So you’re  interested in a fixer-upper but you have not owned a house before.  Consider these points as you begin your search:

1) Buy in the best neighborhood you can – This point sounds obvious but buying right will be the single most important item in determining whether you are financially successful or not. Location is so important. Take your time to find the right house.

2) Make sure the house has the basics  3 bedrooms, 2 bathrooms and a minimum amount of square feet (determined by neighborhood norms). Also, consider things like lot size, lot location and whether there is a garage. If these are things that are norms for the neighborhood, your house should have those as well.

3)Find the home with good mechanical systems – Find a dated house that has good systems. The furnace, A/C, water heater, electrical, plumbing, basement/foundation and roof. These are things that every buyer wants to be acceptable at a minimum level. You won’t get a whole lot extra when you sell for redoing these components, but you might spend a lot extra if you have to improve them. These components are also the ones that you will more than likely have to hire out for.  If you go into a house that has systems that are ancient, look closer at the rest of the house and definitely take into account what it will take to get these systems up to an acceptable level.

4) Look for the  potential – When I look at a house, the first thing that I look for are unfinished spaces that can be finished inexpensively that will directly add value to the house. These are usually unfinished attics and basements. When you finish an attic or basement, you directly add value to your house for a minimum price. It could also propel the house into a new price category, if for example, you can make a 2 bedroom house a 3 bedroom house.

5) Strongly consider the kitchens and bathrooms – Kitchens and bathrooms sell houses. If you have a house that has a floor plan where the kitchen may always be small or dysfunctional, you might want to reconsider the whole house. With bathrooms, try to get a least 1-½ bath. If you buy a house with just one, you need to figure out how to get that second bath in. Many people will not even consider a house with only one bathroom.

6) Be realistic with your budget – Most of the time, fixer-uppers always have a few surprises in store for you. So when you are looking for that right fixer-upper, plan that it will take more than your budgeted amount and will take more time to finish as well.Even the this old house people take an itemized budget and add about 20% more to it.

7) Work with the right buyer’s agent – Buying a fixer-upper is different than buying a regular house. Having an agent that knows what is involved in projects and remodels is one step better.   The seller may be the last person to know (or admit) the house is a fixer-upper and thinks it is just as nice as the nice house that sold down the block. Even when you settle on a price, you are not done. The inspections will be more difficult, there could be defects and you’ll might even have to get reputable bids quickly to get seller concessions.  A transaction like this is where a buyer’s agent really earns his/her money.

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