Home repairs don’t have to be a deal-breaker — but you should know what you’re getting into.
- The current housing market makes it difficult for people to find their perfect home.
- If you’re thinking of buying a home that needs work, you’ll need to do a lot of research and number-crunching before committing to a purchase.
Today’s housing market is a tough one to buy in. Not only is inventory extremely limited, but home prices are up in a meaningful way. While you may have been in a position to buy a larger home in a normal market, you may now be limited to a starter home. Or, in exchange for more square footage, you may need to buy a home that’s not very updated, or one that needs a lot of repairs.
The latter scenario is a tricky one, though. While buying a home that clearly needs repair isn’t necessarily an unwise move, it could be a risky one.
In a recent HomeAdvisor survey, 44% of home buyers said a significant need for repairs was a deal-breaker that caused them to pass on a property. If you’re contemplating buying a home that needs a lot of fixes, there’s one important thing you’ll need to do first.
Get quotes and run the numbers
The cost of home repairs varies greatly depending on the work needed. Even the same type of project could cost a different amount from one home to another.
Say you’re looking to purchase a home that needs mold remediation. The cost of that could be $1,000, or it could be $10,000, depending on how extensive the problem is, which areas of the home are impacted, and the specific things that need to be done to fix the issue.
That’s why if you’re going to buy a home that clearly needs a lot of repairs, you’ll need to price each repair out before moving forward so you can make sure the total amount works for your budget. That means talking to different contractors and gathering quotes so you understand the scope of the work and the damage.
You’ll also need to make sure the home is priced in a manner that reflects the repairs it needs. Say you’re looking in a neighborhood where the average medium-size home is listed for $400,000. If you’re thinking of buying a home you know will require $50,000 to $60,000 in repairs, you should be paying $50,000 to $60,000 less. If the seller refuses to close a deal for less than $380,000, then it’s a sign you should walk away.
Don’t get in over your head
Home repairs are a normal, albeit potentially pricy, expense that property owners have to deal with. But while it’s one thing to have repairs pop up after you’ve purchased a home, it’s another thing to buy a property that clearly needs work from the start.
If you take the time to understand the costs of making repairs, you can avoid a scenario where you move forward with a purchase and regret it after the fact. But don’t let today’s lack of housing inventory drive you to settle for a home that needs repairs and isn’t discounted. In that situation, you’re looking at the worst of both worlds — a more expensive mortgage and a series of up-front repair bills that could easily eat away at your savings.
A historic opportunity to potentially save thousands on your mortgage
Chances are, interest rates won’t stay put at multi-decade lows for much longer. That’s why taking action today is crucial, whether you’re wanting to refinance and cut your mortgage payment or you’re ready to pull the trigger on a new home purchase.
The Ascent’s in-house mortgages expert recommends this company to find a low rate – and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn’t influence our opinions of products, we do receive compensation from partners whose offers appear here. We’re on your side, always. See The Ascent’s full advertiser disclosure here.