Hi, I’m Warren Oberholser. I’m a realtor in the East Bay Tri-Valley area in Northern California. My goal is to help both buyers and sellers get maximum results for one of their biggest investments, their home.
Tri-Valley home buyers, still haven’t found that dream home? Have you considered a fixer-upper? Well, I’ve got a lot of information in this BLOG!
Have you made your wishlist for all the neat things you want in your new home? If you have, have you wondered if there’s a home out there on earth that has all those features at a price you can afford?
And given this crazy seller’s market, if you do find that home, you’ll most likely be competing with 20 other buyers bidding up the price.
The ‘Oddball’ Home
So let’s go in a different direction. Let’s go for the ugly home, or what I refer to in my BLOGs and videos as the ‘oddball home’. What is an oddball or ugly home? This can be a home that needs work or a ‘fixer‘, as they call it in the real estate industry.
A Fixer-upper are the ideal choice for picky home buyers, and here is why:
- They are less expensive than homes in move-in condition
- There is typically less competition in the fixer market
- You can customize the home to fit your home-buying Wishlist
- You may be able to buy in a more expensive neighborhood which will help boost your home’s value once it’s repaired
- Financing options are quite attractive
According to realtor.com, “in some markets, buying a fixer can really be a game-changer, bringing the typical single-family home into reach for a medium-income household. And there are several financing options that are quite attractive”.
So how do you shop for a fixer-upper in your area? At first, shopping for a fixer-upper may be a bit of a challenge. Remember, these homes are not typically very attractive, so you’ll need to learn how to look at them in a different light.
Forget trying to picture yourself living in the home now. Picture, instead, what the home will look like once it’s transformed.
Verify The Floor Plan
The most important thing about shopping for a fixer-upper is to make sure the floor plan fits your particular needs. This way, you don’t have to do a lot of major construction by removing walls or reloading a weight-bearing wall (Load-bearing wall). Removing a non-load-bearing wall is much cheaper than removing a load-bearing wall, especially in a single-story home.
If the home you purchase has more than one story, removing walls, especially load-bearing walls, can be more than double than a single story. So as you can see, the main criteria for a fixer-upper are the correct floor plan. This will save you a lot of money in the long run.
While removing a non-load-bearing wall may cost between $1,200 and $2,000, ripping out a load-bearing wall costs $2000 to $3,000 for a single-story home. If the home you purchase has more than one story that price jumps to between $3,200 and $10,000, according to the folks at HomeAdvisor.com.
As you can see, the floor plan is key when looking at fixers.
The two professionals you’ve got to have on your side when looking for a fixer-upper is:
- A good real estate agent, one who especially understands the value and potential of a home
- A good contractor
Financing The Fixer-Upper
Financing the fixer-upper. Once you’ve picked your home, unless you’re paying cash for both the home and the rehab, you’ll need to find financing for it.
Unlike in years past, today, there are several attractive loan options. Some loan favorites include the FHA 203(k) loan, the Freddie Mac Home Possibility Mortgage, and the Freddie Mae Homestyle Renovation Mortgage.
Although these programs have different qualification guidelines, they all basically offer the same thing. They permit the borrower to wrap up the rehab work into the financing for the home.
One Loan Covers Both
With the FHA program, you won’t need to start making mortgage payments until you actually move into the home. This is significant for both money and time-saving. Having just one loan means that you have just one set of closing costs.
With all three loans, the loan amount is typically based on the value of the property when the work is completed.
So the process is definitely more complicated than buying a brand new home. However, if you’ve got the right contractor and a real estate agent who understands your needs, then buying a fixer-upper may be one of your best investments.
I hope you enjoyed this article. Please let me know if you have any questions. Warren
Hello…I work with both buyers and sellers in the Tri-Valley area of Northern California. The Tri-Valley is comprised of 6 cities: Pleasanton, Livermore, Dublin, San Ramon, Danville, and Alamo. To better understand what each city has to offer, I have created a Pros and Cons video and BLOG for each – (Pros & Cons for Pleasanton, Pros & Cons for Livermore, Pros & Cons for Dublin, Pros & Cons for San Ramon, Pros & Cons for Danville and Pros & Cons for Alamo). If you are thinking about purchasing or selling a home, please reach out to me by text, phone, or email. If it is convenient, I can schedule a Zoom chat so we can discuss your home goals. Wishing you all the best on your home journey. Cheers!
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