I hit this all the time. Buying a fixer upper seems like such a great way to save money. I sometimes relate the stories that I can remember from childhood of the old Our Gang show on TV. This was the show with Spanky, Alfalfa, Buckwheat and Corky and the rest of the gang. Their little Our Gang 10-15 minute vignettes were a staple of the kids TV shows of the 50’s and 60’s, along with cartoons. At least one a month, the gang would get into some sort of situation where they needed to raise money. Then someone in the gang (usually Alfalfa) would say, “I know. Let’s put on a show. You get the band together and I’ll get us a stage.” Off they would go and soon would be charging admission for their little show. Alfalfa was the singer in most shows and they always managed to pull it off and get the money to save the day. Click here to view one of the Our Gang vignettes on YouTube.
I get the same kind of cute impression sometimes from first time home buyers when they imagine taking on a fixer-upper project – “You get a ladder and I’ll get a paint brush and we’ll fix this place up in no time.” Unfortunately it just does work that way in real life. The reason the fixer-uppers are so cheap is that they normally need a lot of work and work that is going to be expensive. Even if you are fairly handy, you probably aren’t going to have all of the skills and special tools required to do all that these homes might need.
It is unfortunate, but a fact that, many of these homes end up back on the market within a few months (that’s why we call them boomerang homes in the real estate business). The buyers usually run out of money or get frustrated by the amount of work required well before they get all of the repairs and updates done. Often you will see these homes on the market in semi-finished stages, with gutted out kitchens or baths, or perhaps with a kitchen or baths that are done and the rest of the house still in need. The first-time buyers underestimated badly the amount of money, time and effort need.
So, what should you do about that fixer-upper that you have your eye on? First, have a good heart-to-heart talk with your Realtor about what he/she thinks of it from what they have seen. Realtors see a lot of really bad houses and can usually spot the big things that will need to be done; however, they are not home inspectors, so you’ll need to have a good home inspection, too. I good home inspection will find all of the things that may need to be repaired or replaced.
Sometimes a fixer-upper will be in such bad shape that a good inspection can’t even be done. In those cases, assume that you will need to replace everything that you couldn’t properly test – furnace and air conditioning, water heater, well system, perhaps the septic (if it is winter and you can’t get to the tank top), maybe even the roof, if it is snow covered. In extreme cases about the best that the inspector can tell you is whether the house is structurally sound or not and whether it has problems with mold, radon, infestation or water penetration. For each thing that the inspector finds wrong he/she should be able to give you at least a ballpark cost to repair or replace. They are giving you a real estimate for the work, just a ballpark guideline so that you can get a feel for whether it is a big or small cost.
The next step is the one that most would be fixer-supper owners miss or get wrong. You must do an honest assessment of your capabilities to do the work that will be required and if you have the time that will be required. Many first-time home buyers are working couples with very little time off to be together in the first place. After a few weekends of working on the house all weekend, you may wish that you had that time to yourselves. If you plan on using help from family and friends, assess that too. Just because you have an Uncle in the heating business or a friend who is really handy, doesn’t give you all of the support that you need for a big fixer-upper project.
Perhaps you do have enough family and friends in the building trades to help with the work; the next question is do you have enough money to buy all of the materials that will be needed. Almost as important is the question, do you have the necessary discipline to stick to a budget for the work. The difference between putting in “builder-grade” materials in the baths and kitchen, verses, using the great looking stuff that you see in the design books is several thousands of dollars. Running out of money because too much was spent early in the project on a kitchen or bath is what causes so many fixer-upper buyers to stall out and abandon the project.
So, my advice is to do some deep soul searching about your real preparedness for what is involved in a fixer-upper project house before you get too far with it to back out. It may cost you $300-600 to get all of the inspections done that you’ll need in order to make a decision whether to proceed; but, that is money well spent to avoid the loss of thousands later on. Second, look at your life situation and ask if you really want to devote your life to this project for six months to a year. It can take that long or longer if you have full-time jobs to worry about, too. It is also possible that the house won’t even be habitable for months after you close, so having a plan for where you will live until you can get enough fixed is a must.
If I’ve scared you with this post, good; taking on a fixer-upper is a daunting task. It’s usually much more than a new coat of paint and some new carpeting. So let someone else get the band together and get the stage. Sit in the audience and wait for that show to end and maybe you can then buy the house in a condition where you can move in.
In case you need to read more about this, here are some good links –
From the This Old House site - http://www.thisoldhouse.com/toh/article/0,,694903,00.html
From the Bob Vila site - http://www.bobvila.com/articles/424-should-your-first-home-be-a-fixer-upper/#.UyhQSfldWSo
Good luck with your decision.