Find Your “Damsel in Distress”

Buying a home is definitely one of the most exciting (and nerve-wracking) milestones in a person’s life. Any way you look at it – it’s a lot of work. Some houses are brand new or move-in-ready – but many of them won’t be perfect for you right off the bat. While many hope to find a home on the market that is a perfect fit, restoring a home to match your personal style is more realistic. That’s why finding a “fixer-upper” may be the better choice in some instances – especially if you want to make your new home unique to your needs, or you plan on reselling it in just a few short years to upgrade to a larger or newer one.

But how exactly do you go about finding the right “fixer-upper”? It can prove to be an overwhelming task…trying to locate a good deal without getting caught up in the spiral of renovation expenses. If you’re lucky enough to find that home that’s a “damsel in distress,” but located in a decent neighborhood, you might just be able to avoid paying those expensive premiums for a premier property. You just have to remember it will cost you in “sweat equity.”

If it sounds too good to be true, it might be. There aren’t many steals on the market these days, and inventory is tight. However, if you do your homework and are able to step back and give in to a vision of what a home could be with a little work – you might have some luck. Be forewarned, though. It’s easy to get caught up, lose focus, and overspend on a remodel. That’s why it’s extremely important to be cautious when looking for your fixer-upper.

If you’re ready to take the plunge, here are some tips to keep in mind that will help you locate a home that needs some TLC, and maximize your resources for the rebuild when you do:

1.) Take a Look at the Big Picture – start with your realtor. A seasoned broker will have seen it all, and can give you a sense of what type of work needs to be done to update the home. Does it have what is known in the real estate business as “good bones?” You want to find a home that is structurally sound. It is also crucial to look into zoning laws in the community that could potentially limit renovations. Other questions to ask yourself are: is the home well-built? Does the infrastructure (roof, heating system, exterior) need a lot of work, or is the work merely cosmetic? If the latter is your answer, you’re on the right track.

2.) Assemble Your Dream Team – even if you intend to do a lot of work yourself, you’ll need help. It is in your best interest to hire an architect to assess the design of the house and options for renovation, as well as a contractor for those adjustments to the home. Your broker will also have a stable of construction professionals on speed dial, and can suggest a few who you can talk to or meet with to assess the property before you sign a purchase and sale agreement.

3.) Figure Out the Financials – before you make a move, it’s critical to have a sense of the overall projected cost to renovate your “fixer-upper.” After your architect and contractor see the property, both need to provide an estimate that should be all-inclusive, adding material and labor costs to the tally. It’s very important that you choose the right team, so consult your broker and check reviews online, as well. After these costs are determined, add in an extra 5-10 percent for unexpected issues that generally come up. When you have the final number, subtract it from what the home will most likely sell for after the complete renovation – and you’ll get a sense if it’s a worthwhile endeavor.

4.) Double-Check Your Work – It’s essential that the purchase and sale agreement includes an inspection clause. This inspection will reassure you that the “fixer-upper” is indeed a good investment. If a house needs extremely significant structural improvements, it’s best to stay away. Major repairs, such as plumbing/electrical issues and foundation upgrades, can be more trouble than good to fix. Pay attention to ceiling dimensions. You want to avoid ceiling heights that are under eight feet, as this is difficult to fix and is a limitation when it comes time to sell.

5.) Bang for your Buck – The most important aspect to think about is opportunity when looking for a potential buy. Cosmetic renovations, such as renovating an old kitchen or bathroom, can go a long way. Small restorations like these generally cost much less than what they return in market value, which is a plus!

6.) Avoid Hidden Costs – It’s smart to avoid any property that involves unseen work, like rewiring electrical panels and plumbing repairs. Those major infrastructure upgrades can be a hassle – and you need to have done your research here before making a move. If you’re going to be spending money, you want to make sure it shows on the externally, as well as internally.

7.) Don’t Spend Too Much Money (or Too Little) – When buying and renovating a “fixer-upper,” it’s important to stay within your budget. Going over can be a huge disaster. That said, it’s also important to not hold back on spending a little extra. A cheaper renovation might save you in the short term, but it might not do the job completely – and diminish the home’s appeal to potential buyers upon resale.

Bottom line, don’t do it alone. It’s easy to get carried away with ideas and the potential for a dream home – or in the case of a quick resale, a goldmine (when actually, it’s a complete wreck!) – so assemble the best team you can and try your best to keep emotions out of your search process. If you approach the house hunt with your eyes wide open, and have endurance for the long haul, you’ll be amazed with what you can accomplish.