What to Expect When Buying a Fixer-Upper
Buying a fixer-upper isn’t for the faint of heart. However, for many first-time home buyers, it’s the ideal way to get into the market. Before jumping into it, make sure you’re familiar with the buying process and what to expect when renovating. These tips will help you get prepared to take on your fixer-upper project the right way.
What to Expect When Buying
The average sale price for a home in Bellevue is $945,000, but a fixer-upper can often be purchased for less. When you start searching for fixer-upper properties in your area, keep these key points in mind:
- Budgeting Basics: Your budget needs to factor in the cost of repairs along with the potential resale price once the home is all fixed up. You don’t want to offer more than you can expect to recoup when selling. It’s also crucial to consider how you will fund the renovations. Apartment Therapy recommends looking into renovation loans, which could help you finance the renovations and home purchase with a single mortgage.
Kari Haas team member Darren Costa is a mortgage industry expert, including Limited 203(k) loan programs. Darren and the rest of the team will help guide you along the right path for your project!
- Choose Projects Wisely: When looking at potential properties for your fixer-upper, it’s important to assess how much of what you will need to do is cosmetic and how much is structural. Cosmetic changes will be least costly, whereas larger structural issues can add up quickly. Getting a home inspection is essential to making sure you know what to expect, and this will help you determine whether your renovations are likely to pay off. The national average cost of hiring a home inspector is $244 – $421. In the greater Seattle area, the price can range from $300-$600.
How to Tackle the Project
Buying a house that needs to be overhauled can be overwhelming. Avoid getting bogged down in frustration by creating a list of everything you want or need to do and then prioritizing projects.
The Kari Haas team is experienced in contracting and construction. Whatever your goals are, the Kari Haas team will be your best sounding board to help you make sure you’re set up for success.
- Be Prepared With the Right Tools: The most cost effective way to tackle a fixer-upper is to do the work yourself. Even if you’re starting from scratch, it will be well worth investing in the right power tools. Consult a list of essential tools for DIY, such as this one from Fine Homebuilding. A few essentials include a drill, sander, and jigsaw, along with a basic toolbox and ladder.
- Start With Structural Changes: If you need to make any structural changes or the exterior needs work, prioritize those projects first. Otherwise, you may end up undoing some of the cosmetic work you’ve done inside.
- What Makes the Most Sense? Even if you have projects that you really want to put on the top of your list, focus on what makes the most sense to do first. You may be tempted to rip down some particularly ugly wallpaper, but if you’re planning on moving furniture in and living there through construction, it may make the most sense to install flooring first.
- Make Your Space Livable: Along the same lines, prioritize one or two projects that are necessary to make your home livable. If you don’t want to live on takeout, that might mean a kitchen renovation comes first.
Stay or Sell?
After all the work is done, how do you know if selling is the way to go? If you have kept costs low by doing a good bit of the work yourself, you have a greater chance of being able to sell for a profit. Then you have the question of whether your fixer-upper makes enough money to buy a home you want to live in. Or maybe it would make a great vacation rental for long-term income! You may also fall in love with your “new” home and decide you want to stay. When someone buys a house to flip, they typically renovate to appeal to a wide range of buyers rather than to their own tastes, so think about your end goal.
You don’t have to figure everything out beforehand, but you don’t want to go into this process blindly either. Be sure to do your research and work with an experienced real estate agent who can guide you. If you’re up for the task, buying a fixer-upper has rewards that you will enjoy for years to come, whether you decide to flip or end up with your dream home.
Call Kari Haas TODAY to get started on your project, or just brainstorm!
Photo credit: Pixabay
This post was originally submitted by Erin Reynolds and has been edited by the Kari Haas Team. Erin Reynolds is the creator of DIYMama.net, which provides resources to help others with home improvement projects and repairs.
The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact Kari Haas at 206-719-2224.
Washington State employment jumped back up to an annual growth rate of 2.4% following a disappointing slowdown earlier in the spring. As stated in the first quarter Gardner Report, the dismal numbers earlier this year were a function of the state re-benchmarking its data (which they do annually).
The state unemployment rate was 4.7%, marginally up from 4.5% a year ago. My current economic forecast suggests that statewide job growth in 2019 will rise by 2.6%, with a total of 87,500 new jobs created.
Home Sales Activity
- There were 22,281 home sales during the second quarter of 2019, representing a drop of 4.8% from the same period in 2018. On a more positive note, sales jumped 67.6% compared to the first quarter of this year.
