Assessing the Real Cost of a Fixer

What's the Real Cost of a Fixer?

 

It can be very compelling to find a home in a neighborhood you like that is bargain priced. But how do you know if it will be a good investment? The only certainty in a fixer project is that there will be a substantial amount of uncertainty and risk. There can be significant rewards too, which is why the call of a fixer is so loud for opportunistic buyers.

Here are a few guidelines to determine how much how much to offer and whether a fixer is the right house for you.

 

Step 1: Determine the initial scope of work

Make a list of the most obvious items to be addressed. Decide which items are within your skill set to accomplish yourself and which ones need to be contracted out. Spend some time calling contractors and researching each item to get a ballpark idea of the cost to complete—either the raw materials expense to DIY or the contractor’s price to do it for you. Calculate in an additional 20% for unexpected issues and cost overruns. Add these to a spreadsheet along with the time each project should take. Keep in mind this is an initial evaluation intended to be done before you invest too much time and money into negotiation or inspections.

It’s well worth spending a few minutes talking to the city or county building department to verify which work requires a permit and what the cost and process is before proceeding. Don’t forget to calculate in the cost of obtaining permits for electrical, plumbing, major remodel, or structural changes into your total budget. Getting permits can be time-consuming but doing work without a permit will ultimately create bigger problems when you go to sell because lenders and buyers will want verification the work was permitted and completed properly.

 

Step 2: Do a reality check

Do you have the readily available cash or an approved line of credit to fund this project plus any cost overruns? Do you have the skills and patience to manage or complete the renovation work? Are you able to fit the work itself or the oversight of contractors into your current life schedule without compromising your life values? Will the time and money you invest be worth it in the end product? Are you willing to live in a construction zone while work is being completed?

Don’t skip this step! The answer to these questions will be different for everyone. Some people take on a project because it pencils out without fully evaluating what the impact on their lifestyle will be. A savvy fixer buyer will go in with full awareness of what they are taking on and the project will be much smoother as a result.

 

Step 3: Determine your offer price and strategy (and max purchase price)  

This is where your broker can be an invaluable resource. They can assess a home’s as-is market value and also its potential finished value. Calculating in the costs you identified in step one—including the 20% for unexpected issues and cost overruns—will give you an idea of your max purchase price. Don’t forget to consider expenses like the cost of living elsewhere during renovations, the inconvenience of living through a remodel, and the value of your time invested.

From there, your broker can evaluate market activity and present options for offer strategies, including an initial offer price. Your offer should always include an inspection and sewer scope or septic contingency unless you’ve completed them before making an offer. Here are additional contingencies you may want to include to protect you in your purchase.

 

Step 4: Don’t skimp on the inspection

Assuming you’ve decided that you and your pocketbook are up for the challenge, the next step is to hire the best inspector you can find to make a thorough assessment of the home. If there is obvious deferred maintenance you can see, there are likely to also be many other issues you can’t see. A good inspector will identify those and provide insight into the overall structural condition of the home. Well-built homes with “good bones” make much better rehab projects than homes of mediocre quality.

Don’t forget to scope the sewer line or evaluate the septic system. Both are potentially big-ticket items that don’t add any visible value to your finished product. If you are in an area that may have had oil heating at one time, also confirm there are no underground oil tanks remaining.

If major structural issues are identified or there are indications of problems that cannot be fully investigated, think seriously about proceeding without getting permission to have a structural engineer or general contractor investigate further.

 

Final thoughts

By thoroughly completing your due diligence, you can mitigate much of the risk associated with purchasing a fixer. Having remodeling skills or connections to outstanding contractors is critical. Lastly, if this is your first-time renovating a home, purchasing a home that is simply tired and dated rather than having significant deferred maintenance or structural issues will help you keep your project in the black.

Still have questions? Contact one of our knowledgeable brokers for assistance with how to purchase or determine the value of a potential fixer.

 


 

Find a Home with Windermere Real Estate

 

Find a Home | Sell Your Home | Property Research

Neighborhoods | Market Reports | Our Team

We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.

