Gaffney Group Wildwood, NJ Real Estate

  • Home
  • Search for Homes
    • Featured Listings
  • Island Homes
    • Search All Cape May County Homes
    • Avalon Homes
    • Brigantine Homes
    • Cape May Homes
    • Diamond Beach Homes
    • Longport Homes
    • Margate Homes
    • North Wildwood Homes
    • Sea Isle City Homes
    • Seaville Homes
    • Stone Harbor Homes
    • Ventnor Homes
    • Wildwood Homes
    • Wildwood Crest Homes
    • West Wildwood Homes
  • Rental Search
  • Market Watch
    • Avalon Closed Home Sales
    • Brigantine Closed Home Sales
    • Cape May Closed Home Sales
    • North Cape May Sold Homes
    • West Cape May Closed Home Sales
    • Diamond Beach Closed Home Sales
    • Longport Closed Home Sales
    • Margate Closed Home Sales
    • Ocean City Closed Home Sales
    • Seaville Closed Home Sales
    • Sea Isle City Closed Home Sales
    • Stone Harbor Closed Home Sales
    • Ventnor Closed Home Sales
    • Wildwood Closed Homes Sales
    • Wildwood Crest Closed Home Sales
    • North Wildwood Closed Home Sales
    • West Wildwood Closed Home Sales
  • Resources
    • Biweekly Email
    • Wildwood Market Summary
    • Cape May Market Summary
    • South Jersey Shore Market Summary
    • What is My Home Worth?
    • Financing
    • Homebuyers Guide
      • Planning
      • Shopping
      • Offer to Buy
      • Money
      • Protection
      • Closing
    • Sellers Guide
      • Getting Ready
      • For Sale
      • Paperwork
      • Offers and Contracts
      • Showings
      • Walk-Throughs
  • The Gaffney Group
    • Testimonials
  • Contact

How to Assess the Real Cost of a Fixer-Upper House

remodel

By: G. M. Filisko
Published: August 24, 2010

When you buy a fixer-upper house, you can save a ton of money, or get yourself in a financial fix.

Trying to decide whether to buy a fixer-upper house? Follow these seven steps, and you’ll know how much you can afford, how much to offer, and whether a fixer-upper house is right for you.

1. Decide what you can do yourself

TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don’t know how to do will take longer than you think and can lead to less-than-professional results that won’t increase the value of your fixer-upper house.

  • Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.
  • Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?

2. Price the cost of repairs and remodeling before you make an offer

  • Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do.
  • If you’re doing the work yourself, price the supplies.
  • Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.

3. Check permit costs

  • Ask local officials if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it’ll cause problems when you resell your home.
  • Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.
  • Factor the time and aggravation of permits into your plans.

4. Doublecheck pricing on structural work

If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems.

Get written estimates for repairs before you commit to buying a home with structural issues.

Don’t purchase a home that needs major structural work unless:

  • You’re getting it at a steep discount
  • You’re sure you’ve uncovered the extent of the problem
  • You know the problem can be fixed
  • You have a binding written estimate for the repairs

5. Check the cost of financing

Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.

If you’re planning to fund the repairs with a home equity or home improvement loan:

  • Get yourself pre-approved for both loans before you make an offer.
  • Make the deal contingent on getting both the purchase money loan and the renovation money loan, so you’re not forced to close the sale when you have no loan to fix the house.
  • Consider the Federal Housing Administration’s Section 203(k) program, which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation. The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans. A streamlined 203(k) program provides an additional amount for rehabilitation, up to $35,000, on top of an existing mortgage. It’s a simpler process than obtaining the standard 203(k).

6. Calculate your fair purchase offer

Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.

For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.

Your comparison house, in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement.

The cost to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Your bid for the house should be $160,000.

Ask your real estate agent if it’s a good idea to share your cost estimates with the sellers, to prove your offer is fair.

7. Include inspection contingencies in your offer

Don’t rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:

  • Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.
  • Radon, mold, lead-based paint
  • Septic and well
  • Pest

Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don’t want to deal with.

If that happens, this isn’t the right fixer-upper house for you. Go back to the top of this list and start again.

G.M. Filisko is an attorney and award-winning writer whose parents bought and renovated a fixer-upper when she was a teen. A regular contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Read more: http://members.houselogic.com/articles/how-assess-real-cost-fixer-upper-house/preview/#ixzz3AOMm5arn
“Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.”

Quick Search

$
$

We Are Short Sale Specialists!

Looking to purchase a Short Sale or sell a home as a Short Sale? Contact us now! We are Atlantic County and Cape May County Short Sale Experts.
Jackie Bada-Gaffney SFR
Powered by NJ Interest Rates
Wondering What Your Home is Worth? Click to Request a FREE No Obligation Market Analysis!
Request a Free Market Analysis on Your Home's Value

Access All MLS Listings, Search for Your Dream Home and Save Your Results!

Property Search

Email Alerts

Login to Your Account

Sign-up For Our Shore Newsletter!

Connect with us!



Gaffney Group Wildwood NJ Real Estate Agents

Long & Foster Real Estate Wildwood NJ

The Gaffney Group

We began with a mission: to define the real estate business for what it is…the art of matching people and places. Everyone wants a real estate agent who will get the job done with as little hassle as possible, but most want something more, and that’s what we’re good at. Read more...

Jackie Bada-Gaffney Wildwood Realtor
Jacqueline Bada-Gaffney
O: (609) 729-8840
C: (609) 408-1627
Contact Jackie
Mike Gaffney Wildwood Realtor
Mike Gaffney
O: (609) 729-8840
C: (609) 408-1354
Contact Mike
Aaron Bada Wildwood Realtor
Aaron Bada
O: (609) 729-8840
C: (609) 338-7599
Contact Aaron

Copyright © 2023 Jackie Bada-Gaffney · Long & Foster Real Estate, Inc · Wildwood, NJ Real Estate

Jacqueline Bada-Gaffney | Licensed NJ Realtor® | jackiegaffney55@aol.com | Cell: 609-408-1627
Long & Foster Real Estate, Inc | 100 W. 1st Avenue - North Wildwood, NJ 08260 | Office: 609-729-8840
All information provided is deemed reliable but is not guaranteed and should be independently verified.
Equal Housing Opportunity

website by marketme