What Are The REAL Costs Of Buying A Fixer-Upper?
August 17, 2023
It’s the age-old debate when searching for a home: New or resale? The usual adage is that you get what you pay for. So, new home = more $$$. But before you decide that a resale home with renovations is a better buy, McKee Builders wants you to consider: what are the real costs of buying a fixer-upper?
Here are some of the questions you should ask yourself:
What Is A Fixer-Upper?
The term “fixer-upper” is usually limited to homes that need significant fixing. Not just a roof or flooring, but a long list of things that need to be fixed/repaired/replaced before it becomes habitable. A fixer-upper also covers a range of situations, from an empty shell to something that needs a sledgehammer and some elbow grease.
Why Buy A Fixer-Upper?
The answer to this question is money. Obviously, a home in need of major renovations is going to cost less than a move-in-ready home. But before the lower price tempts you, consider the total cost of ownership. Total cost of ownership refers to the actual cost of owning a home, not just purchasing it. When buying a home, you need to combine the purchase price with additional expenses, like the cost of utilities, insurance, repairs, renovation, and replacement. If you have to replace the roof, HVAC, electrical, plumbing, or other major systems, your more affordable fixer-upper could become a money pit.
Proceed with caution! During the pandemic’s homebuying free-for-all, desperate buyers were waiving inspections on homes in order to be the winner in the sea of hungry house hunters. But now that things have quieted down, buying a fixer-upper should involve careful planning and research. Here are a few renovation do’s and don’ts:
- Don’t guess when you think about putting down an offer. While you might think that $50,000 is more than sufficient to cover repairs in a fixer-upper, just a couple of “uh oh” revelations can blow that budget. A few hundred dollars here, a couple thousand there, and suddenly your discretionary fund is shot and you have nothing left to pay for the renovation.
- Don’t base your “estimates” on word of mouth. While someone else’s renovation might appear comparable, everything from the initial state of the home to the quality of the contractor and materials will vary. Every home is different, and depending on how “unloved” the fixer-upper is, the renovations may involve things you haven’t even thought of.
- Do bring in knowledgeable professionals who can provide a written estimate on the work you want to be done. Learn what’s going to be involved. Will you be able to repair something rather than pay for a full replacement? What are the pros & cons to your choices? It’s better to fully understand what you’re going to deal with before you make an offer.
You’ll also get a feel for the contractor. Did they show up for the estimate appointment? Were they prepared? Were they engaged? This will give you an idea of how they would work on your project.
Do take time to vet the contractors you’re considering. Once you have their estimates, check their references and online reviews. Explore their timeliness—both for showing up and meeting deadlines. Ask about their experience in the type of renovation you’re planning and the experience of the tradespeople they employ. These people are going to be in your home for an extended period of time. Learn as much as you can about them!
Do You Have The Time and energy For A Fixer-Upper?
When you think about affordability, don’t just look at dollars. You’re not only investing a lot of money in this home, you’re also putting a huge amount of time and energy into it.
- Do you have the time to work on a prolonged renovation?
Depending on the condition of the home, you might need more than a weekend or two to complete the repairs. If so, do you have time to work on it during the week? How much time can you commit to the renovation, from hands-on work to supervising a contractor? Will you be available during the workday to make decisions in order to keep the project moving forward, possibly even rushing home to deal with it?
- Do you have the emotional bandwidth to handle a renovation?
Buying a fixer-upper is not for the fainthearted. Seeing a renovation through, from demolition to move-in, is a big commitment. (Home makeover shows only give you a glimpse of what’s involved.) Making decisions and compromises, and dealing with inevitable delays and surprises, is stressful. (Think about how many times the homeowners in those shows are faced with unexpected problems.) Unanticipated costs, frustrations, and delays take a toll.
- Where will you live during the renovation?
Are you planning on living in your fixer-upper while you do the work? It might feel feasible at first. But be honest. Can you live with the noise, dirt, and disruption? Once the repairs begin and you’re living without a working kitchen or bathroom or laundry, you might change your mind. If you’re living with children and pets, you need to accommodate their needs, too. Are workers coming and going? Is your privacy being impacted? Living like this for a week is doable. Maybe a couple of weeks if you’re certain the work will be done on schedule. Beyond that, living in a home during renovation may be too stressful.
- Are you being realistic about your expectations?
Can you honestly achieve the results you want with the budget and timeline you’ve created? Add a buffer—at least 20 percent to both—to prepare yourself for additional expenses and scheduling problems. If you’re using a contractor, discuss possible delays. Ask about their other projects. It’s common for a contractor to move their crews between job sites. Your home could sit for days—or weeks—with no progress being made.
Is A Resale Home Right For You?
Conventional thinking says that new construction is more expensive. But if you consider all the costs associated (see above), is that actually true? Even if it isn’t a complete fixer-upper, there are always costs when buying a resale home.
Unless, by some whim of fate, you find an existing home that’s actually up to your standards, you will have work to do on your “move-in ready home”. Some renovations can be postponed, but eventually, you’ll need to bite the bullet. In the meantime, you’ll just live with things the way they are. Is that really the ROI you want from such a large investment?
Yes, buying a resale home can be a great solution if you find the perfect place in the right location. But nationwide, resale home inventory is limited, so options are limited. And you still need to make sure that your total cost of ownership includes all the expenses factored into buying a resale home.
The Benefits of Buying New and Move-In Ready
Picture moving day in a new McKee home. You unlock the door and everything is exactly right.
- The kitchen—from the cabinets and countertops to the faucet and walk-in pantry—is just what you want.
- The floors, appliances, and fixtures are all brand new.
- Everything is under warranty so you don’t need to worry about the cost of repairs.
- The technology is completely up-to-date, including the wiring for the WiFi and internet.
- The windows are energy-efficient.
- The roof is guaranteed.
Your weekends won’t be spent doing “projects”. And you won’t have to put up with features that you don’t like or that don’t work right. Your new home is effortless.
McKee Builders builds a variety of new homes in Delaware and Pennsylvania. Our quick delivery homes are waiting for you, with great locations, incredible features, and special pricing. Contact McKee Builders to give yourself all the rewards of a new home, instead of the worries of buying a fixer-upper.