A couple currently on the market to buy a home are looking at two different types of properties: turnkey condos, in which the home is basically move-in ready, and then what these clients affectionately refer to as “Great Grandma’s place” – or homes that have not been touched in decades and need a gut renovation. The wife is an architect and decorator, and she is hungry to take on a project.
A turnkey property allows the couple to purchase a home at the top of their budget. Alternatively, a fixer-upper that needs work on just about everything – often referred to in the real estate industry as "estate condition" – will require them to factor the projected cost of the renovation into their budget when assessing the contract price.
When purchasing a home, condition is one of the five most important factors to consider, along with price, location, size or layout and wow factor – or lack thereof. Because a turnkey property has already undergone its renovation, if you plan to finance the purchase you're essentially financing the cost of making the home move-in ready as well. For a property in estate condition, however, financing the cost of a renovation can be harder, and you may be paying cash for the work.
Most buyers who plan to take on a renovation hope that after all the blood, sweat and tears – and sawdust– they’ll have a home that is customized to their own standards and taste, and ultimately spend a net total of less than the price of an equivalent move-in ready home.
Properties that need work generally trade for significantly less than their renovated counterparts. Two homes on the market with similar square footage and layout, location and architectural style will generally sell for very different numbers if one has been renovated to today’s standards and the other has not been updated in decades. This means that there can be a great opportunity if a buyer is willing to take on a project, understanding what this entails.
The scope of work required is something any homebuyer should take into consideration when searching for a new property. No matter what, you’ll likely have to paint, but renovating a kitchen and bathrooms, rewiring and moving walls are another ball of wax. Depending on a buyer’s bandwidth, connections, budget and timing, buying a fixer-upper and taking on a renovation can be a great option to save money in the purchase price and, in the process, create a customized space that can be a real source of pride. Here are a few reasons why buying a fixer-upper might (or might not) be the best option for you.
Before deciding to buy a fixer-upper home, ask yourself these four questions:
- Do you have the bandwidth?
- Do you have the architect or contractor connections?
- Do you have another place to live temporarily?
- Do you have the vision?
1. Do You Have the Bandwidth?
In today’s world, we are pushed and pulled in many directions, juggling the obligations of work, family, friends and day-to-day errands. Adding a big, stressful project – with economic consequences, no less – is more than many people can handle. If your shoulders are wide enough to take on renovating a home, you can be at quite an advantage to buy a discounted property that is an overwhelming prospect for much of the buying public. Many buyers will pay a premium to avoid taking on the significant hassles of a renovation. The commitment is not small: Undertaking a renovation entails not only hiring the right people, but also the flexibility to visit the site on a regular basis and taking the time to shop for materials and appliances.
2. Do You Have the Connections?
Do you know architects, contractors, project managers or other people in the construction business? Can you find some that you trust? Hiring the right people can make all the difference, in part because time is money. A project manager or general contractor can streamline the process and keep subcontractors on task and on a timeline. Furthermore, they often have connections for better prices on materials and appliances.
3. Do You Have Another Place to Live?
While you’re renovating, you might not be able to live in your new place. Although some people can live through a kitchen renovation – especially in a city with good takeout options – or other aspects of a gut job, you can’t live without a bathroom. When budgeting for a renovation, you have to consider that while your new home is ankle deep in plaster dust, you will likely need to live somewhere else, and generally, that’s not free. Do you have the budget to carry two homes, or rent something economical while renovating? If a nearby friend or relative can put you up this can be a great way to save, but beware of the strains it might cause on the relationship.
4. Do You Have the Vision?
Be honest. Some people are just better at envisioning and then seeing a project through. The wife in the house hunting couple not only has a vision but the industry connections, so she can see what she wants in her mind’s eye and also explain it properly to her subcontractors and properly manage them. Conversely, her husband is a genius certified public accountant and tax attorney, but isn't exactly creative. Without her, he’d be totally overwhelmed at the prospect of a renovation. If you don't have the vision to help you get started, you may be better off looking at homes that don't require as much work and creativity.
Go ahead, think outside the box.
