Buying a home was so important to Jerika Glatt that she and her now-husband sacrificed a wedding ceremony to save for it. Finding an affordable house in Orange County, Calif. was difficult, thanks to record-setting high prices and availability, so she asked herself: “Should I buy a fixer upper?”
“We had a specific dollar amount we were comfortable with and looked for several years to find the perfect home,” she said. “I wanted a single-family home, but all we found were condos or townhomes in not-so-good neighborhoods. Location was important as well, so I pretty much narrowed our options down to a limited pool.”
In 2009, after three years of house hunting, she found the home of her dreams…it just happened to look like a nightmare when they signed the mortgage. It needed a lot of work.
“Every inch was horrible,” she said. “However, I loved the cul-de-sac, the big yards, and the location was super central. The surrounding homes were nice and the neighbors were super nice when we visited.”
After their TLC, the three-bedroom home became the perfect place for the right price to meet their growing family’s needs.
If you’re a wannabe homebuyer with a tight budget and the desire to make a fixer-upper home work for you, keep reading for Glatt’s tips, as well as some from a realtor who has helped families buy and sell fixer-uppers for nearly two decades. With any luck, they’ll help you’ll make an unappealing house your dream home!
Factor Your Repair Budget into the Home’s Price
Fixer-upper homes can be appealing to first-time home buyers. They may have a lot of the amenities on a shopper’s list, but with a more budget-friendly price tag given the extra work involved, said Paul Slaybaugh, a realtor in Scottsdale, Ariz. He cautions, however, that buyers should always estimate the repair budget before bidding to make sure they can afford it.
“Prices are down because things are out-of-date, and you need money to update it,” he said. “So, it’s best to target a home that needs a little work, not the one that’s grossly underpriced and needs a lot of work.”
Potential home buyers may also be able to get assistance from the Federal Housing Administration and lender Fannie Mae, which offer loans to help with fixer-upper repairs. But there are no guarantees.
“These loans aren’t as common as they were before the crash,” he said.
The Glatt’s home was priced to sell because it needed work, so it was easier for the couple to afford the initial $20,000 they needed for repairs and remodel work without extra loans.
“If this home had been move-in ready, it would have been way above our budget,” Glatt said.
But everything needed upgrades. And by everything, she means everything.
“Every room was spray painted. All of the (glass on the windows) was painted; the carpet was stained. Everywhere. Every door in the house was destroyed and the yards were overgrown.”
Her husband took two weeks off work to complete the repairs with help from contractors and quickly made the house livable.
“If you aren’t handy, don’t bother,” she said. “Paying someone else to do the remodel, in my opinion, is too expensive. Just buy a move-in ready home.”
Make Sure the Property is Structurally Sound
Carpets and fixtures can be replaced easily and at a reasonable price, if you’re savvy and ready to bargain hunt, but roofs and foundations can cost tens of thousands of dollars. So consider making sure you’re new home has “strong bones” before buying, said Slaybaugh.
“When I’m looking for a fixer-upper, I’m looking for structural integrity,” he said. “You always want to know when the roof was replaced, how old the water heater and A/C are, and about the other things that no one wants to buy after moving in.”
Slaybaugh also recommends paying for extra inspections before buying a fixer-upper home, especially if it has water damage or a pool.
“On a property that is dilapidated in any way, I would recommend buyers hire a licensed roofer and specialists,” he said. “A general guy will find the major issues, but the likelihood of additional problems is greater with fixer-uppers, because the last owner obviously didn’t take great care of it.”
An inspection found $8,000 worth of termite damage in the Glatt’s home before they moved in! Thankfully, the bill was footed by the original owner.
“We bought ‘as is,’ so we expected there to be many issues,” she said. “The only big surprise (that we have to deal with) is some foundation stress fractures.”
Don’t Spend More Than Your Home is Worth
Be aware of home values in the neighborhood where you buy, so that you don’t spend too much money on a remodel. Otherwise, you risk losing money, said Slaybaugh.
“You don’t want to over-improve a house,” he said. “Know the value of what you’re getting now, and how much it will be worth after you’ve remodeled it. A good agent should be able to help with that.”
He added that this is especially important nowadays, because families are more likely to move than stay in one house forever.
Since Glatt has put so much time, personality and beauty in her home, she never wants to move. Especially since her family, which includes a growing boy and a couple of active pups, love the remodel.
But even if she did want to relocate, her home is now worth much more than the purchase price and repair costs together.
“This was the only home in this neighborhood in our price range due to the repair issues, so we lucked out there big time!” she said.
She said other fixer-upper buyers should be patient and do each project properly. It’s been eight years, and she still has plans to remodel the master bathroom and replace the original oven.
“There’s no finish line really,” she said. “We do each project the right way, which will cost less in the long run. No sloppy, quick jobs!”
“Watch lots of DIY shows about the room you’re working on,” she added. “Don’t obsess too much, and make sure you take some weekends without projects. Sometimes you get caught up and forget why you bought the home to begin with: Family.”
Photos courtesy of Jerika Glatt.