It’s no secret that buying a fixer-upper can give you much more purchasing power as you shop for a home. A home may need to be fixed up if it has been foreclosed, seized by the government or suffered neglect in repairs. It’s important to know which features of a particularly problem ridden house will end up costing you more than just a headache of repairs, and where to go from there.
Why don’t you do it yourself?
Anybody in the market for buying a house would love to come across the fixer-upper with only superficial projects to be done. Things like painting outside and inside the home, replacing and installing light fixtures, carpets, doors and windows are a DIY dream. Replacing appliances or ventilation systems can get really costly. Furthermore, you might find that a fixer-upper will have structural damage needing to be repaired which crosses the line of costly into nightmarish impossibility.
Inspect, scrutinize and review.
The average Joe (and many people who wouldn’t classify themselves as such) will have dreams of what a house could be rather than seeing the reality of what it is. A home inspector is needed to bring the buyer back to the real world, providing the details of that will cultivate a wise decision.
The inspector will evaluate potential problems with everything from appliances, heating and cooling systems, plumbing pipes, roof, wiring, ventilation and insulation, structural foundation and exterior faults. A realtor may subconsciously tone down the extent of repairs needed on a home due to their interest in selling it. The unbiased perspective and detailed list of repairs and renovations provided by a home inspector is worth the price tag. You don’t want to underestimate the cost of it all.
How much money are you really saving on the fixer-upper once you add in all of the repair costs? Consider whether you will be happy once all the repairs have been paid for, and the house is finally livable.
Look into a special loan - FHA Insured HUD 203(k)
There are two types, regular and streamlined. A regular loan is for a house with structural damage, and streamlined is for nonstructural repairs. HUD 203(k) is a program that allows the buyer to get a loan for the repairs and housing expenses if the house is unlivable. This can be tricky to get approved for, so make sure your credit score is in good condition. Submit a detailed repairs list (given to you by the home inspector) along with price estimates and a plan to get it all done. This is not recommended for those who want to do repairs themselves, but it can be done if you are able to demonstrate your ability in this area.
Make the right decision when it comes to buying a fixer-upper by consulting a home inspector, weighing the costs and considering special loans. Remember to be patient. Fixing up a house will most likely take longer than you originally thought, but it will be worth it.
Preston Sandlin is owner and founder of Home Inspection Carolina. He has been in the home inspection industry for over 15 years, performing thousands of structural/mechanical inspections from 600 sq. ft. condominiums to over 60,000 sq. ft. commercial buildings. Preston is a proud member of the NC Licensed Home Inspector Association and the Charlotte Regional Realtors Association.