It is often said there are two types of people in the world: early birds or night owls, chocolate or vanilla lovers, city or town folk. In real estate, the great divider may be between those who want to buy a fixer-upper and those who want to buy a move-in ready house.
Many people won’t have to wonder if buying a fixer-upper or buying a move-in ready home is right for them: They’ll know. In fact, a survey by Coldwell Banker found that 80% of respondents said they preferred to buy a move-in ready home, with 70% of millennial respondents saying they’d be willing to sacrifice house size for a home that is ready for them to move into.
But listening to your gut might not be the best way to decide which half of the divide you fall on. Buying a fixer-upper or move-in ready home will each come with unique challenges.
Their names say it best: With a move-in ready home, all you need to do is settle down. A fixer-upper, though, will require some work before you can comfortably make it your home. But there are greater differences between these homes than just the timeline to your housewarming party.
These properties require more work than just a new coat of paint on the walls. A fixer-upper is a home that needs substantial repairs or remodels, and those repairs might take a lot longer than popular portrayals on HGTV and other home renovation reality shows.
The lower listing price of fixer-uppers acts as a draw to many homebuyers, but the hidden costs of updating a fixer-upper can snowball. Fixer-uppers required an average of over $13,000 of necessary repairs, plus another $15,000 of aesthetic and practical renovations, according to a report by Buildworld. Many homebuying respondents found their renovations more costly, time-consuming, and challenging than initially anticipated.
These houses are ready to be comfortably inhabited, but they might not be quite to your taste. That means, move-in ready homes might require some minor renovations, like new paint or appliances.
The ready-made nature of these homes is likely why many prefer them. However, they carry a higher listing price than most fixer-uppers. Be prepared to pay a premium for these homes, many of which have undergone some remodeling to list for top-dollar in a competitive market.
You can search for move-in ready homes with Orchard, and we can even help you make a cash-offer to beat the competition.
In their report, Buildworld found that homebuyers who bought a fixer-upper were just as satisfied with their purchase as those who bought a move-in ready home, but for different reasons. We break down the pros and cons of each:
As with any homebuying process, partnering with an expert real estate agent is your first step to finding your dream fixer-upper. Your agent will be able to help you navigate different neighborhoods, considerations, and tools available to aid your home search. An established agent may even be able to connect you to reliable contractors in your area to help with your renovation process.
Auctions and foreclosures are also solid leads for finding a fixer-upper. Banks offload these homes below market value without the updates that make a home list for top dollar. However, it’s important to consider that these homes will likely be sold as-is, which means that you won’t benefit from disclosures or an inspection contingency. You will need to prepare for unexpected costs.
You might even try cold calling. If you’ve ever gotten an unsolicited call to buy your house, you’re familiar with this old sales trick. While it might be annoying for homeowners who aren’t looking to sell, this tactic has been successful for iBuyers and real estate agents looking to pick up inventory in competitive markets.
Not all fixer-uppers are created equal. To help make your road to renovation easier, look for the following characteristics when buying your fixer-upper.
When buying a fixer-upper, you may have more financing options than a move-in ready home. Below are a few unique opportunities for this type of home purchase.
The FHA 203(k) Rehabilitation Loan is a government-backed loan that allows homebuyers and homeowners alike to roll renovation and homebuying costs into one mortgage. This is ideal for homebuyers looking to buy a fixer-upper, as it provides a one-stop-shop for their financing needs: one contract, one monthly payment, and one lump sum held in escrow.
The FHA 203(k) is backed by the Federal Housing Administration and comes with more flexible qualification requirements than a conventional loan. However, the terms of these loans do require that you complete all renovations within six months, so you will need to be mindful of your timeline.
Active duty members and veterans of the U.S. armed services who qualify for a VA loan can roll the renovation expenses for their fixer-upper into their home loan. The repairs will need to be “ordinarily found” on comparable homes, and all funds will be paid directly to the contractor.
The HomeStyle loan is a conventional loan not backed by the government that provides more flexibility in how homebuyers can use the funds. Borrowers may receive up to 75% of the “as-completed” appraised value of the property.
When you list with Orchard, we’ll get your home show-ready and make repairs to increase your home’s value at no upfront cost.
Orchard guarantees your home will sell, so you can buy your next one worry-free.
We provide peace of mind that your home will sell, plus list your home on the market to maximize your earnings.
Use our home sale calculator to estimate your net proceeds.
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