- Since the middle of last year, there has been a rapid rise in the number of homes for sale, which is likely the reason sales have slowed. More choice means buyers can be more selective and take their time when choosing a home to buy.
- Compared to the second quarter of 2018, there were fewer sales in all counties except Whatcom and Lewis. The greatest declines were in Clallam, San Juan, and Jefferson counties.
- Listings rose 19% compared to the second quarter of 2018, but there are still a number of very tight markets where inventory levels are lower than a year ago. Generally, these are the smaller — and more affordable — markets, which suggests that affordability remains an issue.
Connect with Kari Haas on Twitter to see market stats updates as soon as they come out!
Year-over-year price growth in Western Washington continues to taper. The average home price during second quarter was $540,781, which is 2.8% higher than a year ago. When compared to first quarter of this year, prices were up 12%.
- Home prices were higher in every county except King, which is unsurprising given the cost of homes in that area. Even though King County is home to the majority of jobs in the region, housing is out of reach for many and I anticipate that this will continue to act as a drag on price growth.
- When compared to the same period a year ago, price growth was strongest in Lewis County, where home prices were up 15.9%. Double-digit price increases were also seen in Mason, Cowlitz, Grays Harbor, and Skagit counties.
- The region’s economy remains robust, which should be a positive influence on price growth. That said, affordability issues are pervasive and will act as a headwind through the balance of the year, especially in those markets that are close to job centers. This will likely force some buyers to look further afield when searching for a new home.
Click here to see current listings by Kari Haas!
Days on Market
- The average number of days it took to sell a home matched the second quarter of 2018.
- Snohomish County was the tightest market in Western Washington, with homes taking an average of only 21 days to sell. There were five counties where the length of time it took to sell a home dropped compared to the same period a year ago. Market time rose in eight counties and two were unchanged.
- Across the entire region, it took an average of 41 days to sell a home in the second quarter of 2019. This was the same as a year ago but is down 20 days compared to the first quarter of 2019.
- As stated above, days-on-market dropped as we moved through the spring, but all markets are not equal. I suggest that this is not too much of an issue and that well-priced homes will continue to attract attention and sell fairly rapidly.
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors. I am leaving the needle in the same position as the first quarter as demand appears to still be strong.
The market has benefitted from a fairly significant drop in mortgage rates. With average 30-year fixed rates still below 4%, I expect buyers who have been sitting on the fence will become more active, especially given that they have more homes to choose from.
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
This post originally appeared on the Windermere.com Blog.
March Real Estate Stats for the King County
The spring home buying season started early this year. Open houses had increased attendance and bidding wars returned. After months of softening, home prices in most of the region jumped significantly from the prior month. With just one month of data, we’ll have to wait and see if this is the start of a longer upward trend.
If you are a buyer, you need an experienced agent on your side to win in multiple-offer negotiations. I, Kari Haas, am the broker you need! I win in over 95% of negotiations for my buyer when there is more than one offer. Call me today at 206-719-2224 to make a plan to achieve your goals!
The Eastside was one area of King County that continued to see prices moderate. The median price of a single-family home on the Eastside was $900,000 in February, a drop of 5 percent from a year ago and down slightly from last month. However, supply here isn’t nearly enough to meet demand, a fact that most likely won’t change any time soon. Amazon’s latest expansion in Bellevue is expected to bring a significant wave of new employees to the city.
The median single-family home in King County sold for $655,000 in February. While up slightly less than 1 percent year-over-year, it was an increase of $45,000 over January. Southeast King County, which includes Kent, Renton and Auburn, saw the greatest gains with prices rising 4.5 percent over the previous year. While inventory has grown, it is less than half of the four to six months that is considered balanced.
More inventory and low interest rates helped bring buyers back into the market. The median price of a single-family home in Seattle hit $730,000 in February, down 6 percent from a year ago, but up $18,500 from January. With just six weeks of available supply, Seattle continues to have the tightest inventory in the county. Seattle’s record development boom shows little signs of easing, so we can expect strong demand to continue.
The median price of a single-family home in Snohomish County reached $474,947 in February. Although that is a 2 percent decrease from last year, it is $5,000 more than January. As buyers push outside of King County to search for more reasonably priced homes, Snohomish County continues to struggle to find enough inventory to meet growing demand.
This post originally appeared on the WindermereEastside.com Blog.