; what are the real costs of buying a fixer-upper.
When you’re looking at homes for sale, you need to understand the meaning of certain terms. “Cozy” means small. “Move-in ready” refers to a home that needs no renovations, unless you want cosmetic changes, like changing the interior paint.
And “fixer-upper” is a home that is in need of lots of repair. The home might be described as “in need of love”. Read between the lines to understand that it hasn’t been loved. And neglect can wreak havoc on a home.
The term “fixer-upper” is usually limited to those homes that need significant fixing, not just a roof or flooring, but a long list of To Do tasks in order to make it happily habitable. It could be anything from a shell of a home to something that needs a sledgehammer and lots of elbow grease. Sure, the HGTV show,Fixer Upper, has glamorized the idea of rehabbing and refurbishing an existing home, but you’re only seeing one hour’s worth of the effort. And these homeowners have Chip and Joanna Gaines handling the whole project. Who’s got YOUR back?
The answer to this question is “Cost”. That’s it. A home in need of major renovation is going to cost less than a move-in ready home.
Before the low price tempts you to make an offer, discover the total cost of ownership. Total cost of ownership refers to the actual cost ofowninga home, not just purchasing it. You need to factor in additional expenses, like the cost of utilities, insurance, repairs, renovation, and replacement. If you have to replace the roof, HVAC (air conditioning), electrical, plumbing, or other major systems, your home could be a money pit, where the costs to renovate seem to come without end.
A recent article in the Wall Street Journal, “Nobody wants to buy a fixer-upper right now”, shared that the appeal for these unloved homes has waned significantly. “Fixer-uppers are always a risky proposition for buyers, but now they are more costly as the rates for home loans and construction loans have both increased, on top of high property prices.”
During the pandemic’s frenzy of homebuying, prospective buyers were waiving inspections on most homes because they were desperate to be the winning bidder, among many. Buying a fixer-upper today requires careful planning and research.
Don’t guesstimate costs when you’re planning to put in an offer on a fixer-upper. And don’t base your estimates on what you have heard from others who had similar work done. While their renovation might appear comparable, you can’t be certain of the situations within the home and the quality of the contractor and materials.
You might think that a $50,000 budget is more than sufficient when buying a fixer-upper. Then you have a few “uh oh” revelations. Next, a few hundred dollars here, a thousand there, and suddenly you have no money left to pay for the renovations you need.
Bring in knowledgeable professionals who can provide a written estimate on the work you’re envisioning. Learn what’s going to be involved in getting it done before buying the fixer-upper. Will you be able to repair something rather than pay for a full replacement? What is the upside and downside to your choices? It’s better to fully understand what you’re going to deal with before you make the offer.
Also, take the time to vet the contractors you’re considering. Check their references and online reviews. Explore their timeliness—both for showing up and meeting deadlines. Ask about their experience in the type of renovation you’re planning and the experience of the tradespeople they employ. Remember, these people are going to be in your home for an extended period of time. Learn as much as you can about them!
When we talk about affordability, let’s not just look at the dollars—although that’s important. You’re not just investing a lot of money into converting your home into your dream, but you’ll be putting an extreme amount of time and emotional bandwidth into the venture.
Think about your answers to these questions:
Do you have the time to work on the renovation?Depending on the condition of the home, you might need to be more than a weekend warrior to complete the repairs. If so, do you have time during the week? Decide how much time you can commit to doing the renovation, which includes hands-on work as well as supervising a contractor. You might need to be available during the workday to make decisions in order to keep the project moving forward, possibly even rushing home to deal with it.
Do you have the emotional capacity to handle renovating a home?Buying a fixer-upper is one thing. Seeing it through the makeover is another thing entirely. All those home makeover shows provide only a tiny glimpse of the many hours involved.
There’s also the stress of having to make decisions and compromises in an instant and of dealing with inevitable delays and surprises. Look at how many times in those shows that the homeowner is faced with an unexpected problem once the walls are torn down. The sound of ca-ching and the frustration of another delay takes its toll on you.
Will you need to live in the home during the renovation?You might be planning on living in your fixer-upper while you do the work. It might feel livable at first. What’s a little peeling paint and ripped-up carpet? Be honest. Can you live with the noise, dirt, and disruption?
Once the repairs begin and you’re living without a working kitchen or limited to just one bathroom, you might change your mind. And if you’re living with children and pets, you need to accommodate their needs, too. Are workers coming and going? Is your privacy being impacted? Living like this for a week is doable. You can probably endure a couple of weeks if you’re certain the work will be done on schedule. Beyond that, living in a home during renovation is stressful for everyone.
Are you being realistic about your expectations?Can you honestly achieve the desired results with the budget and timeline you’ve created? Add a buffer—at least 20 percent to both—to prepare yourself for additional expenses and scheduling problems.
If you’re using a contractor, discuss the possible delays. Ask about their other projects. It’s common for a contractor to move their crew to another job site to handle an emergency. Your home could sit for days—or longer—with no progress being made.
With all these considerations, is buying a fixer-upper home right for you?
You might have thought that a new home was more than you could afford. But…with all the costs associated with buying a resale home, is that true?
Even if you’re not buying a true fixer-upper, there are costs involved with buying a resale home. Unless you find something that’s actually up to your standards of a “move-in ready home”, you will have work to do. Maybe you want to replace the flooring or update the bathroom or kitchen. Or the air conditioning system or roof needs replacement. And how old is the water heater?
Some of these renovations can be postponed but eventually, you’ll need to bear the cost. In the meantime, you’ll just live with things the way they are. Is that really what you want from such a large investment? Settling for less??
Buying a resale home can be a great solution if you find the perfect place in the right location. But inventory of resale homes is very low, so the pickings are slim.
Imagine that moving day arrives. You unlock the door of your new home and everything is exactly the way you want it to be. Everything in the kitchen—from the color of the cabinets and countertops to the style of the sink and the size of the walk-in pantry—is perfect. The floors, appliances, and fixtures are all brand new.
There’s nothing to do but unpack.
The home is under warranty so you don’t worry about the cost of repairs. Your technology is completely up-to-date, including the wiring for your WiFi and internet. Your windows are energy-efficient. Your roof is guaranteed.
A new home is effortless. Your weekends aren’t spent doing “projects”. You don’t have to put up with features that you don’t like or that don’t work right.
The total cost of ownership doesn’t involve all the expenses factored into buying a resale home or buying a fixer-upper.
New Home Inc.buildscommunitiesofnew homes for sale in Raleighand the surrounding Raleigh suburbs, includingApex,Smithfield,Fuquay-Varina, andLillington. We focus on affordable quality, giving you more home for your money. And by “more”, we mean more thought into the way you live. New Home Inc.’s advanced“Future-Proof” approach includes forward-thinking features, like an enclosed, climate-controlledsmart door delivery zonefor your packages, an electric vehicle charging station rough-in, and CAT6 cabling to give you a robust, reliable signal throughout your home. Check out our comprehensive list of above-standardstandard features, plus the includedsmart home automation package, andwhole home air filtration systemthat improves theindoor air quality. Look at theextra spacethat New Home Inc. builds in it’s kitchens. And if a townhome is more your style, we’re building brand newcommunities of townhomes for saleinSmithfieldandFuquay-Varina, NC, two popular Raleigh suburbs!Ready to move soon? Ourquick move-in homes and townhomesare ready right now, with affordable prices starting in the low $300,000s.Contact New Home Inc.to give yourself all the rewards of a new home, instead of the worries of buying a fixer-upper.