With my post yesterday on warning signs to look for when hiring contractors it made me realize that several buyers have been asking if they should consider fixer upper properties or Windsor new homes.
While real estate agents can never answer these types of questions for you, we can offer suggestions or points to consider. With interest rates still at historic lows, buyers are realizing that 2013 may be the year to buy a home before rates start rising. With affordable homes still out there, buyers are jumping off the fence and trying to figure out what type of home makes sense for their lifestyle.
The question ultimately is: Does it make sense to buy a less expensive fixer upper? Or does it make more sense to buy a new home that costs more, but have all of the bells and whistles?
Here are some pros for buying a fixer upper:
1. Paying less for a home means lower payments and more money for emergencies and savings.
2. If you enjoy home improvement projects, then buying a home that needs updating will appeal to you.
3. Putting your own personal style on a house makes it a home.
4. If a fixer-upper in an ideal location, you are getting your foot into where you want to be. Remember, it really is true, “location, location, location.” It also means if you make desired repairs, you have the potential for reselling at a profit.
5. A buyer often has less competition when buying a fixer upper because this type of housing doesn’t appeal to everyone.
Cons of buying a fixer upper:
1. Standard of living: Let’s face it, if you have moved from a great apartment, then moving into a home that is less desirable, may take some getting used to. In some ways, buyers feel they are downgrading even though they are new homeowners.
2. Expensive: Updating homes are expensive. You also need to be prepared for delays, budget increases and living in disarray while the home is being remodeled.
3. Less free time: It’s true that if you undertake a large project, or even a bunch of smaller updates, you have less free time for your hobbies and what you enjoy doing.
4. If you need to sell immediately: Once in a while, things happen. If you need to sell your home before the updates are finished, it could take longer to sell.
Several things buyers should consider before making a final decision on a home that needs work:
Location. As mentioned above, think carefully about buying any fixer upper that is in an undesirable location. Avoid busy streets, next to commercial buildings, in high crime areas or surrounding bad neighbours. Homes in bad areas are very difficult to sell should you need to in a hurry. Always find what you can afford in the best neighbourhood you can afford.
Configuration: Pick homes that will appeal to the majority of buyers. Even if you plan on staying in a home for several years, don’t look for a fixer upper that has no garage unless you plan on building one.
Layout: Fixer-uppers with bad layouts are very expensive to remodel. Tearing down walls, moving kitchens from one side of the house to the other, tearing down bathrooms are very costly.
Condition: If a home has structural issues, mold or anything else that makes it inhabitable, think again about cost and budget. Also, banks will not give out loans for homes that are appraised at less than what you pay.
Pros of Buying A New Home:
1. You are the first owner: Buying a new home means you don’t have to worry about previous owners. You don’t have to remove ugly wallpaper or take down tacky window treatments.
2. New homes have latest technology: Newer homes today have energy saving appliances, hook ups for cable and internet and the latest in heating and cooling, lighting and plumbing equipment.
3. High-end finishes: Most homes today have higher end amenities such as stone counters, nicer spa like bathrooms and hardwood flooring.
4. Popular layouts: This means larger rooms, nice flow, larger windows that bring in sunlight and ample storage space.
5. No maintenance costs: At least for a year or longer your home will be under warranty, so you won’t have to worry if something breaks down.
6. No remodeling: Of course, with a new home, you won’t have to hire a contractor or make updates on your home.
Cons Of Owning A New Home:
1. Not all new construction is in perfect condition. Always make sure a professional home inspector looks over your property. Just because its new, doesn’t mean there may not be problems.
2. Consider location. If you are buying a home in a new housing development, you never know your neighbourbors or how the area will develop. It’s also a place that usually doesn’t have a character yet as opposed to older traditional homes that have a personality.
3. Usually more expensive: Again, newer homes are usually more expensive than older, fixer uppers. Sometimes, buying a new home means holding on to it longer to require any equity. Again, it depends on the area and the real estate market, but new housing developments can take time to develop a reputation.
If you are on the fence between buying a fixer-upper or new construction, spend your time looking at various properties and weigh the pros and cons. If down to a choice, find the home in the best location where you can get more bang for your buck. I always say that it’s best to buy the cheapest home in the very best neighbourhood, than the most expensive home in a bad location.