Before you rush to make an offer on that fixer home, think carefully about what you are signing up for. Do you want this home because of where it is or what it has to offer or what it is?
Location
As has been mentioned repeatedly, real estate is all about location. If you are buying in the perfect-for-you neighborhood, that is one thing. If you are buying in an almost universally desirable neighborhood, that is something else. The difference will become evident when you decide to sell the home. You may be perfectly happy buying into a neighborhood undergoing redevelopment, but will the next potential buyer feel the same way?
Amenities
Perhaps you want this house because it has 4 bedrooms and feel you can live with it having only 1 bathroom. Or maybe you actually see yourself adding a second bathroom later on. While this addition will add value to the home, you will almost certainly under-estimate the cost of the addition. Also, there will be all those months and years when you and your family will be sharing the single bathroom. What sort of weekday schedule will this force upon you? Ask yourself this question about whatever feature(s) is attracting you to this home.
Savings
Buying a fixer can be for the savings involved. Perhaps you would not be able to afford living in that particular neighborhood if you pursued a move-in ready home. In this case, you need to ask yourself, realistically, how much time and effort are you willing to put into renovating the home. Then you need to price out the repairs needed. And finally, you need to really study the home inspection report to make sure you understand the amount of work needed.
Availability
Finally, you need to figure out if find a fixer home is even feasible. The fact is that the availability of fixer homes has diminished drastically. Since foreclosures and short sales have dropped off dramatically, investors are now focused on fixer homes. They offer cash, which means the seller gets their money in 5 to 7 business days. If you are financing the purchase, it most unlikely that you will be able to pay the seller (close escrow) in less that 21 days and more likely it will take about 30 days. Which offer would you take if you were in the seller’s shoes?
Avoid Distractions
Pursuing a fixer home will likely distract you from the much more achievable regular home purchase, particularly now that the market is balancing out. With more homes for sale, you should be able to find a perfect-for-you home. Do not overlook it as you try to save a penny or two on a fixer. You’ll find you are happy you kept your options open every single day you live there.
Contact me at 760 622 5087 or [email protected] if you have questions or concerns.
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