We can all picture our move-in ready dream house. Unfortunately for many of us, this dream house is way out of our budget. The great news is that there are a lot of houses out there that have the potential to become your dream home with just a little imagination and work (ok some more so than others).
Certain factors are proven to make a house sit on the market longer and sell for less money. Some of these things you can fix and others you have no control over. Knowing what factors to overlook is crucial to getting the best home for the least amount of money. This is where I can help. Through both personal and professional experience I've learned how to get the best bang for your buck.
Honestly, I hated our first house when we bought it. The home was completely outdated, with doors to every single room on the main level (even the kitchen and family room), seven different types of flooring in a less than 1000 square foot space on the main floor and it smelled like cat pee. Sounds awful doesn’t it? So, you may be asking why in the world we bought that thing. It was easy, we loved the location and we saw the potential. The house was walkable to our church and a less than 5-minute drive from a historic downtown area we loved. Plus, the things we didn’t like about the house could all be changed (relatively) easily and for a lot less money than buying the same home that had been updated and was move-in ready.
Plus, the work we did (and hired contractors to do) built immediate equity into the property and gave us the exact updates we wanted. Plus, we were able to sell the house for almost $100,000 more just over two years later.
If your budget is tight and you’re trying to maximize the amount of house you can buy for your money, being willing to compromise on getting a move-in-ready house can save tens of thousands of dollars or more! Plus, keep in mind, you’re going to pay for every upgrade a home has, whether or not you would have chosen it yourself or plan to keep it long-term. There are certain things it PAYS to overlook and certain things that could spell disaster, a serious case of buyer's remorse, or reduced value long term. How do you know? Read on.
It Pays to Overlook...
Weird paint colors: Homes with outdated yellow-beige walls, neon, or very dark paint colors sell, on average, for thousands less than other (otherwise identical) homes. Many buyers will pass on a house solely because of the paint or decor choices. While painting a house isn't exactly fun, it's a relatively easy way to completely transform and update your home, even on an extremely limited budget. Plus, you'll build in a little extra home equity too.
Clutter: People have A LOT of stuff. A savvy seller will declutter and remove extra items or oversized furniture before putting their home on the market. Why? A cluttered home is less attractive, looks dirtier, feels smaller, and screams that there’s not enough storage in the space. These negatives can be deal breakers to other buyers. In fact, staged homes sell on average 73% faster and for between 6-20% more than un-staged or poorly staged homes. Why? To put it simply, staging makes it easier for potential buyers to visualize the property as a future home and decide how they will use the space. So, if you can visualize the space in an unstaged or poorly staged home you can take advantage of a great opportunity to save some money!
Old fixtures: Just like paint color, old fixtures can make a home feel completely outdated. Changing out door knobs, hardware, or light fixtures can dramatically update a space. Plus, the cost of these changes are relatively minimal and can be an easy first DIY project to tackle if your budget is limited.
Need for Cosmetic Updates: Ok, hear me out on this one. Know that you’re going to pay for every upgrade in a home, even if it’s not what you would choose. Of course, completely updated and move-in-ready homes are extremely attractive, but you'll pay a premium for that convenience, even if it’s not exactly what you want. The ideal home to maximize your budget in this way has been otherwise well taken care of, just not cosmetically updated. These types of homes are usually great opportunities to build home equity. Plus, it allows you to customize the home to your exact style and needs. Make sure you get multiple contractor quotes for your planned renovations though, it's best to make sure (in advance) they are feasible for your budget and situation.
You Should Think Twice Before Compromising On...
...things you cannot control or modify or homes that could be potential money-pits. Odds are, if you decide to sell your home in the future, your potential buyers will have to be willing to make the same compromises you did. And even if you don’t sell, some of these compromises can impact your quality of life, and again, unlike being able to renovate the home itself, there’s not really much you can do to fix them.
Location: The saying goes, “like the home, love the location” for a reason. You can change a lot of things about a home to make it more attractive or valuable, but location isn’t one of them. That’s not to say you can’t compromise a bit on the area to save some money…just know what you’re getting into here. A less optimal location will allow you to get more house for your money, but those are things you cannot change, and so if you decide to sell, you will likely be making the same concessions made to you to your buyer. If you have no intention of selling in the future, consider the long-term impact of the location and the difference in quality of life it might bring. These factors can be different for everyone depending on your individual situation but might involve things like commute time, convenience, safety, noise level, cost of education, proximity to leisure activities, etc. Think long and hard about how these factors will impact you before making a concession here because there’s generally not much you can do to remedy them.
Your Neighbors: If you love the house, scout the neighborhood or surrounding area. What did the other homes in the area sell for? Are the yards or any common areas kept up? Do the houses look well taken care of? Have there been any recent police reports or crimes in the area? Do your research so you’re not surprised by anything after closing. Of course, you want to feel safe where you live but you also want to have a good understanding of the value of surrounding properties. Do your research on any proposed changes, planned developments, or rezoning discussions in your immediate area. These things can positively or negatively impact your property value so it's best to know before your purchase.
Significant Deferred Maintenance: Before you tackle a true fixer-upper, make sure you have a good understanding of needed repairs and the status of all major systems. Plus, it's important to know that there will be surprises and it will take longer than you plan. If a home has not been well taken care of, costs can build up quickly and compound to be big budget busters. No one wants to buy a money pit. Plus, it may be fun to renovate a kitchen but replacing a roof or HVAC system can easily cost tens of thousands of dollars, and is significantly less enjoyable. You'll also want to consider and budget for needed repairs you can't see too. Once you start opening up walls, you're almost certain to find something so it's important to build a contingency or hold-back in your budget to account for it.
Huge Structural Changes: HGTV is great but it did create some unrealistic expectations when it comes to home renovation. Thinking about knocking down walls to open up rooms and making huge structural changes to a home to improve its layout can be a lot of fun (and, if we’re being 100% honest here, a bit addicting). But, the cost of these improvements can get out of control very quickly and some changes may be impossible due to the structural integrity of the home. Neither is something you want to be surprised by after closing. So, getting a quote from a licensed contractor is strongly encouraged if you want to make big changes. While a great agent can help you visualize the space and talk you through changes that would help improve the home, he or she is not going to be your best source on the actual cost or feasibility of a renovation (unless they also happen to be a licensed contractor and/or structural engineer). Plus, you don’t want to get your heart set on a change that can’t happen or that is well outside of your budget.
If you're looking to get a deal on your next home, it pays to overlook paint colors, clutter, outdated fixtures, need for cosmetic updates. However, you might want to think twice before you sacrifice on location, your neighbors/surrounding area, deferred maintenance, or significant structural changes to avoid buyer's remorse. The most important thing is that you are happy with your purchase and that it is the best fit for you!
