Buying a fixer upper home has become increasingly popular in recent years, in large part to the numerous TV shows that demonstrate all the possibilities you can do to a home. This has been an attractive idea to many home buyers making it more affordable to buy a home due to the increasing home prices.
This has become a popular way to buy a home, but I want to make sure that you know what you are getting into. These projects can sometimes become money pits and a much bigger task than originally anticipated and I would like to help you avoid that.
Things to consider when taking on a fixer upper
Here are some basic guidelines to follow when purchasing a fixer upper.
- Consider all costs- In the appraising industry, your costs do not equal the new value. If you spend $60,000 on a new kitchen, your home is not worth $60,000 more. Please be cautious that you do not over spend and be sure to remember you will have additional costs, such as, demolition, taxes, insurance, loan interest, real estate commissions, etc.
Also, be aware that not everything adds value. In most cases additional square footage, and updated kitchen, or converting extra space in a home to an additional bedroom or bathroom will all add value. Just keep in mind that some things that are important to you that you are willing to spend extra money on may not be important to the next buyer.
- Functionality- Before tearing down walls and altering the layout be sure it is still functional. Appraisers consider the functionality of the property and if you need to walk through a bedroom to get to another bedroom that will decrease the functionality of a home and therefore decrease the value.
- Conformity- You may have the money to make your home larger or complete it with high end finishes but before proceeding with this plan, consider the neighborhood. Don’t overbuild for the neighborhood because you will most likely not get extra money for it when you sell.
The appraiser uses comparables as a large part of the appraisal and if they cannot find any similar properties in your neighborhood it will make it more difficult to accurately appraise the value and will most likely be a similar value to other properties in the neighborhood.
- Get an Appraisal- A subject to the completion of a remodel appraisal can help you determine what your home will be worth once the improvements have been completed. Once you have plans for the new property you can have a subject to the completion of a remodel appraisal. The appraiser will inspect the plans and the property determining the market value based on the plans and will then come back out after the work is completed to be sure nothing has changed.
By having the appraisal done ahead of time you can determine if you made the best decisions or if you need to adjust some of the materials or designs you are considering making. This gives you the opportunity to change things before more money is spent.
Fixer Uppers are very appealing and, in many cases, can be fun but only if you know what you are getting yourself into. Do your homework so you can maximize your profit and enjoy the process.
Please contact our office with any questions you may have or to schedule your appraisal appointment at 760-741-7699, firstname.lastname@example.org or use our contact page on our website.
Brandlin Appraisals Inc. specialize in helping people who need appraisals for estate purposes, divorce, date of death, bankruptcy, FSBO’s and more throughout San Diego county. For more information please contact us at (760)741-7699, or visit our website at Brandlinappraisals.com, or email us at email@example.com
San Diego, CA // Real Estate Appraiser
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