7 Tips for Buying a Fixer Upper

Hello Hampton Roads,

Everyone loves a great deal on a new home--that is a big part of the appeal of buying a fixer-upper! Sometimes home buyers can get a great deal on a property because it needs a little work. There are risks of course, as most of these properties are generally sold "AS IS" and "needing a little work" is always subjective.  The important things to know are how much work is really needed and how much will it cost.

If you're set on buying a fixer upper, here are 7 tips I've learned from experience that will save you time and money.

1. Before you make an offer, have an idea of what you want done to the home to fix it up.  If you are good at estimating, you can determine costs on your own or have your contractor view it and give you an estimate based on what you want done.  Once you have a number add a 10% buffer to the costs.
2. Have your Realtor check the history of the property to see how long it has been on the market and to see any history of price drops.  This will give you an indication of seller motivation.  If the home has been on the market for months with no drop in price, this may mean that the seller is unrealistic in how much they want for the house and conversely, if you are seeing a price drop every month, then you know that the seller is more willing to negotiate. 
3. Have your Realtor give you comps of homes that have sold in similar condition and also what an estimated after repair value of the home will be.  This helps you know how much to offer so you don't over enthusiastically pay too much even if there is competition for the house.  
4. Always get a home inspection.  An inspection will reveal the things that you may not necessarily be aware of like issues with the roof, the attic or the crawl space.  If the inspection reveals more work than you are willing to do, re-negotiate the price if the seller won't do the repairs or seek a release from the contract. 
5. Always get a termite/moisture inspection.  Even if your loan type doesn't require one, get one anyway so you will know the condition of the of the crawl space and if any work or  termite/fungus treatment is needed and how much it will cost.  Many companies offer inspections and estimates for no charge.
6. Don't forget to check the flood zone!  If the home is in an area that requires flood insurance, this will add to your costs and the closer you are to BSE (base flood elevation) the more your will pay.  You may be better off taking a pass on the home and finding one that doesn't require this additional fee. 
7. Understand your loan type.  Will the type of loan you are using work with a fixer upper?  VA and FHA will generally not.  But an FHA 203K rehab loan or a Fannie Mae Homestyle renovation loan may work.

If you have any questions about buying a fixer upper or need any help finding one, please feel free to contact me to discuss your home buying plans!


Thanks for Reading,

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Serving your Hampton Roads and Virginia Beach Real Estate needs. Liz Schuyler on Google+