When it comes to interior design for your home, some rules are made to be broken. Whether it’s mixing fabrics or introducing an oversized piece of furniture, it’s possible to achieve a good look when you’re not following all the classic rules of interior design. Thinking outside the box is becoming even more accepted in home design: “Overall, I think there’s just less rules,” says Lee Crowder, design gallery and model branding manager for Darling Homes, a subsidiary of homebuilder Taylor Morrison Inc., based in the Dallas-Fort Worth area. Here are seven home design rules you can feel empowered to break.Furniture has a specific place in each room.
Furniture has a specific place in each room.
Traditional design and the rules of feng shui may tell you to create a U-shape with living room seating or place your bed on a wall opposite the door, but not every space makes following the rules so easy. "Don’t be afraid to break tradition in order to make the most out of what you have,” says Lauren Makk, home editor for Yelp. “Measure the length and height of each wall, and take note of windows, plugs, air ducts and any unusual architectural feature so these features accentuate the furniture you have and vice versa.”Keep the room looking uniform.
Keep the room looking uniform.
There are those who dislike mixing furniture styles from different decades, but an entire room of midcentury modern can also make it look like you’ve transported back to the 1960s. Don’t be afraid to put a more modern side table next to a traditional armchair, especially if you’re showcasing unique pieces. An antique chair or a coffee table made by a local carpenter may not fit with a uniform design aesthetic, but these pieces offer variety and invite conversation. A survey commissioned by high-end goods online marketplace 1stdibs, released in January, asked 630 interior designers about trends and expectations for 2018. Forty-six percent of respondents said they plan to buy more furniture from artisan craftsmen rather than big-name furniture designers.Every home needs a dining room.
Every home needs a dining room.
Even in the age of the open floor plan, many people assume they need to make room for all the traditional spaces on the main floor of a home: living room, dining room and kitchen. But Crowder says in new home construction, builders are encouraging homebuyers to choose a layout based on their preferences and needs. If you never entertain and typically eat in the kitchen, why waste space with a dining table for eight? Instead, that space can fit your interests and needs, whether that’s a home office or study area, a reading nook or spillover seating when you have people over for casual get-togethers.Keep most walls neutral, but add an accent wall for a splash of color.
Keep most walls neutral, but add an accent wall for a splash of color.
Longstanding practices often tell homeowners to stick to a neutral wall color, then introduce a fun pop of color on just one wall. While neutral walls may be best for a house on the market, it’s not something you have to stick to while you’re happily living there. “Painting is the quickest and most affordable thing you can do to change your space, but it takes guts to commit to an exciting new shade,” Makk says. “I say take the leap and commit to painting all [four] walls of your space.”Fixtures and finishes should match.
Fixtures and finishes should match.
The trends for metallic lighting fixtures and plumbing hardware throughout the home change every few years, just like preferred color palettes. One year brass is out of style and the next it’s in, but you can’t reasonably be expected to change out all your fixtures to keep up with the times. Instead, embrace the mixed-metal look. “People can step out and do a few more eclectic things than they felt comfortable doing before,” Crowder says. Black or nickel plumbing combined with chrome lighting fixtures work well together, she says.Don't mix patterns.
Don't mix patterns.
A decades-old rule that can still be hard to break today is mixing patterns, which some people think looks too busy, particularly when textiles are mixed. But when paired with complementary colors or similar styles, multiple patterns can actually result in a more dynamic look. Mismatched pillows of different patterns that go together can be a simple way to incorporate more than one print into a space, or you can make a bigger statement with printed fabric on a chair or couch, rugs or wall art.Keep current with trends.
Keep current with trends.
While you may be in love with the current design trends you see on HGTV, embracing a style that's uniquely yours will have more longevity with your home design. Designers who responded to the 1stdibs survey reported that clients too often try to follow trends and would be better off diverting from whatever rules are currently en vogue. Makk agrees, noting that “good design is about curating a timeless space that transcends trends and truly reflects your personal aesthetic.”Read More
Devon Thorsby | June 5, 2019
Homeowners should not fret, as long as they're prepared for the possibility of a downturn.