The real estate market has been on a tear in recent years, with home prices rising at a record pace. However, there are signs that the market is starting to cool off. Interest rates are rising, and inventory is starting to increase. This is good news for buyers, especially those who are interested in fixer-uppers. This is because buying a fixer-upper house can be a good idea – under the right circumstances. With the stars beginning to align, here’s why you should be considering such a purchase right now.
The Many Benefits of Fixer-Uppers
There are a number of reasons why now is a good time to buy a fixer-upper. One of the most telling is that prices are more affordable. When the market is hot, prices are driven up by competition. This can make it difficult for buyers to find a home that they can afford. However, when the market cools off, prices start to come down. This makes it easier for buyers to find a fixer-upper that they can afford. Additionally, with the price of lending creeping ever higher thanks to the US Federal Reserve’s constant tinkering with the base rate, it becomes a smarter financial move to source a smaller home loan to minimize costs.
Another major advantage to buying a fixer-upper is that inventories are higher. There are more fixer-uppers available than there are move-in-ready properties, and this helps during times when markets are cooling. Hot markets, like those in the days of early 2022, were perfect for sellers, who have their pick of buyers willing to pay top dollar for their properties. As markets cool, however – as they’re predicted to over the next few months – sellers need to be more competitive. Lower offers are more likely to be accepted, and sellers are also likely to be more willing to negotiate more. This goes double on homes that are in need of repair work.
In The Market? Here’s What You Should Be Thinking About
If this sounds like good news to you – and for many it will – it’s a good idea to start looking more deeply into what it takes to buy a fixer-upper. The idea of being able to purchase a property for a song and then turn it into the home of your dreams with some sweat equity on your part is appealing, to say the least! However, a lot goes into transforming a fixer-upper into your dream home. There’s a lot to keep in mind, so here’s what you should be aware of and what you should be doing:
- Do your research. Before you start looking at fixer-uppers, it’s important to do your research. This includes learning about the local market, the different types of fixer-uppers that are available, and the costs of repairs. You’re getting a lower purchase price in exchange for having to invest in those repairs, so keep in mind your total cost is going to be higher than just what the property sells for.
- Get a home inspection. Once you’ve found a fixer-upper that you’re interested in, it’s important to get a home inspection. This will help you identify any potential problems with the property. You don’t want any nasty surprises coming your way because you neglected to get a home inspection that would have alerted you to costly repairs that need to be done.
- Be prepared to spend money on repairs. When you buy a fixer-upper, you should be prepared to spend money on repairs. This is especially true if the property is in need of major repairs. Whether you’re a skilled contractor in your own right that can do the work yourself or if you have a team of professionals do it on your behalf, you’ll be the one footing the bill in the end for labor and materials.
- Don’t be afraid to negotiate. When you’re buying a fixer-upper, don’t be afraid to negotiate with the seller on the price. You may be able to get a better deal if you’re willing to do some of the repairs yourself. If a seller is motivated, they might be willing to drop the price enough that you can use the savings on the sale by putting them towards your own repair costs.
- Be patient. Buying a fixer-upper can be a lot of work. It’s important to be patient and enjoy the repair and renovation process. If you’re willing to put in the work, you can turn a fixer-upper into your dream home, but it’s not going to be an overnight process by any stretch of the imagination.
The Last Word on Buying A Fixer Upper
Buying a fixer-upper can be a great way to save money on a home purchase. This goes double when the housing market is going through a cooling-off period or is otherwise showcasing some major volatility like it is now. You’ll be able to afford more property for less, and you can more easily control your related costs in regard to mortgage rates by buying a more modestly-priced property because it needs some moderate repair work.
However, it’s important to do your research and be prepared for the work involved. Buying a property at a rock-bottom price isn’t going to help you in the long run if you don’t factor in the cost of major repairs. Yet at the same time, if you’re willing to put in the time, money, and effort necessary to rehab a house, you can turn a fixer-upper into your dream home. In a cooling housing market, having a home of your own that you can afford is more valuable than almost anything.