Most buyers define the “fixer upper” as needing wall paint, flooring and possibly a bathroom or kitchen remodel. Unfortunately, that’s not really a fixer upper – that’s generally putting your mark on the house and making it comfortable for you. A real fixer upper is a home needing such things foundation work, electrical upgrades (possibly a re-wire), extensive plumbing, a new roof or all of these things.
I currently have a true fixer upper on the market for sale. The owners are lovely people, they just never updated or maintained their home. Unlike most sellers, these folks are realists and agreed to price the home at a price under tax assessed value and way below market value. Their hope is to get a cash investor, and their price is commensurate with the condition and the work needed to make a good flip or a great family home.
I’d recommend the following if you want to have the winning bid, for a listed true fixer and then a successful outcome:
- Do your homework, know the market, know the specific market for that neighborhood, style of home, etc Don’t write an offer taking the sellers’ deflated price and then take the discount for the work again in your offer – that won’t win you the house.
- If you are not a contractor, make sure you have a trusted contractor friend (maybe even a partner in the purchase). This person will be invaluable in the initial decision to make an offer and to keeps things moving forward as the inevitable surprises come up. Hopefully they will also have expertise in working with the county on permits, etc.
- Know your numbers. What is the home worth after your vision is realized? What will it take to get it there?
- Know the COSTS of your project. What will the money to buy the house cost you in interest, points, etc.? What is your budget to accomplish the fixes? Now add at least 20%. What will you do if you can’t sell the home? Will it cash flow as a rental?
As the market has turned from a sellers’ market due to the rise in interest rates, there will be opportunities. I’d recommend keeping your integrity and not trying to take advantage of sellers needing to sell (should be a win-win). Use the professionals you know and trust to help you find properties, get them inspected, etc. Approaching a listing agent to “get a deal” instead of the Realtor who has shown you a hundred homes is just a bad look,