So you want to buy a fixer-upper mountain retreat? Sometimes you can save a significant amount of many by fixing up a place. Other times it can be a financial mess. These 4 steps will help you decide is a fixer-upper is right for you.
- Know what you can do yourself.
What are your skills? Some tasks, like painting, can be simple. Other tasks, like a bathroom remodel can be much more complicated.
- Price the cost of repairs and remodeling before you make an offer.
Obtain a written cost estimate from a licensed contractor. Make sure any permit costs are included. If you are doing the work yourself, include the cost of supplies plus your travel expenses. Then, add another 20% to cover the inevitable unplanned things that are sure to happen. Also if the property requires structural work. make sure to hire a qualified home inspector/structural engineer to make sure all costs are included.
- Determine your fair purchase offer.
Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.
For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet,
- Include inspection contingencies in your offer.
Don’t rely on your friends or your contractor to eyeball your fixer-upper house. Hire licensed professionals to do common inspections including a general home inspection, radon, mold, lead based paint, septic/well, and pest. Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don’t want to deal with. If that happens, this isn’t the right fixer-upper house for you. Go back to the top of this list and start again.
Source: Houselogic.com/GM Filisko