Considering the Price of a Fixer Upper

Posted on: April 7, 2017 by Goodrich & Watson

As part of our series on Weighing Your Options for Buying a Fixer Upper, we’re going to take a closer look at evaluating the price of the home. While a lower price tag in relation to the rest of the neighborhood might sound appealing, it’s important to consider what the real cost of purchasing the home will be. When considering the price, think about the following factors to ensure you don’t end up in a financial fix. Even more importantly, secure your home with a VA Home Insurance policy to give you the peace of mind you deserve.
Have a licensed and professional contractor do a thorough walkthrough of the house to determine exactly how much work needs to be done. Focus more on the structural and functional aspects of the home that need work, such as electrical, plumbing, and foundation concerns. If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems, suggests House Logic.

If you have the expertise to tackle the home on your own, price out the supplies for what needs to be accomplished. Next, experts recommend factoring in an additional 10-20% extra for unforeseen expenses so you don’t break your budget. Once you have a grasp on the work the home needs to be inhabitable and safe, then consider making an offer.

To make a fair purchase offer, consider the market value of the property. Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs. If the home you’re looking to buy has asbestos, pests, and dated appliances with dingy wallpaper, get an estimate of what it would cost to repair and upgrade these issues. This number should be deducted from the list price to ensure you get a fair deal. Your real estate agent can help you determine the market value of the home and the surrounding neighborhood, as well.

About Goodrich & Watson

Whether you are in the process of buying a new home or have been in your home for many years, you can trust Goodrich & Watson with all of your home-insurance needs. Your home is your greatest asset. Protect it with insurance you can trust. For more information, contact us at (757) 591-2032.

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