Ocean Breezes Blog

Fixer-uppers

The oft heard phrase "Buyer Beware" is never more appropriate than when considering the purchase of a fixer-upper. You really need to know exactly what you’re getting into before buying.

It is commonly believed that fixer-upper properties represent easy money that is ripe for the taking - that you can buy it, do a little work on it in your spare time, and then resell quickly for a large profit. Usually, this is not the case. With proper planning and foresight, good profits can be made by buying "distressed" properties at less than market value, making appropriate improvements and repairs, and then reselling. If you're a first-time home buyer and plan to live in the house while working on it, buying a fixer-upper can be the very best option. It’s less risky buying a fixer-upper when you can live in the house while fixing it.

First rule: Location, location, location! Buy the worst house in the best neighborhood. You can overcome many obstacles, but location isn't one of them.

Second rule: Have a Home Inspection. The most important thing to know before making a decision on such a purchase is what needs to be fixed. Always have an inspection for hidden damage, performed by a professional home inspector or construction professional before buying a fixer-upper. Make sure that satisfactory completion of such inspections are a condition of purchase in any contract you sign. Then be sure to negotiate to try and get the seller to pay for all or part of the cost of needed repairs uncovered by the inspection. Often, sellers will be willing to lower the sales price to sell the home "as is" instead of paying for the repairs.

Third rule: Don't overbuild for your neighborhood. Be mindful of the neighboring homes; are they mostly 3 bedroom, 2.5 bath ranch homes? As tempting as it may be to add a full story, 2 bedrooms, a full bath, knock out walls and make the kitchen twice as big, install granite in the kitchen and baths, make the bathrooms mini oasis' -- STOP! As great as all that might be, unless you KNOW you will never move and never need to sell -- keep the updates simple and practical. The real estate "shoulda sold for" road is littered with beautiful homes that didn't sell for close to break even.

Any time you are spending money on improving a home with the plan of selling it later, strive to spend your money on things that buyers can easily see. New paint and removing trash from the property cost little, but have instant impact on curb appeal. Houses that have only cosmetic problems like peeling paint, a trashy yard, bad carpet or wallpaper are the best bet. This is especially true for the first-time buyer looking to live in the house for awhile before reselling. Fixing and cleaning cosmetic issues is fairly easy and inexpensive; it virtually always delivers a good return on investment, particularly when you can do the work yourself. Kitchen and bathroom remodeling usually pays a nice return, provided you don't over-do it. Don’t be afraid of buying a fixer-upper in need of this kind of repair. Properties with structural damage, or a floor plan that requires major work to remedy, usually can’t be "fixed up" at a profit.

Be careful that you don’t over-pay. Especially if you plan to resell quickly, paying too much up-front can doom your plans for quick profit. Find a REALTOR® you trust, research the market for reselling and have an exit plan in place for selling the house before making an offer.

There are some great deals in the Wilmington, NC area -- homes begging for a little TLC. Let me help you find one that will be YOUR dream come true.