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Should You Buy a Home That Needs Work?

With high prices, competition from other homebuyers and low inventories, you may consider buying a home that needs renovating. Unloved or outdated homes don’t attract as many buyers, allowing you the opportunity to mine the gold under the dirt. 

Most buyers want a move-in-ready experience, and don’t have the experience or patience to remodel a home. Some are reluctant to hire contractors for fear of getting in over their heads, especially if they’re first-time homebuyers. And then there are buyers who simply can’t visualize a way to transform the home to their liking.  

But there are real advantages to buying a home that “needs work.” Homes in less than move-in condition tend to sell at a discount compared to other similar homes. And, you’re not paying top dollar for someone else’s improvements, some of which you may not even like. When you do the renovations, you can make the changes you want and make the home your own in style as well as substance. 

Consider the cosmetics. Look for the worst home in the best neighborhood you can afford. Cosmetics can be distracting, but don’t stress out over ugly paint, shag carpet or gingerbread trim. You’ll build instant equity when you improve the curb appeal, so the home looks like it belongs with its neighbors. Your Berkshire Hathaway Home Services network professional can help you distinguish features that matter, and which are easy to change.  

Consider the bones of the home. As you view a potential home with your Berkshire Hathaway HomeServices network professional, consider the structure. Is the home well built but simply needs updating? Or, does it have significant problems such as poor space planning or a crumbling foundation? Will the home need significant work by professionals such as plumbers, electricians and masons? If so, you’ll need to talk to your lender about loans that pay for remodeling. 

Consider a home renovation loan. According to Bankrate.com, there are several choices for loans that pay for remodeling such as FHA's 203(k) program or Fannie's HomeStyle Renovation Mortgage. Even if the work that needs to be done is work you can do mostly by yourself, building materials are expensive and you may still need help paying for big-ticket items like countertops, appliances and new fixtures.   

Consider DIY VS hiring a Pro. Many do-it-yourself projects will save you substantial money and require little more than viewing a YouTube tutorial, but others are more complex. Ask yourself if you have the right training and experience, the time, and the tools to DIY. A good rule of thumb is that if the job requires a license, such as a plumber or electrician, or poses too much physical or financial risk, you’re better off hiring a professional. The bottom line is you want a professional-looking result.