9 Questions to Ask Before Buying a Fixer-Upper Home

You may be able to purchase a home in a desirable neighborhood for less money and transform it into something that fits your lifestyle.
But there's an important question to ask before getting caught up in the potential:

Are you buying a great opportunity—or a money pit?
A home that needs cosmetic updates can be very different from one that needs a new roof, electrical system, plumbing, foundation repairs, or major structural work.

Before making an offer on a fixer-upper, ask these nine questions.

1. What repairs does the home actually need?
Start by separating what you want to change from what needs to be fixed.
New flooring, paint, countertops, and light fixtures may be cosmetic improvements. A failing roof, outdated electrical system, foundation problems, or significant water damage are much more serious. A professional home inspection can help identify potential problems that aren't obvious during a showing.

2. How much will the repairs cost?
Don't rely on a guess—or assume you'll be able to do everything for the price you see on a home-improvement website. Get estimates from qualified contractors for major projects. Then add some extra room to your budget for unexpected expenses.
The initial estimate is not always the final bill.
A good rule is to avoid spending every dollar you have on the purchase itself. A fixer-upper can uncover surprises once walls, floors, ceilings, or other areas are opened up.

3. Can I afford the home AND the renovations?
This is one of the most important questions.
Don't simply ask, “Can I afford the mortgage?”
Ask:
“Can I afford the mortgage, property taxes, insurance, utilities, maintenance, and renovations at the same time?”
You may also have to pay for temporary housing, storage, permits, materials, or other expenses while work is being completed.
Make sure the entire project fits comfortably within your financial situation.

4. Which repairs need to happen immediately?
Not every project needs to be completed on day one.
For example, you might be able to live with an outdated kitchen for a few years. You probably don't want to ignore a serious roof leak or major electrical problem.
Create three categories:

• Must fix immediately
• Should fix soon
• Would be nice to have

This can help you prioritize your money and avoid taking on too many projects at once.

5. Are there structural or major system problems?
This is where a fixer-upper can become much more expensive.
Pay close attention to the:

• Foundation
• Roof
• Electrical system
• Plumbing
• HVAC system
• Windows
• Sewer system
• Drainage
• Structural components

Some of these issues may not be visible during a normal showing.
If an inspection identifies a potentially serious problem, consider getting an evaluation from an appropriate licensed professional before moving forward.

6. Will the renovations require permits?
Certain renovations require permits and inspections from the local municipality.
Before beginning major work, find out what permits may be required and whether there are existing permits or code issues associated with the property. This is especially important if you're considering projects involving structural changes, electrical work, plumbing, additions, or major renovations.
Never assume that previous work was properly permitted simply because it was already completed.

7. Will the home qualify for my mortgage?
This question can be overlooked.
Depending on the property's condition and the type of financing you're using, certain issues could affect the ability to obtain a mortgage or create additional requirements before closing. Talk with your lender early in the process about the home's condition and the type of financing you're considering. If the property requires extensive renovations, ask whether a renovation loan might be an option.

8. What will the home be worth after the renovations?
Don't just focus on what the home could look like.
Focus on the numbers.
Research comparable homes in the area and determine what similar properties are selling for after renovations.
You don't want to spend $100,000 renovating a home only to discover that the neighborhood doesn't support the value you're expecting.
This is where working with a knowledgeable real estate professional can be particularly helpful.

9. Do I have the time and patience for a renovation?
Money isn't the only consideration.
Renovations can take weeks, months, or sometimes longer than expected. Contractors can run into delays. Materials can be backordered. Projects can uncover additional problems.
Ask yourself:
“Am I realistically prepared for the disruption?”
If you're working full-time, have a family, or need to move into the property immediately, a major renovation may be more challenging than you initially expect.

The Bottom Line
A fixer-upper can be a great way to create the home you want and potentially build equity—but the purchase price is only part of the equation.
Before making an offer, understand the home's condition, estimate the renovation costs, investigate potential permitting issues, determine how you'll finance the project, and consider what the property could realistically be worth when the work is finished.
Most importantly, don't let a beautiful vision distract you from the numbers.
The goal isn't simply to buy a home that needs work.
The goal is to make sure the work makes financial sense.

If you're considering purchasing a fixer-upper, a knowledgeable Realtor, lender, home inspector, and qualified contractors can help you evaluate the opportunity before you commit.