Living Green Olympia: What do YOU Mean by "Fixer Upper"??

What do YOU Mean by "Fixer Upper"??

So you say you want to buy a fixer upper?  My next question is "What do you mean by that?"   I'm not being a smart aleck, and yes, of course I've heard the term fixer upper.  It's just that it has quite a range of meanings; might mean a house that needs some new floor coverings and paint and a little cleaning & yard work here and there.  Might mean a house that needs a new roof, a new floor in the bathroom where the toilet leaked, and the above floor coverings, paint etc.  Might mean that it needs to be jacked up to have a new foundation poured, new wiring, new siding, new windows, a little mold cleanup in the attic, and all of the earlier mentioned items.  Might even mean it needs to be totally gutted and you get to rebuild from the studs out.

Many buyers believe a "fixer" is a great opportunity to get a really good deal - and it might be.  But a major remodel/repair project may also mean that you will need to get a rehab loan to finance your project (banks do have some minimum requirements for building condition for their ordinary mortgage loans).  And it might mean you could get a really unpleasant surprise if the extent of the needed work is WAY more than you planned for and budgeted for.  Or if the initial cost plus the cost of all the needed work means you now own a house worth 50% more than all the other houses in your neighborhood.

So define carefully what you really mean by a "fixer upper".  And if you really do mean FIXER UPPER, then talk to your lender about how you will arrange to finance it.  Make sure you get a really thorough home inspection to get as much information as possible about the current condition so you know what you have ahead of you.  Now get more information in the way of cost estimates from professionals for the work needed.  Now think about whether you have the time, energy, and know how to manage all these professionals and the big project you are taking on.  And don't forget to factor in where you will live while all the work is being done if it is the kind that means you can't even occupy the house for a while after you buy it.  And if that's the case, don't forget to factor in the cost of your new house payments on top of rent or other house payment for where you are living until all the work is done....

Wow, that list is going on in a very depressing manner isn't it?  But my point is that there can be a fine line between a house that can be well worth the time, effort and money to turn it into the gem you can see is hidden there... and the other type of fixer upper more accurately called a money pit!

                                                                           

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Nancy Conner, City Realty Inc,    360-701-1086     nancy@cityrealtyinc.net      

Comment balloon 7 commentsNancy Conner • May 08 2010 01:03AM

Comments

Yes, I really understand the difference.  My father always purchased homes that were homes we could fix up and do well from.  He did well and I have followed in his footsteps.

Posted by Tim Lorenz, 949 874-2247 (TIM LORENZ - Elite Home Sales Team) over 10 years ago

You are so right; and if they need a rehab loan they need to know how more intensive that is.  We have a lot of Fixer Uppers in our area - Both types, thanks for defining the difference.

Posted by Lois Davies, Cape Coral & SW Florida (Century 21 Birchwood Realty, Inc.) over 10 years ago

Too many people often forget about that pesky "minimum property standrards" requirement.  Just because the buyer is OK with the condition of the property, doesn't mean that the lender will be.

Posted by Rodney Mason, VP of Mortgage Lending - AL, FL, GA, SC, & TN (Guaranteed Rate NMLS# 2611) over 10 years ago

Hi Tim - thanks for your comment!  And yes, buying fixers and turning them into nice, livable homes again can not only be rewarding as an accomplishment, but can work well financially - sounds like your dad & you know what you are doing!!

Thanks Lois for your comment!  We have quite a few here too - I think the foreclosures are part of the cause for an increase in homes that need at least cosmetic work, if not structural too.  And you are so right that the rehab loan may require a bit more patience - a few more hoops to jump thru!

Yes, Rodney - buyers can be shocked at the discovery that what they are willing to accept and take on may not be at all in line with the lender's expectations for the property's condition!

Posted by Nancy Conner, Olympia/Thurston County WA over 10 years ago

It is good to understand what your client really wants.  Fixer upper could be so many different things.

Posted by Rob Lang, Local Expert in Lawrence Kansas Real Estate Homes (At Home Kansas) over 10 years ago

Nancy:

It does make sense to really ask the right questions or clarify what people would like

Ty

Posted by Ty Lacroix (Envelope Real Estate Brokerage Inc) over 10 years ago

Thanks Rob & Ty for your comments!  Yes, it is so important to make sure that what I think of as a fixer is the same thing my buyer means.  And it obviously applies to assumptions about many of the buyer's criteria - a "large yard' sure may have different meanings to someone moving from 10 acres or someone moving from an urban apartment!

Posted by Nancy Conner, Olympia/Thurston County WA over 10 years ago

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