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10 Signs Your Fixer-Upper is a Money Pit

Over the past several years, fixer-uppers have been glamorized on countless home TV shows. After all, transforming an outdated disaster into your dream home can be incredibly rewarding. Plus, the process can allow you to get exactly what you want in a home. But, fixer-uppers can come with their share of headaches and it can be hard to know for sure if a potential dream home is really just a giant budget buster in disguise.

Don’t get me wrong; I love fixer-uppers. My husband and I have actually only bought this type of home so far, though the homes have been at different points on the fixer-upper scale. Our first home smelled like cat pee, seven different types of flooring within a 1000 square foot space, and had doors to literally every room in the home (kitchen and dining room included). Our most recent home mostly just looked like it was trapped in 1999 when we bought it.

Taking on a fixer-upper can be the most cost-effective way to get your dream home. The truth is, you pay a premium for a move-in ready updated home. When most people see a fixer-upper they run for the hills because they don’t want to deal with it. Not this girl! However, there ARE some signs that your potential fixer can be more than you bargained for. Costs to certain systems can add up quickly and don’t necessarily translate to increased value, which can leave you in a hole if you’re not careful.

Let’s face it, everyone expects to have a working electrical system and a roof that doesn’t leak. You’re not going to get any built-in equity for that. So, what are those red flags? Well, it kind of depends, to be honest. If priced low enough and appropriately budgeted for, you can compensate for a lot of structural, electrical, or systems issues. But if you’re expecting to go in and make mainly cosmetic fixes, having to correct unexpected things can be a big budget buster.

When buying our fixer-uppers, we look for homes that were “loved”, as in, generally taken care of from a maintenance perspective but completely outdated. This way, we could focus the majority of our budget on the fun and rewarding cosmetic updates versus systems that we couldn’t see. Though, it’s up to you how much risk you’d like to take on. No matter what, I would recommend getting quotes from licensed contractors if you are planning on moving forward with purchasing a fixer. While looking for certain signs can give you a general idea of what might be going on in the home, an experienced licensed contractor is going to be able to give you a higher level of expertise and a much more accurate idea of cost for the renovations. You want to know how much your planned renovations are going to cost and you don’t want to fall in love with the idea of a house you can’t afford to fix. Here are a couple of things though that can spell major budget disaster if not adequately planned for and known:

  • Being Sold “As-Is”: Often, this is the first warning that there is significant work that needs to be done. If the seller says they are unwilling to make repairs, you know right away that the house needs repair. It is helpful to know what you’re dealing with here. That’s where those contractor quotes come in. The safest bet is to get quotes before you even make an offer. However, if that’s not feasible because you’re worried about losing the home, make sure the estimates occur in your due diligence phase or that you have an escape clause in the contract if costs come back outside of your budget. Also, note that significant repairs will require extra consideration from a mortgage perspective. An appraiser has to sign off that the home is habitable for it to qualify for most conventional and FHA loans. So, if it’s not, you’ll need renovation financing like a 203k loan or hard money loan to get it in livable condition.

  • Sagging Floors and Walls: Signs including wavy or bowed siding, doors that don’t close, floors that bounce or sag, or large gaps between the baseboard and the floors should result in an immediate call to a contractor. While the issue might not necessarily be structural it is a big red flag. Also keep in mind that building standards have changed significantly over the years and the house might have framing issues that need to be remedied (again, not cheap).

  • Foundation Issues: The foundation supports the entire house and major issues here can easily run you tens of thousand dollars to correct. Plus, you don’t want to completely update a home only for it to give way on you. Look for cracks in the walls or shifted masonry, bowing structural walls, uneven floors, or moisture in the basement or crawl space when viewing a home. Have it inspected thoroughly to identify any potential problems and if there is any doubt at all on call on a structural engineer to tell you exactly what you’re dealing with. This is not a surprise you want after closing as it can destroy your budget.

