Once you have found some neighborhoods you like, keep an open mind when selecting houses you might want to purchase. Houses that need a little work sell for thousands less than their more well-appointed neighbors. Consider a “diamond in the rough” and you may find yourself a valuable jewel.
When home hunting, look for property with potential. Although most people dream of buying a home in tip-top shape, there are some individuals who go out of their way to find the worst house in the neighborhood. What they are looking for is known as the “fixer upper.” As any real estate agent will tell you, the best strategy for buying a fixer upper is to find the least-desirable house in the most desirable neighborhood.
Because few buyers want them, there is little competition for fixer uppers, which means you can frequently find a bargain – providing you’re willing to make the necessary improvements. This may be a way to buy a house you you might not normally be able to afford, such as a waterfront home or a home that’s close-in to Austin. Be sure to consider: location, location, location!
When evaluating a fixer upper, find out what the average house in the neighborhood is selling for and also the highest price a home has sold for in that same neighborhood. Your buyer’s agent can give you these numbers from the MLS. Don’t trust online sites for this information because Texas is a non-disclosure state – meaning home sale prices are not recorded publicly. Use these 2 numbers to make sure that you buy a home for less than the average sales price and that the sales price + the cost of improvements is less than the highest priced home in the neighborhood.
Stay away from houses that are located in low-demand areas. Even if you turn your home into a show place, if the neighborhood is undesirable, you may have trouble selling in the future. Generally, the best areas for investing in a fixer upper are older, close-in neighborhoods in areas with good schools. Look for areas with an active real estate market where the majority of homes are owner-occupied, not rentals.
An easy fixer upper to tackle is one that just needs cosmetics like fresh paint, wallpaper removal, new flooring, fixture upgrades and landscaping. The trick is to look past the worn carpeting, outdated appliances and flowery wallpaper. If you can find a home that has an easy-to-update kitchen, all the better. Plus, there may be a way to expand a master bath without too much invasion into the structure. Kitchen and bath remodels have the highest return for your dollar spent.
Unless you have construction or remodeling experience, you may want to stay away from homes that need major improvements, such as foundation, re-plumbing, re-wiring, structural work or walls moved. These types of repairs are often costly and tricky to manage. Plus, you may not be able to live in the house while this kind of work is done.
Remember that fixer uppers do sell for less but will require more cash out of pocket upon purchase. If you just barely have enough money for a down payment on a home, then a fixer upper is probably not for you unless you are willing to live with the condition until you save the money for improvements. Buyers with extra cash will find that they are in an excellent position to pick up a fixer upper bargain.
If you are ready to look at fixer uppers, contact me or call 512-266-2606.