Fixer Upper Homes
The definition of a fixer upper can vary depending on the buyer, but it's generally a home that is in need of certain structural and/or cosmetic repairs to make it livable.
Since most prospective buyers tend to gloss over listings that are in need of major repairs in favor of homes that are more move-in ready they are usually a good opportunity for investment. What is a fixer upper home to one person might be just a weeks worth of repairs to another.
Buying a Fixer Upper – Know the Process
Investing in a fixer upper house is a great way to find a bargain during any type of market conditions. Since the purchase is generally not contingent on the state of the market, whether hot or cold, any time is a good time to buy a fixer upper.
If you've ever thought about buying fixer-upper properties, you're not alone. Although it's not meant for everyone, even first time homebuyers can successfully buy a fixer-upper after enough research and guidance.
Before the Purchase
There are a few things you'll want to do before buying a fixer upper home. Each buyer might value one aspect more than another so it's important to assess your own situation with a unique attitude and approach.
Research is a Good Start
If it was that easy to find cheap fixer upper homes for sale, everyone would be buying them. Expect to research a lot of the same things you would check when looking for a more traditional property.
Things like location, neighbors and comparables are some of the most important aspects to focus your attention on. Bargain homes won't fall out of the sky but there are plenty of fixer uppers for sale.
An Inspection is Your Best Friend
Before you hire a Realtor you'll want to get a good inspector. Ask your friends for referrals or use tools on the internet to find a reliable and effective one. They're going to be critical in assessing the status of the house:
- Membrane - Will the roof keep water out and will the walls keep in heat during the winter?
- Structure/Foundation - Are there any structural integrity problems or will the house hold up just fine over the long run?
- Electrical - Are the wires updated? A lot of older homes do not use copper wiring or may not be up to code.
Certain things like basic electrical maintenance, doors and windows can all be fixed pretty easily but some structural or foundation problems might force you to pass and move on to the next house. There is always a large abundance of fixer upper homes for sale so don't be afraid to say no thanks and start your search over.
Finding a Good Realtor
If you want to buy a fixer upper at a discounted price, a knowledgeable Realtor can aid you tremendously. Realtors should have a good handle on the cheap real estate in your area since they work with it on a daily basis. You may not have the time to do all the research so make sure you hire someone who you can trust to work hard. A good Realtor could also have leads on fixer upper foreclosures if that's something you're interested in.
During the Buying Process
Now that the hard work is over, you'll want to focus on things like financing and down-payments. Your offer is more likely to get accepted if it's in cash but that's definitely not a requirement. At the end of the day, whether you pay cash or get financing, the seller will receive a check for the same amount of money (the former tends to expedite the closing process though).
Negotiate With the Seller
Before saying I do and signing on the dotted line, you can use anything found in your inspection to negotiate with the seller in bulk. It generally reflects poorly on the property if it were to fall out of escrow so most sellers are willing to work with you to fix any major problems.
Finding Homes in Your Area
Finding fixer upper houses for sale is a lot easier than you might think since everyone's definition of a fixer-upper will be different. Some buyers might be looking for old fixer upper homes for sale while others might be looking for foreclosed homes. Either way, you need to determine what level of a fixer-upper you're comfortable with and proceed from there.
How to Find Fixer Uppers
You can go about finding a fixer upper in a very similar manner to how you would search for a regular property: use the help of a Realtor and/or scour the internet listings. The best place to start is the foreclosure listings. You'll have the most leverage here since the longer properties are on the market the more you can negotiate.
If a foreclosure auction isn't for you, cheap houses and even fixer upper mansions for sale come up all the time. But with a more traditional listing, when the time comes to make an offer you need to be ready to pull the trigger. In order to get the best discount, be ready to act swiftly since it's very likely that other buyers will be interested in such a good property.
Alternative methods include looking for fixer upper homes for sale by owner since you won't have to pay Realtor fees. Though it's probably still a good idea to hire a real estate lawyer to review the contracts that need to be signed and make sure everything looks up to par.
Getting Fixer Upper Home Loans
Fixer-upper loans work just like financing for any other property. You'll need to show adequate savings and monthly earnings in order to qualify for financing and once you do, getting pre-approved should be a simple process. Learn more about that in our Foreclosure Financing Page.