42% of Younger Home Buyers Want Fixer-Uppers. Here Are the Pros and Cons of Buying One
by Maurie Backman | Published on Sept. 7, 2021
Here's what you need to know about buying a home that needs work.
In today's real estate market, prospective home buyers can't afford to be too picky. The reason? There's very limited inventory to go around.
In fact, a lot of buyers today have to compromise on upgrades to break into the housing market. And some are even going as far as to purchase fixer-upper homes.
If you're considering this route, you're in good company. A good 42% of potential buyers are interested in purchasing a fixer-upper, according to Bank of America's 2021 Homebuyer Insights Report. In fact, many younger buyers say they'd prefer to purchase a fixer-upper rather than buy a home that's move-in ready.
Buying a fixer-upper could be a smart decision, but it could also backfire. Here's what you need to know.
The upside of buying a fixer-upper
There are certain benefits to buying a home that needs work. For one thing, you might pay a lot less for it than you would for a home that's move-in ready. That could leave you with a much lower mortgage to pay off.
Along those lines, buying a fixer-upper could help you move into a neighborhood where the majority of home prices are above your price range. If you have children, for example, buying a fixer-upper could be your ticket to a highly rated school district.
Finally, when you buy a home that's move-in ready, you have to live with someone else's design choices. When you purchase a home that needs work, you get to put your own stamp on it when making improvements.
The downside of buying a fixer-upper
On the other hand, buying a fixer-upper means potentially living in a construction zone for months on end. That's hardly pleasant.
What's more, some parts of your home may not be usable for weeks at a time. If you need to gut your kitchen, you won't have a way to cook, which means you'll spend a lot more money on food by having to resort to takeout.
Also, the cost of renovating a fixer-upper could end up being more than what you initially bargain for. While renovating, homeowners sometimes discover new issues that need to be addressed. If that happens to you, the savings you reap by spending less for your home could be canceled out by the money you're forced to spend on home improvements.
Is a fixer-upper right for you?
There are plenty of benefits to buying a home that needs its share of attention. Just make sure you recognize the risks of buying a fixer-upper. And also, get a good home inspector to come in and assess that property before moving forward with your purchase.
You might think you're signing up to buy a home that needs a kitchen and bathroom remodel only to discover that its roof is also failing and its foundation is sinking. The more information you get before closing on that home, the fewer unpleasant financial surprises you're likely to encounter.
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