2737 77th Ave SE, Mercer Island, WA 98040 | (206) 232-0446

mercerisland@windermere.com

© Copyright 2020, Windermere Real Estate / Mercer Island

Posted on March 17, 2020 at 8:00 am
Jennifer Craven | Category: Buyer Tips | Tagged , , , , , , , ,

Remodeling Cost vs. Value

Will Remodeling Pay Off?

 

Every year, Remodeling Magazine evaluates which projects bring the most return at resale in different markets around the country in their “Cost vs. Value” report.  While returns have dipped nationwide due to growing costs and consumer anxiety, Seattle still saw better pay-off on remodeling than the national average. The chart below shows cost vs. value on the most common remodeling projects…

 

Cost vs. Value for Common Remodeling Projects

 

When looking at the full list of projects, curb appeal projects seem to bring the most bang for your buck.

According to Remodeling Magazine, these are the six top projects in our region that currently have the best return on your investment when it comes time to sell. To see the full report, click here.

 

Manufactured Stone Veneer

As long as the new stone veneer is consistent with your neighborhood’s overall look, this siding accent was rated the most profitable project in the Seattle area.

Stone veneer can replace your home’s existing siding, adding a fresh, modern look that conjures a cozy vibe all the way from the street, before buyers ever step foot inside. In Seattle it can recoup 118.5 percent of the cost when you sell.

 

Garage Door Replacement

In the Seattle area, replacing your garage door will cost an average $3,882, but will increase your resale value by $4,136, recouping 106.6 percent of what you paid for it.

Due to its size, a garage door can have a big impact on a home’s curb appeal. But adding to your home’s aesthetic is only one advantage; the warranty that comes with the new garage door is also a selling point for potential buyers who can trust that they likely won’t have to deal with any maintenance issues in the near term.

 

Wood Deck Addition

While building a deck might seem like a big undertaking, it’s actually a pretty cost-effective way to add to your enjoyment and positively impact your home’s resale value. Seattle-area homeowners can expect to pay about $19,000, but they’ll recoup 95.1 percent of that when they sell.

Adding a deck extends the living space of your home and provides even more area for entertaining, relaxing, and enjoying the outdoors. Whether you choose a natural wood deck or a low-maintenance composite deck, you can pick from a variety of styles based on the lay of your land and the areas of your backyard you wish to highlight.


Siding Replacement

Depending on the size of your home, replacing the siding can be an expensive undertaking. However, it’s a project that comes with high returns. For the Seattle area, sellers can expect 94.9 percent of the costs recouped.

Not only is siding one of the first things a buyer sees, but it also serves as an indicator of the overall health of the home. Broken or damaged siding could mean that there are other problems with the home, such as pests and rot. Replacing old siding is a cost-effective way to boost your home’s curb appeal and ensure buyers are going to walk through your front door.

 

New Vinyl Windows

Vinyl windows can add an instant update in both appearance and energy efficiency.  The average cost to replace 10 windows is about $19,501 but you’ll recoup 89.5 percent of that cost when it’s time to sell.  If any of your windows are fogged from broken seals then replacement will probably be a must before it’s time to sell.

 

Minor Kitchen Remodel

No need to move walls or appliances around, a minor kitchen remodel will do the trick to recoup 89.1 percent of the cost in our area.

An outdated kitchen can go from drab to fab and become a focal point with a fresh palette. Replace the cabinet doors with new shaker-style wood panels and metal or metal-looking hardware. Switch out the old counter tops with a cost-efficient option that matches the new look. Think about adding a resilient flooring option, then finish the project with a fresh coat of paint to the walls, trim, and ceiling.

 


 

Find a Home | Sell Your Home | Property Research

Neighborhoods | Market Reports | Our Team

We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.

2737 77th Ave SE, Mercer Island, WA 98040 | (206) 232-0446 mercerisland@windermere.com

© Copyright 2020.

Adapted from an article originally posted on Windermere.com. Remodeling data © 2020 Hanley Wood Media Inc. Complete data from the Remodeling 2020 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.

Posted on February 3, 2020 at 9:58 am
Windermere MI | Category: Homeowner Tips and Happenings | Tagged , , , , , , , , , , , , , , , ,

Should I Move or Remodel?

Remodel or Move?

