11 Mistakes to Avoid When Buying a Fixer-Upper

If you're in the market for a new home, it pays to consider a fixer-upper. If you go that route, you might snag a lower purchase price, and from there, you'll have an opportunity to put your stamp on your home. But if you're going to purchase a home that clearly needs work, it's important that you steer clear of these mistakes.

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Chances are, your fixer-upper will need its share of renovations. So, it's important to try to eke out some savings on your home's purchase price, so there's room left over in your budget to cover those costs. If you make too high an offer, you may not have the wiggle room to make the repairs and improvements you have in mind.

ALSO READ: 4 Options for Financing Home Improvements

You might snag a lower purchase price on a fixer-upper than on a home that's in better shape. But that doesn't mean you shouldn't try to save money on your mortgage, and you can do so by shopping around with different lenders. It also pays to explore special financing options for homes in need of repairs, like a Fannie Mae HomeStyle loan.

You might assume that it will cost a certain amount of money to get your fixer-upper in shape. But if you undershoot that total, you could end up short on the amount of money you need to get that home into working order. A better bet? Talk to contractors before you buy and get estimates so that you can rest assured the numbers you have in your head are accurate.

Although we're not looking at the same supply chain bottlenecks we faced in 2021, certain building materials are still in short supply. As such, your renovations could take longer than anticipated when buying a fixer-upper. Be sure to account for those delays so that they don't catch you off guard.

ALSO READ: How REITs Will Help Slow Supply Chain Bottlenecks

You may go into a fixer-upper with the thought that you'll do a lot of repairs yourself. But while it's good to have confidence, if you end up incapable of tackling much of that work, you could land in a financial crunch once you start having to outsource it. That's why it's important to be realistic about your capacity to fix up a home before making an offer.

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Maybe you have experience renovating and repairing homes. But if you have a separate full-time job, you may not have enough hours to get the job done yourself. Be sure to take that into account when budgeting for a fixer-upper.

A home inspection could delay the process of closing on your home, and as a buyer, it's another expense you need to pay for. But skipping a home inspection is a big mistake. Even if you're buying a home that's clearly seen better days, it still pays to know what you're dealing with. A home inspection could reveal issues that virtually double your repair and renovation budget.

ALSO READ: 7 Issues to Look Out for During a Home Inspection

You may have come to the conclusion that you'll need outside help for your fixer-upper. But in that case, be sure to talk to different contractors and get plenty of quotes. You never know when one contractor might offer a better deal.

You may want to have your home in excellent shape by the time you move in, but if it needs a lot of work, that may not happen. Instead, you may have to settle for "livable" as opposed to "fully upgraded" for your move-in. That's something you should reconcile before moving forward.

If you're relying on outside contractors to fix up your home, you have to account for the fact that delays might happen. To that end, be flexible with your move-in date if possible. And if your current living arrangement is ending at a certain time -- say, you have a lease coming to an end -- make backup arrangements in case you need them.

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You may want to spend conservatively in the course of repairing and improving your fixer-upper. But don't let your desire to save money lead you to purchase inferior materials and fixtures for your home. If you do, you might face added repair costs over time, even if you save yourself some money up front.

Not everyone has the stomach for buying a fixer-upper. If you're going to take that leap, do your best to avoid these mistakes. If you steer clear of them, you could end up sparing yourself a world of stress.

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