59% of 2023 Home Buyers Want a Fixer-Upper or Starter Home. But Here Are 3 Drawbacks to Buying a Home That Needs Work

Buying a home is an expensive prospect these days. Not only are homes still expensive, but mortgage rates remain elevated, at least compared to the bargain rates buyers saw in 2021. As such, you may be inclined to purchase a fixer-upper if you're intent on buying a home this year.

A fixer-upper might end up being less expensive than a home in better shape from a purchase price perspective. And buying one could mean signing a much more affordable mortgage.

A good 59% of prospective buyers say they're looking to buy a starter home or fixer-upper this year, according to TD Bank's First-Time Homebuyer Pulse. But here's why buying a fixer-upper may not work out so well for you.

1. Your repairs might cost more than you bargained for

You can do your best to estimate the cost of restoring a fixer-upper by talking to contractors before you make an offer. But even then, you may find that the actual cost of getting your home in shape is higher than the numbers you were presented with initially. That could deal a huge blow to your savings account or force you to take on additional debt to get your home repaired.

2. Your repairs might be disruptive

Living in a construction zone is hardly a pleasant experience. Depending on the nature of the repairs your home needs, you could end up spending your days listening to the sound of hammers and assorted tools when you're trying to work or settle in. And if you're having your kitchen gutted, you may not be able to do anything more than stick a frozen dinner into the microwave for weeks at a time.

Keep in mind, too, that home repairs have a tendency to take longer than expected. Your contractor might tell you that your kitchen won't be functional for about a month while it's being redone. But if there are delays with things like permits, inspections, and appliance orders, you could end up inconvenienced a lot longer.

3. You may not have an accurate read on your property taxes until your home is fixed up

Property taxes are partially based on the market value of your home. If you buy a home that clearly needs work, you might start out with a property tax bill based on its current condition. But if you spend time and money fixing it up, you may find that your home is slapped with a much higher assessed value the next time assessments take place in your area. And a higher assessment will generally lead to a higher property tax bill.

Be careful when buying a fixer-upper

The good thing about buying a fixer-upper, aside from paying less for your home, is that it gives you an opportunity to put your own stamp on it. But before you make the decision to purchase a home in dire need of repairs, think about the drawbacks involved. And make sure you're willing to take on the risk of added costs, higher property taxes, and weeks of upheaval to your home life.