What Customers Need to Know When Purchasing a Fixer-Upper
Courtesy of Regions Mortgage InMarket Winter 2022
Over the past few years, there has been a noted upsurge in buyers interested in purchasing fixer-uppers and completing home renovation projects. And while it’s easy to blame the phenomenon on the surging popularity of remodeling-themed programming featured on HGTV, DIY Network, and TLC, the reality is the current hot housing market is responsible as well. For buyers frustrated by skyrocketing prices, tight inventory, and increasing bidding wars, fixer-uppers are proving to be a great option.
If you have a customer who is interested in purchasing a fixer-upper, share these helpful tips with them.
Remodeling a fixer-upper can be expensive, so it’s critical that a buyer select the right financing solution. Reviewing the three options available—conventional loans, FHA 203(k) renovation loans, and VA renovation loans—can help them make a more informed decision.
Know when to hire a professional
Many projects are easy enough for homeowners to complete themselves, such as stripping wallpaper, removing carpet, or painting ceilings and walls. The more difficult tasks—such as electrical and plumbing work—should be tackled by certified professionals to ensure a project is completed safely and on time.
A good first step when finding a professional to hire is to obtain recommendations from family and friends. Also, the National Association of the Remodeling Industry’s website (NARI.org) is a great source for candidates.
A buyer should estimate remodeling costs before making an offer on a property. An online calculator can help them determine a rough estimate of renovation costs. Or a buyer can hire a contractor to conduct an evaluation. A good rule of thumb is to add 10% to 20% to the estimated total to cover any unforeseen problems.
Conduct an inspection
An inspection is a must. Any fixer-upper should be thoroughly inspected before a purchase is made. In some cases, a buyer may need to hire multiple inspectors to check for structural issues, pest infestations, radon detections, etc.
Expect the unexpected
Remind a buyer that they will encounter renovation-related hurdles that need clearing—it happens even with the most well-planned projects. A buyer should be realistic with their goals and timeframe and not be afraid to adjust either.