01 Sep Want To Buy a Fixer-Upper?
Tips For First-Time Home Buyers
A fixer-upper is a property available at a lower purchase price because it requires major maintenance work once the house has been purchased. While you can sometimes still live in a fixer-upper during renovations, depending on the extent of work to be done, you’ll need to spend a lot of time and money on structural and cosmetic improvements.
Purchasing a fixer-upper can be an excellent way for first-time homebuyers who don’t mind living through repairs to save money, buy sooner, live in the community of their dreams, personalise their house to their liking, and quickly accumulate equity. Fixer-uppers, however, are not for the timid: delays, overspending, and modifications to the original idea should be expected and planned for.
Here’s what you need to know if you’re considering buying a fixer-upper as your first home.
The Benefits of a Fixer-Upper for First-Time Home Owners
Personalise Your Home From the Start
Despite the widespread belief that purchasing a fixer-upper means compromising, some buyers actively search for fixer-uppers because they want personalised interiors. Not everyone is interested in sparkling, cookie-cutter homes. Refurbishing a property can be exciting because it allows you to add as many personal touches as you like without paying for a new home’s construction.
Less Competition
In actuality, a lot of purchasers desire a house that is ready to move into. They pay more for new buildings and “flips” because of this. Your options for a first home can be expanded by choosing a fixer-upper instead of only the turn-key properties that other buyers are bidding on. It may be possible to negotiate with the seller to get a better deal on a fixer-upper or to pay less than you had anticipated because there aren’t as many other buyers vying for the same house.
The Purchase Price May Be Lower
Purchasing a fixer-upper can be more economical than buying a move-in-ready property that has been recently renovated or is situated in a sought-after neighbourhood. The seller of a move-in ready property determines the asking price based on current market rates for homes with all of today’s “desirable” features already included.
At times, the most affordable way to reside in a particular neighbourhood is by buying a fixer-upper. Not only can you take advantage of lower prices, but you also won’t encounter as much competition if a bidding war drives the final price above the listed amount.
Is buying a fixer-upper as your first home a smart idea?
Cons:
- Renovations can take a lot of time
- The demand for contractors may make it difficult to find them
- If you need to do extensive renovations, you might not be able to move in right away
- The cost of renovations can go over budget if it isn’t managed properly.
Here are the revised tips for buying a fixer-upper as a first-time homebuyer:
Get a Home Inspection
You will need to pay for a home inspection, but it can be a worthwhile investment. A licensed home inspector will thoroughly examine your potential home and provide a detailed report outlining all the necessary repairs. Without a home inspection, you might be unaware of issues such as the need for new plumbing, septic tank replacement, or foundation repairs. A home inspection helps in prioritizing projects and budgeting and can prevent surprises.
Understand Your Budget
Once you have established your renovation budget, it’s important to stick to it. When the excitement of renovation kicks in, you may be tempted to justify borrowing and overspending, believing that it’s “okay” as long as the projects get completed, even if it means exceeding your original budget. This is why it’s crucial to have a firm grasp of your budget!
Obtain Multiple Quotes for Renovations
Getting quotes for renovations is useful for two reasons. Firstly, they can help you determine the size of the loan needed to pay for the renovations. Secondly, you can get accurate estimates of the actual cost of your home from these quotes. It’s best to request at least three quotes for each project to get a reliable average.
Have Realistic Expectations
It’s important to have realistic expectations when buying a fixer-upper as your first home. Understand that the house won’t be perfect right away, and it may take some time before it’s fully up to your standards. Ask yourself if you’re okay with gradually working on the house over time or if you’re comfortable with part of the property being a construction zone when you first move in.
Prepare Your Finances for a Fixer-Upper
Paying for renovations is one of the most challenging aspects of buying a fixer-upper, so it’s important to be smart when looking for your ideal property. One approach is to estimate the cost of the renovations and budget for them or apply for a higher bond than you need. This can free up extra funds for the renovations you’ve always wanted. Just make sure to research and shop around for the best rates and terms.
Prioritize Your Project List the Right Way
If you don’t plan to hire a contractor for a full-scale renovation, it’s not realistic to expect to complete all renovations at once. Prioritizing projects is crucial for most homeowners who buy fixer-uppers. You should identify which projects need to be done first and which ones can wait. Create a timeline and prioritize the most important tasks to ensure the project is completed on time and within budget.
Identify What You Can Renovate Yourself
Undoubtedly, making improvements yourself can save you a lot of money. Contractors can be expensive, especially if you hire them for every project. Determine which renovation projects you can do on your own if you’re handy, or with the help of friends or relatives.
Should You Buy a Fixer-Upper for Your First Home? A fixer-upper can be an affordable option to live in a desirable neighbourhood and get into the property market, but there are many challenges to consider. It’s important to weigh the pros and cons of fixer-uppers before making the decision. Get an accurate estimate of the costs involved and consider the time and effort it will take to complete the project. Make sure to talk to an experienced real estate agent for a better understanding of the area you’re considering.
Kindly be advised that AWD Law does not enter into litigation on behalf of clients. Our conveyancers specialise exclusively in the development of vacant land, property transfers, bond registrations, administration of deceased estates and notarial practice. Should you require assistance with a litigation, kindly contact The Legal Practice Council.
Contact AWD Law For Professional Property Advice before signing your Offer to Purchase.
All fields marked by an asterisk are required for form submission.