Pros and Cons of Buying a Fixer-Upper vs. Move-In Ready - Video
Want to Fix It Up or Move Right In?
Buying a home is a big decision. It is not like buying a smartphone, computer, or car, which you can trade-in for a better model after a few months. With a home, if you make a mistake and buy the wrong property, you are stuck with it for the foreseeable future. This is why it is important to properly consider your options before you commit to buying a property.
And while price, location, and the size of the home are important factors, one of the first questions you should ask yourself is this. Should you buy a slightly rundown home and fix it or should you buy a home that you can move into immediately? What are the pros and cons of buying a move-in ready home versus a fixer-upper? You will find the answers below.
Buying a Fixer-Upper - The Pros
Discounted sales price – Owners of decrepit homes know that their properties need work and buyers are eager to avoid that, so they often price the home a lot lower than other homes in the market. Buyers can get the home at a fraction of the value of neighboring houses.
Less competition – Competition for move-in ready homes can push home prices beyond the buyer's reach. But buyers who focus on fixer-uppers can still find good deals without paying an arm and a leg.
Tax savings – Since property tax is determined by a home's purchase price, buyers of fixer-upper homes pay less in taxes. In addition to lower taxes on the home, there is the possibility of qualifying for an investment tax credit on the home's rehabilitation costs.
Customization – Buying a fixer-upper gives buyers more creative control over the way the home turns out. They can design the layout, kitchen, and other details to their taste. People who buy a fixer-upper are more likely to be happy with the way their home looks.
The Cons of Buying a Fixer-Upper
A lot of work – While fixer-uppers cost less, they also require a lot of work. The amount of work required often means buyers must have a level of knowledge on how to renovate houses.
Time-consuming – Fixing a home takes time and rarely happens according to schedule. There are several obstacles to deal with like delays by contractors and other unexpected events. If a buyer's current home is up for sale or they have an expiring lease, this could be a problem.
It is riskier – Buying a fixer-upper comes with a lot of risks. The actual cost of fixing the home is not certain until the walls are opened. The cost of fixing the home might be higher than the expected savings on the property.
Complicated financing – The financing processes for fixer-uppers are different from those for move-in ready homes. Along with having to deal with the cost of the purchase and subsequent renovations, buyers must convince lenders that they are capable of managing the project.
Buying a Move-In Ready Home - The Pros
Easy transition – With a move-in ready home, it is easy to transition from the current home to the new one without delays. Buyers have much more control over their lives than when they buy a fixer-upper.
No extra work or surprises – With move-in ready homes (ad especially Charlotte new construction homes), buyers are completely sure of what they are buying; the probability for unpleasant surprises is very low. The home is in a livable condition and buyers do not have to do any additional work before they move in.
Uncomplicated financing – Most lenders' processes are designed for purchases involving move-in ready homes. Therefore buyers of such properties will have an easier time getting financing for their homes than if they were buying a fixer-upper, although the FHA 203k Streamline Loan could help!
More modern – A move-in ready home is more likely to have a modern and contemporary home design as well as up-to-date technology. The layout of the home, its size, and the exterior are going to reflect trends that are currently favored by buyers. The home is going to be more energy-efficient than a fixer-upper.
The Cons of Buying a Move-In Ready
More expensive – Buying a move-in ready home is going to be costlier. That is the price buyers pay for the convenience of being able to buy a home with fewer issues and one that they are can move into immediately. The higher cost for a move-in ready home is also due to the superior amenities in the home.
More competition – Because there are more people trying to avoid the inconvenience of fixing a dilapidated home, buyers of move-in ready homes will face stiffer competition. Unlike those who choose a fixer-upper, they may not always be able to afford the home they want.
Less customization – Buyers have less creative control when they buy a move-in ready home. They are boxed into the builder's design decisions. And if they want additional features or better appliances in the home, they have to buy it themselves or pay more for the property. This means that buyers will have to pay even more to bring their homes to their taste.
There you go, the pros and cons of buying a fixer-upper versus a move-in ready home! What are your thoughts? Do you want to begin looking? Here's an advanced Property Search Form to help you now! And my extensive Roger Holloway YouTube real estate channel makes relocating to Charlotte easy!
This blog post on "Pros and Cons of Buying a Fixer-Upper vs. Move-In Ready" was written by REALTOR® Roger Holloway of ProStead Realty & John Baker of the North Carolina Property Management firm T.E. Johnson & Sons.