 

There are a number of things that can trigger the decision to remodel or move to a new home. Perhaps you have outgrown your current space, you might be tired of struggling with ancient plumbing or wiring systems, or maybe your home just feels out of date. The question is: Should you stay or should you go? Choosing whether to remodel or move involves looking at a number of factors. Cost vs. value is a big consideration—check out the chart below or click here to view Remodeling Magazine’s full 2019 Cost vs. Value Report showing the cost and resale value of 21 projects in the Seattle area. 

 

Cost vs. Value Chart for Common Remodeling Projects

 

Here are some things to consider when making your decision…

FIVE REASONS TO MOVE:

1. Your current location just isn’t working.

Unruly neighbors, a miserable commute, or a less-than-desirable school district—these are factors you cannot change. If your current location is detracting from your overall quality of life, it’s time to consider moving. If you’re just ready for a change, that’s a good reason, too. Some people are simply tired of their old homes and want to move on.

2. Your home is already one of the nicest in the neighborhood.

Regardless of the improvements you might make, location largely limits the amount of money you can get for your home when you sell. A general rule of thumb for remodeling is to make sure that you don’t over-improve your home for the neighborhood. If your property is already the most valuable house on the block, additional upgrades usually won’t pay off in return on investment at selling time.

3. There is a good chance you will move soon anyway.

If your likelihood of moving in the next two years is high, remodeling probably isn’t your best choice. There’s no reason to go through the hassle and expense of remodeling and not be able to enjoy it. It may be better to move now to get the house you want.

4. You need to make too many improvements to meet your needs.

This is particularly an issue with growing families. What was cozy for a young couple may be totally inadequate when you add small children. Increasing the space to make your home workable may cost more than moving to another house. In addition, lot size, building codes, and neighborhood covenants may restrict what you can do. Once you’ve outlined the remodeling upgrades that you’d like, a real estate agent can help you determine what kind of home you could buy for the same investment.

5. You don’t like remodeling.

Remodeling is disruptive. It may be the inconvenience of loosing the use of a bathroom for a week, or it can mean moving out altogether for a couple of months. Remodeling also requires making a lot of decisions. You have to be able to visualize new walls and floor plans, decide how large you want windows to be, and where to situate doors. Then there is choosing from hundreds of flooring, countertop, and fixture options. Some people love this. If you’re not one of them, it is probably easier to buy a house that has the features you want already in place.

FIVE REASONS TO REMODEL:

1. You love your neighborhood.

You can walk to the park, you have lots of close friends nearby, and the guy at the espresso stand knows you by name. There are features of a neighborhood, whether it’s tree-lined streets or annual community celebrations, that you just can’t re-create somewhere else. If you love where you live, that’s a good reason to stay.

2. You like your current home’s floor plan.

The general layout of your home either works for you or it doesn’t. If you enjoy the configuration and overall feeling of your current home, there’s a good chance it can be turned into a dream home. The combination of special features you really value, such as morning sun or a special view, may be hard to replicate in a new home.

3. You’ve got a great yard.

Yards in older neighborhoods often have features you cannot find in newer developments, including large lots, mature trees, and established landscaping. Even if you find a new home with a large lot, it takes considerable time and expense to create a fully landscaped yard.

4. You can get exactly the home you want.

Remodeling allows you to create a home tailored exactly to your lifestyle. You have control over the look and feel of everything, from the color of the walls to the finish on the cabinets. Consider also that most people who buy a new home spend up to 30 percent of the value of their new house fixing it up the way they want.

5. It may make better financial sense.

In some cases, remodeling might be cheaper than selling. A contractor can give you an estimate of what it would cost to make the improvements you’re considering. A real estate agent can give you prices of comparable homes with those same features. But remember that while remodeling projects add to the value of your home, most don’t fully recover their costs when you sell.

 


 

Find a Home | Sell Your Home | Property Research

Neighborhoods | Market Reports | Our Team

We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.

2737 77th Ave SE, Mercer Island, WA 98040 | (206) 232-0446 mercerisland@windermere.com

© Copyright 2019. Information and statistics derived from Northwest Multiple Listing Service.

Posted on February 6, 2019 at 5:57 pm
Windermere MI | Category: Buyer Tips, Homeowner Tips and Happenings | Tagged , , , , , , , ,