When it comes to buying a fixer-upper, it’s essential to acquire as much information as you can to make the best decision about your future home. While this is an important step in all Real Estate transactions, fixer-uppers bring a whole new set of potential problems and possible hidden costs to the table. So whether you’re just beginning to think about adding fixer-uppers to your list of potential homes, or you’re in the middle of finalizing your sale, this list will provide you with the 9 Key Questions to ask your Realtor, Contractor and yourself before diving in head first.
1. Does the home have a good layout?
Unless you’re thinking about completely bulldozing your home and starting from scratch, one of the most important features of a good fixer-upper is a great layout. If you’re potential future home has the “bones” you’re looking for, you won’t need to go through the trouble (or the cost) of knocking down walls or adding in extra bedrooms or bathrooms.
Another thing you may want to look out for is random nooks and crannies that suck up precious square-footage, or having to deal with low ceilings when you’re 6″ tall. Although the home may seem like a great bargain for the asking price, consider the money and time it’s going to take to renovate any structural layout issues to make your dream before signing.
2. Is it structurally sound?
This one is a no brainer when buying any sort home, whether it be move in ready or a classic fixer-upper. Structural damage like a cracking foundation or sinking home can cost tens of thousands of dollars to fix, and may end up costing you much more than you bargained (or budgeted) for.
Consulting an expert (or two) when it comes to a home inspection is especially important when considering a fixer-upper. Remember, this term can be thrown around very loosely in the Real Estate market and can mean anything from needing a new coat of paint and some flooring to installing complete new wiring, plumbing and fixing the foundation.
A home inspector can tell you exactly what’s wrong with the home, what will need to be fixed to bring it up to code and how much these improvements will cost. Hopefully, leaving you enough money to create the home of your dreams.
3. Are the major systems in good shape?
Before you sink big money into your home, you’re going to want to know how well the major systems are functioning, and if you’re going to have to spend even more money fixing those! The best way to find out everything about your home is to hire a specialist or home inspector to give you a deeper understanding of each system’s current health.
Finding out how your wiring, furnace, air conditioning, plumbing and water heater are functioning (or not functioning) before purchasing will give you a better insight to how much your home renovations will cost in the end.
Ideally, you want each of these systems to be functioning normally, but if for some reason they aren’t, make sure you get a detailed quote on how much it will cost to repair to make sure you can work it into your budget.
4. What’s the Neighbourhood like?
Before you think about completing an extravagant on your new home, it’s essential to take into consideration what the neighbourhood’s statistics and dynamics are.
For instance, say you purchase a quaint fixer-upper in a less expensive part of town. Sinking $100,000’s into it may not be worth the money. Updating the home beyond the neighbourhood value will cause you to have a harder time selling it and even worse, an almost impossible time recouping on your investment.
The key is to keep the home in the same ballpark (price wise) as the surrounding homes. While you can definitely make upgrades and improve the quality of living in the home, adding an extra room or completely gutting the place may not be your best bet. Check with your Real Estate agent to get a better idea of the neighbourhood statistics to keep your renovation in budget and have a better chance of returning on your investment.
5. Is it Historic?
When buying an older home, it’s important to know if the home itself is deemed historic or if it’s located in a historic district before starting any renovations. Many times if this is the case, you will have to abide by your city’s historic association guidelines which can vary widely.
Remodelling a historic home can also come with some headaches like applying for special permits, gaining approval for all changes and shelling out quite a bit of cash in the process.
While the end result may be your dream Victorian, make sure you’re willing to spend both the time and money getting it up to par.
6. Are there any hidden costs to bring it up to code?
There can be many times when older houses just aren’t up to code, and it can cost quite a bit of money in order to get them there. Things like low basement ceilings, lack of windows, out-of date wiring and hidden leaks can be big red flags when looking for the perfect fixer-upper.
For example, if the home you are considering has an unfinished basement you’d like to turn into an extra bedroom and bathroom, make sure you have it inspected according these codes. You may need anything from higher ceilings or extra windows to new sub-flooring and vapour barrier if there is a leak that has gone unnoticed.
Not only can these additional renovations add up, but the permits and licensed contractors it takes to complete them could blow your budget right out of the water.
7. Where will you live?
Sometimes a home can need such extensive renovations that you will not be able to live or function in the house while working on it.
Many times this can lead to people people having to pay both their new mortgage, plus rent somewhere else just to have a place to sleep, shower and cook. While your renovations may not be this large, you’re still going to have to live in a “construction zone” which can be very stressful for some people.
If you do decide to go with larger renovations, consider spacing them out over time so you can still have a place to live that is functional or have a friend or family member to stay with for a few months for free so you don’t end up paying an arm and a leg.
8. Is it a good investment?
Overall, buying a fixer-upper comes down to whether or not it will be a good investment in the long run. Consulting professionals like Real Estate agents, contractors and home inspectors along the way will give you a better understanding of how to get your best ROI. Make sure the improvements you are making are consistent with the neighbourhood, will appeal to most people’s taste if you need to re-sell and add value to the home.
Another tip when working on your dream home is to set aside at least 20% more for each renovation quote you are given. Adding this buffer will help keep you in your budget while you are in the midst of dealing with a variety of different contractors and invoices. So remember, there are bound to be extra expenses that pile up so make sure they aren’t completely out of your budget when they decide to rear their ugly heads.