A home is a major purchase, and you want to ensure you’re able to move into the property you’ve been dreaming of. To do that, you’ll likely need to ask yourself a lot of questions—from where your ideal location is to what unique stylistic elements the home offers.
Among these crucial considerations, there’s also the question of whether to buy a fixer-upper or move-in ready home.
In truth, the answer depends on your specific circumstances. Some people may be able to save money and create value by investing in a fixer-upper that requires home renovation. Others may be more suited to a turnkey situation where they can move in immediately after closing.
Considering the pros and cons before you purchase can help ensure your new home is everything you’ve envisioned.
To start you on your exciting home buying journey, it’s helpful to understand the definition of a fixer upper and a move in ready home. Let’s explore the distinctions between these two options.
A fixer upper is a term often used to describe a property that requires significant repairs, renovations, or remodeling. They often will have outdated features, worn-out infrastructure, or cosmetic flaws. While fixer-uppers may seem like a daunting prospect, they also present an opportunity for buyers to unleash their creativity, personalize the space, and potentially increase the property’s value.
On the other hand, a move-in ready home refers to a property that is in good condition and requires little to no repairs or renovations before you can comfortably settle in. These homes are often updated, well-maintained, and ready for immediate occupancy. Move-in ready homes offer convenience and peace of mind, allowing buyers to bypass the time-consuming and sometimes stressful renovation process.
When considering whether to buy a fixer upper or move in ready, it’s essential to understand the key differences between the two options. Here are some factors to consider:
While restrictions in any of these categories may make your decision for you, there are also situations where you can be more flexible. In these cases, it’s worth digging a little deeper into the pros and cons of both options.
Let’s say you’re ready and willing to take on a project. Should you invest in a fixer-upper? The answer depends on a few factors.
If you’re planning on trying to flip the home for a profit, then you’ll have to buy a fixer-upper (since you can’t really flip a move-in-ready house). But even if you’re looking at this as your forever home, some considerations can help you figure out if you should invest in a fixer-upper.
Let’s start with the obvious: you won’t have to pay as much for a fixer-upper. You’ll also likely face less competition in a bidding war, and since the home will likely require some work, sellers won’t ask for as high a price.
Even with these elements working in your favor, it’s still worth consulting with an expert real estate agent.
An expert REALTORⓇ like the agents at Berkshire Hathaway HomeServices California Properties can make sure you find the best deal possible on your fixer-upper so that you can dedicate more resources to renovations.
While the initial cost to purchase a fixer-upper may be lower, you also have to consider total costs. Since the home likely requires some repairs, you need to make an accurate estimate of the renovation costs to understand your investment as a whole.
Some major expenses may include:
These are just a few examples, and you’ll want to get a complete sense of the house ahead of time so that there aren’t any surprises down the road. If you’re considering a fixer-upper, consulting with experts is an excellent idea. To aid in the process, it may also be worthwhile to negotiate a longer inspection period (normal inspection periods are 7 to 14 days).
Even if you’re not planning on quickly flipping your new home, considering the potential resale value is a smart move.
The more your home is worth, the more equity you’ll have in it, which can benefit you in more ways than just resale (examples include home equity loans or HELOCs).
Often, you can estimate your home’s potential resale value by looking for comps in the area (especially if anything that has had recent renovations has sold recently in the area). This will give you a sense of whether your investment in the house will pay off in the future.
However, in some areas, no matter how much you put into the house, you may not receive commensurate value out of it. You’ll want to know that before you agree to buy.
On their own, either buying or renovating a house can be a major purchase. It follows that doing both at the same time will cost money, and financing may become an issue.
While you’ll hopefully save on the initial cost of your fixer-upper, financing can still be complicated, since all the money isn’t going to the same purpose. Some of your options are:
Before deciding on the option that best suits you, you should talk to an expert. At California Properties, we’re happy to go over financing options with you so that you can make an informed decision.
Time is another major factor when it comes to purchasing a fixer-upper, but it doesn’t easily fall into either the pro or con category.
If you’re planning on flipping your home and reselling it, time starts to equal money, as the longer it takes you to renovate, the longer you’ll be paying the mortgage. Likewise, if you need to move into your new home, you may be racing against the clock to finish your renovations (which may mean paying higher costs for added speed).
On the other hand, if you aren’t in any rush, time could be your friend. You can take on projects slowly and find the best deals. Also, your house is likely to go up in value as time goes on, increasing the equity you have in your new home. Time may not always be helpful or harmful, but it is always a factor when dealing with renovations.
Compared to a fixer-upper, buying a move-in ready home is more of a straightforward proposition. However, there are still positives and negatives you’ll need to be ready for if you choose this route.
They call it turnkey for a reason. When you buy a move-in ready home, you know exactly what you’re purchasing. There’s no need for you to project to the future and imagine what your house will be. You’ll know in advance that the home you plan to move into will fit your lifestyle.
A move-in ready home also enables you to avoid the complications of repairs, such as:
If you prefer a move-in ready home, be prepared to deal with some level of sticker shock.
The competition for move-in ready homes can be fierce. That means you may have to look below your maximum budget to find a home that you can make a competitive offer on.
You may still be able to find your ideal home, but you may also find yourself having to make compromises to fit your budget.
Still, remember that you’re also avoiding the future costs that come with a fixer-upper and all its associated repairs and renovations.
If you’re moving across state lines or need to settle in quickly to start a new job, a move-in-ready home has many advantages. Namely, once you close, you’re ready to move.
No rentals are needed while renovations are happening. No timelines need to be factored in (beyond the basic closing timelines). Plus, you likely won’t have delays due to unforeseen renovation issues or the availability of contractors.
All in all, this can make for a much more stress-free move that, for some, will be worth any added cost.
It’s relatively rare to find something that’s truly perfect. While a move-in ready home will likely be closer to perfect than a fixer-upper, that doesn’t mean you won’t still have some smaller projects that you’ll want to take care of.
If there are enough projects, you may just be buying a fixer-upper under a different name.
In the end, finding the perfect move-in ready home is a matter of asking the right questions, knowing your options, and having the right people on your side. The best agents, like our team at California Properties, will ensure you have all the tools you need to find your perfect home.
Choosing between a fixer-upper and a move-in-ready home can be a puzzle, and the right answer can vary from person to person. It ultimately boils down to your personal preferences, budget, and willingness to take on a renovation project. Both options have their benefits, and by considering the differences, you can make an informed choice that aligns with your goals and vision of your dream home.
Regardless of what route you decide to pursue, one clear choice is that partnering with a California realtor you can trust will help you get the most out of your budget.
At California Properties, we understand the market and are here to help you through the entire home buying process. Our agents are knowledgeable experts who can guide you and help you find the perfect property that fits your needs and aspirations.
When you’re ready to purchase a home, be sure to consider all the factors that go into the purchase. Then find the best partner to help you along the way. Start with Berkshire Hathaway HomeServices California Properties.
Sources: US News 1, 2, SF Gate 1, 2, 3
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July 15th, 2023 at 11:00 am