Darien Realtor: Why To Buy a House That Needs Work

DARIEN, Conn. – Most buyers today want a house that is turn-key, meaning they just need to grab their clothes and a toothbrush and move in. But here are three reasons why a “fixer-upper” might be a better deal.

You can add value and multiply your investment. Studies have shown that when you improve a kitchen, you get a 20 percent to 40 percent return on your investment. If you spend $50,000 renovating an old kitchen, your house could improve in value by $60,000 to $70,000. If you improve a bathroom, the multiple is 10 percent to 20 percent. When you buy a house with a new kitchen and master bath, you are paying top dollar for someone else’s improvements.

You get to do the improvements to your taste. You may not like what exists. What if the previous owner redid the kitchen with cherry cabinets and a tan granite counter top? It may be beautiful, but you had your heart set on white cabinets and a marble counter top. You are paying for something that isn’t your first choice. And it’s difficult to justify redoing a new kitchen or bathroom. And the storage options may not be what you’d like. When you do the work yourself, you get to design spaces and storage specifically for your needs.

Necessary work is usually factored in to the overall price of the home, so you can get a lower price. I tell my clients to look for location and land. These are the two things in real estate you can’t change. Many buyers today don’t want to do any renovations, but find a house they love that has great bones, a fabulous location and wonderful land. My suggestion is to buy the location you want and work on the house over time. If it’s a house that needs work in a great neighborhood, look at home prices nearby. An old adage: If you can buy the worst house in the best neighborhood, that’s usually a better investment over time. 

Do your homework

First, get a thorough building inspection. This is especially important on a house that hasn’t been renovated in a while. Make sure the house is structurally sound. If not, you may want to rethink your purchase or get an engineer in to access any structural issues. Buy with a complete knowledge of things that need repair.

Second, meet with the professionals. Bring in an architect, contractor or builder depending on how much work you plan to do. Even if you want to redo the kitchen and baths first and add a den later, get advice and input on all of your potential plans before you buy. Explore different options for various improvements.

Third, get prices and price supplies so you don’t have sticker-shock later. Find out what cabinets, tile, counters and plumbing fixtures cost. Get prices for refinishing floors and painting the interior and the exterior. Have a builder price windows, roofing and siding. Usually a builder or contractor can price the structure and give you an estimate on inside work depending on the level of detail. Get prices from at least two, if not three, different sources. Ask about the length of time required, and if you can live in the house while the work is done. Many builders can set up a temporary kitchen in another room. Where prices and time are concerned add 10 percent to 20 percent to both estimates. Make sure to tell your banker or mortgage broker about a home improvement loan that you may need in addition to your mortgage.  

Finally, have fun: Designing and renovating your new home can be so exciting. Buy location and land and add your vision.

Holly Hurd is a real estate broker with Kelly Associates in Darien and can be reached at hillhh@aol.com or hollyhurdventuremom@gmail.com to help you find a home.

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