  • Strong Smells: Strong smells could be a lot of things that range pretty significantly in cost. Some smells will go away once the offending object is removed (i.e. something left to rot in the old refrigerator). However, musty smells could potentially be a moisture or mold issue. Remediation of mold will vary depending on the type you’re dealing with but can come at a pretty high cost. Strong pet smells are usually remedied with replacing the floors or any other offending surfaces, so if you are planning on doing that anyway, no worries. Smoke can be one of the most costly smells to correct as it infiltrates all surfaces and ventilation systems. To fully get rid of this smell, be prepared to replace surfaces including walls, ceilings, and floors, and perform a thorough cleaning of the ventilation system.

  • Outdated Electrical System: Updating an outdated electrical system is no cheap process either. Plus, it can also be a major safety and/or fire hazard. Take note of the number of outlets and fixtures in the house as it stands. Older homes tend to have fewer electrical outlets and therefore a smaller electrical panel. If the panel is small and already filled (even if it is something that is relatively up to date), that is something you’re going to want to fix. Outdated panels like old fuse boxes instead of breakers or fabric-covered wires on insulator knobs also signal that the electrical system needs an update. Again, make sure your budget fits accordingly.

  • Other Outdated Major Systems: Ok, not necessarily a major red flag as this is super common in fixer-uppers, but still a major expense that should be considered. Plumbing issues including insufficient water pressure and temperature and outdated HVAC units are also major costs to be accounted for. Plus, many times it’s not just updating the units themselves but also the ductwork, piping, and supporting systems that need work too.

  • Health Hazards: Houses built in or before the 1970s frequently contained asbestos and lead-based paint. Both are major health hazards and removal requires hiring licensed remediation specialists, which doesn’t come cheap. If the home was built during this time frame, look for seller disclosures on the known presence of either substance and be sure to have the inspected for these things before you make an offer or leave the due-diligence phase.

  • Termite Infestation: Termite damage, especially with an active infestation can be incredibly expensive to remedy. It’s not just the remediation that is the problem, it is also the often-invisible structural damage they can cause. The damage is invisible because it often occurs within the walls or floors. To find the evidence, you have to look elsewhere for signs of infestation. Signs could include: crumbling, damaged wood, buckling wooden or laminate floors, mounds of termite pellets, mud tubes climbing foundation walls, or discolored or drooping drywall. A professional termite inspection is an added expense but well worth the cost to be aware of any potential issues.

  • Drainage Issues: Water in places it shouldn’t be is never good and never cheap to fix. A house that sits lower than the yard or other houses around it can be the first sign of potential trouble. A seller disclosure should identify a history of flooding issues but don’t just stop there. If you are visiting a home after it has recently raining (or if it is currently raining), look at where the water goes. If it pools directly next to the home then that is a bad sign for potential water intrusion. Pull zoning records for the home and make sure it doesn’t lay in a floodplain. Not only does this increase your risk of having water issues in the future, but it will also make the home MUCH more expensive to ensure. Finally, an inspection help turns up any evidence of existing water damage and can again give you a better idea of what you might be dealing with.

  • Roofing Red Flags: Many fixer-uppers might require at least some level of corrective work here including replacing some shingles. However, a full roof replacement is also a major expense. Signs the roof is at the end of its life include evidence of major leaks in the home, a sagging roof, multiple layers of shingles or shingles that are dry, cracked, and brittle. Severe damage here won’t be cheap because oftentimes you’re not just replacing the roof but addressing the damage prolonged water exposure can cause to the interior of the house. These types of issues can range from water damage, mold, or structural issues from wood rot.

As I said before, if you have the budget and plan accordingly, some of these “red flags” listed may not be red flags at all. But the majority of the items are big-budget busters if you are not anticipating them. Fixer-uppers can be incredibly rewarding but come with unique frustrations. Finding professionals you trust to help guide you through the process, from real estate agents to lenders and licensed contractors can ensure that you have the support you need to make the best decision for you and your family.

Had a great (or terrible) fixer-upper experience? Share it below!


Lindsay is a Realtor® with Berkshire Hathaway Home Services Georgia who specializes in helping clients visualize the potential of homes. She enjoys helping homeowners create spaces they love through decluttering, organization, and intentional design.



My name is Lindsay Walston.

I'm a healthcare provider turned real estate agent with an eye for luxurious details. Let me show you how to create (or find!) a beautiful and functional home, no matter your budget.  Want to learn more?

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