Buying a Fixer-Upper: The Unexpected Expenses

Buying a fixer-upper can be a great way to get a house for less money or to avoid getting a mortgage, but unexpected expenses can often occur, as well.

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Buying a Fixer-Upper: The Unexpected Expenses

Posted by Gary Ashton: RE/MAX ADMIN on Thursday, April 6th, 2017 at 9:16am.

How to navigate the costs of buying a fixer-upper Many people who are looking to purchase a home as soon as possible while getting a steep discount choose to buy a fixer-upper instead of getting a mortgage or continuing to rent while they save for a more expensive home. That can seem like a great idea, but in some cases it might not be the right choice. In order to be sure that a fixer-upper home is right for you, there needs to be a clear understanding of how much repairing that home will really cost. Some unexpected expenses are bound to appear because it isn't possible to plan for everything, but the more care that is taken in the early stages of the buying process, the better off the buyer will likely be.

Did the Home Inspection Really Catch Everything?

The fine print in any home inspection will let the buyer know that there are no guarantees the inspector won't miss something. That might seem frustrating, but home inspectors are only human. They can miss problems, or see an issue but not realize how far that particular concern may extend. With that in mind, the home inspection can still be a very valuable tool to work through problems and try to negotiate the price of the home down to something lower if significant issues are noted. Expect there to be some problems beyond the scope of the inspection, especially when buying a house that clearly needs work.

What About Problems That Can't Be Seen?

Even the best home inspectors don't have x-ray vision. They can't see through walls or into the inner workings of systems and appliances. In short, they won't be able to find things that are truly hidden. As work on the fixer-upper home begins, walls may be opened up to rewire or re-plumb the home, and other changes may be made. During this time, there may be issues found that were completely unexpected and could cause costly unexpected expenses in a budget. Planning for that from a monetary standpoint is vital, or work on the house could come to a stop while other sources of funds are being sought. Most of those types of delays can be avoided with proper planning.

Who Will be Doing the Work?

If you plan to do the work on the fixer-upper home yourself, there are plenty of things to consider. Permits, inspections, and requirements in the city, county, and state will all matter. How much skill is needed to make some of the changes and corrections will also matter, and in some cases the job may become too big and professional help will be needed. Knowing who to call at that point is also very valuable, because not every contractor will charge the same or do things the same way. Getting the best person for the job matters financially, but quality can also be a big factor when the work is being done by someone else.

Is the Home Actually Worth the Final Cost?

In some cases fixer-uppers just aren't worth the money, even if they can be bought cheaply. They may have too many problems, and those problems can translate into more and more money until the cost of the home adds up to much more than it will actually appraise for when the work is completed. If money isn't an issue and the house is very desirable some buyers may still choose that option, but many people will walk away and find a house that works better for them, so they can protect their finances. Contact a real estate professional to determine if buying a fixer-upper is the right choice.

 

Gary Ashton

The Ashton Real Estate Group of RE/MAX Advantage

The #1 Real Estate Team in Tennessee and #4 RE/MAX team in the world!

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