Do you remember the movie "Money Pit" with Tom Hanks and Shelley Long? They buy an old house cheaply with the idea that they will invest a little money in it and have a beautiful home. Sounds nice, doesn't it? Well, they end up almost hating each other and gets stuck in a hole in the floor. Spend a few hours there and you will rethink the whole fixer-upper idea. Buying an older house and putting your touches on it sounds nice at first. It could be a family project or a way to build memories of your first home. It may be just what you are looking for, some minor repairs and updates. But you could be stuck with sagging floors, a leaky roof and some serious draft problems. Fixer-uppers represent a good way for a homebuyer to move up to a larger home or a better neighborhood for less up front cost. But you will be investing a lot of time and money to make the necessary repairs. Don't dismiss fixer-uppers, but be realistic about all of the details. Buying a fixer upper requires a thorough investigation of the necessary repairs before you buy the property. You want to be sure that a "great bargain" isn't just an endless drain on your checkbook. Knowing exactly what it will cost you to restore the home will save you a lot of stress and worry. It won't take you long to learn the difference between a property that sounds too good to be true and reality. But even if a home looks like it lives up to all promises made, you should still remain cautious. Many fixer-uppers look really nice on the outside, with all the issues hidden neatly on the inside. Most fixer-uppers have problems that aren't readily apparent to the untrained eye, such as foundation and roofing issues. Even if you see a lot of repairs are in order, a great bargain on the property can make you disregard the problems as minor. Fixer-uppers are really addictive. We all want to make the steal of the century. Fixer-uppers make it seem as though you are getting a lot for your money. Many sellers will offer mortgage assumption and other sweet terms to get you to not inspect the property. Always have a property thoroughly inspected and appraised by a professional prior to purchase. You might even have an inspection performed prior to submitting an offer. It will save you time and trouble if the property is a dud. Don't let your emotions make you jump into anything. Most fixer-uppers aren't jumping off the market. Take your time in considering what you are getting yourself into. Think about what will happen if your repairs go thousands of dollars over your budget. The home may not appraise for what you've put into it when it is completed. You may find that the morning shines a new and different light on the property. Find out if the asking price is in line with the prices of other fixer-uppers in the area. See if any nearby homes were bought and "flipped" once repaired. How much did they sell for in the beginning and end? What can you expect from the home you are interested in? If you plan on purchasing a fixer-upper, be upfront with your lender. Let him or her know how much you will need to put in the home to fix it up. Be specific about what repairs are needed and who will perform them. Your lender needs to be on the same road as you to avoid any confusion later. A fixer-upper can really be a great experience. But when bills mount up and reality sets in, most people will crack up a bit. Take your time and really look into what constitutes a good deal. Don't let your dreams surpass the reality. |
