Pros And Cons Of Buying A Fixer
Home prices continue to rise, which is keeping many a renter out of the market. But, fixer-uppers present a potential opportunity. For starters, the lower prices create the affordability that is lacking in other segments of the market. So should you be looking for one? We’re breaking down the pros and cons.
It may increase your ability to buy a house
Median home prices are at a record high, while affordability is at one of its lowest points. The reality for many people is that there seems like there is no end in sight to renting. A fixer-upper may present an opportunity simply because of the lower price point that gets you in the door.
When you're done, you will have true pride of ownership
Pride of ownership is a real thing for homebuyers. And that pride grows even stronger when you’ve had a hand in making improvements.
However, expect the unexpected
You know how on every episode of every renovation show on HGTV there’s something in the wall or under the floor or in the attic that makes taking down a wall impossible, or at least price-prohibitive? Get ready for a whole lot of that.
Ways to save money
Certain renovations can seem expensive because the labor is factored in. If you’re doing the work yourself, you’ll be amazed how far your money can go.
Decide what you can handle
If you’re handy — or merely patient and a quick learner—there may be no limit to your ambition as it relates to buying and fixing up a home. But it behooves you to be realistic, and painfully honest with yourself. Do you have the patience for a massive project? Are you the type who always finishes what you start or is it more likely that you’ll end up in a half-done construction zone for months (or years!) on end? How strong is your marriage (because it WILL be tested)? These are just a few of the questions you’ll want to ask yourself before you take the fixer-upper leap.
For it to pay off, you have to pay the right price
Figuring out what to pay for your fixer-upper might not be so easy because you can’t make an apples-to-apples comparison with a home in better condition based on the standard price-per-square-foot equation.
The legal site NOLO frames it this way: Unlike buying a house that’s move-in ready, figuring out the market value of a fixer-upper isn’t a simple matter of comparing it with nearby houses that have the same number of bedrooms and bathrooms and so forth. This makes working with an experienced real estate agent even more important. Knowing how much a property is worth and where to start when it comes to negotiations is key to getting a good deal.
Bottom Line: Actively increase your home’s value
Greater affordability may be the immediate driver when it comes to buying a fixer-upper, but the potential for appreciation is just as important.
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