How to spot a home with potential
Remodeling professionals tell how to tell a fixer-upper with great possibilities from a hopeless money pit.
Steve Gray and his wife, Deanna, bought a dowdy fixer-upper in Indianapolis 10 years ago. The windows were shot, the lighting was old and it was a time machine, with décor unchanged from 40 years ago. Oh, and it was beige, beige, beige.
"The walls were the same color as the carpets, which were the same color as the ceiling," Gray says.
But what the couple wanted most from the purchase was the old Lantern Hills neighborhood; it had been the exclusive location when they were kids.
Also, they saw something that others apparently had missed: The house had amazing potential. True, there were no granite countertops, spa bath or stylish cabinets. But there was something much better: The three-bedroom, three-bath house was a classic example of mid-20th century "Prairie" style (think Frank Lloyd Wright). It had a walk-out basement, enclosed courtyard and a 2-acre, wooded, hilltop lot.
The Grays made cosmetic changes -- new countertops, paint, floor coverings and light fixtures -- shortly after moving in. With these easy and relatively cheap fixes, it became a terrific home and a solid investment. Then, they embarked on a long-term plan for remodeling and expanding in stages.
"I'll bet we saved 20% because there were not a lot of people who could envision what the house could really be," says Gray, who is a professional remodeler.
What do the pros know about plucking a fixer-upper with potential from a market full of bad investments? Sharing their secrets are Gray, owner of Steve Gray Renovations; Dan Fritschen, owner of RemodelOrMove.com; and Tim Wysocki, owner of Wysocki Brothers, an Acworth, Ga., remodeling company.
Assemble a team
Before making a move, get input from qualified professionals. Most remodelers will visit a home you're considering for free, pointing out obvious problems and offering a "guess-timate" of the cost of achieving the changes that you envision, Gray says. It's too soon to involve a designer or architect at this stage. (For that, read "How to hire a good home contractor.") Find remodelers using the National Association of Home Builders' directory of professional remodelers and check the NAHB advice on hiring a pro.
A trusted real-estate agent who knows what sells well in your market can also help. "Work with them on running the comps, looking at the neighborhood and understanding what you could do with a particular home to increase its economic value and value as a place to live," Fritschen says. (Read "Find a superstar real-estate agent" and use the National Association of Realtor's agent locator or the National Association of Exclusive Buyer Agents' directory.)
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Don't get your heart set on a home until a home inspector has given it a thorough examination. If you make an offer on a house, make the sale contingent on the inspection, which means that you have the right to back out or negotiate further if the inspection turns up problems. The seller usually pays for the inspection, which runs around $300, depending on the locale. If possible, go along on the inspection, to see the house through the inspector's eyes.
Bing: Search and decide
Signs of potential
To find the homes with great potential, you must screen for qualities that make a worthy investment and for problems that could suck a hole in your savings.
For a worthy investment, look for:
- A great location. Location was the first thing each expert mentioned. Get into a great neighborhood at a discount by buying a small home that you can expand later. "Look for a neighborhood where (other) houses have been upgraded," advises Fritschen, who publishes advice, articles and calculators for remodeling. If you plan to add on, expand the home's size only to the neighborhood's average or slightly above. Rule of thumb: You get a better return on your investment from a smaller house in a great neighborhood than from a fancy house in a so-so neighborhood. Finding the right neighborhood may take detective work: Knock on doors and ask neighbors about turnover -- low turnover is good -- and whether they think the neighborhood is getting better or worse. Don't just visit in daylight. To get the full picture, Gray advises returning repeatedly, in the evenings, at night and on weekends when residents are home. (Learn more: "How to find a safe neighborhood.")
- Relative youth. Resist the charms of historical homes unless you've got expertise or deep pockets. Find a home no older than 50 years, Fritschen says. "If it's 100 years old, there are so many fundamental problems with piping, electrical, heating and foundation -- it just goes on and on." Simple ranch homes and newer tract homes are your safest bets, Wysocki says. With the housing crash dumping lots of orphaned new homes on the market, it's a great moment to score a place with potential, as long as it only needs minor TLC. (Even with newer homes, do your research: Read "How long can a half-built house sit?" and "Buying a foreclosure? Plot your strategy.")
- Simple upgrades. Your mission is to find a home that's ignored and underpriced because of its shaggy looks, yet really requires only a "makeover" -- simple, inexpensive cosmetic improvements like new paint, flooring and light fixtures. That means avoiding the impulse to buy a home that needs upgrades that require moving or replacing walls, cabinets, countertops, appliances, plumbing or electrical systems. "HGTV says that you can do a room makeover for $750, but that doesn't really happen in the real world," Gray says. The best fixers have kitchens and master baths that are spiffed up easily and cheaply. Otherwise, you'll find yourself easily spending $5,000 on granite countertops alone. In Indianapolis, Gray says, the average bathroom facelift (new flooring, mirrors, paint, countertops and vanity, hardware, light fixtures, sink and faucet) runs $5,000 to $7,000. A full-scale remodel -- moving walls, plumbing, vanity and wiring, and replacing tub, sink, toilet, flooring, paint and counters and building a new tile or stone shower -- costs $40,000 to $55,000, depending on the job and choice of materials. (Play around with Fritschen's Remodel Estimates tool or Contractors.com's Home Improvement Project Estimator to roughly calculate costs. Read "Remodeling in 2010? Additions are out, replacements are in.")
- A floor plan you can live with: Find a home with a basic layout that makes you happy just as is. To contemporary buyers, that usually means an open floor plan, not a warren of small rooms. At the same time, watch out for too much openness, for bedrooms and bathrooms that lack privacy. Also, keep in mind that, in suburban areas, buyers expect a home to have a garage, so investing in a home without one could mean sacrificing resale value.
- Light. Picture how you respond to a light-filled home and you'll recognize what value natural light adds. Dark houses aren't always as easy to fix as you might think. If you find yourself thinking, "I could just plug a window in over there," stop. It's not expensive to add a new window, Wysocki says. But if a room seems to call out for a window where there is none, there may be a reason: zoning issues, structural problems or an ugly house next door.
- Plenty of closets and storage. While it's true that you can always add on, it'll cost you, so look for plenty of convenient storage included. Fritschen estimates that adding a simple storage area (with a concrete floor, walls and a roof) runs $40 per square foot, on average. Prices vary depending on local costs, and contractors often charge a minimum to cover overhead, which means that a per-square-foot cost of a 400-square-foot garage may be less than that of a 50-square-foot shed.
- Updated maintenance. Ask if the sellers kept service records on the furnace and mechanical equipment and look them over. Were appliances and home systems serviced annually? Try all doors, drawers, knobs, windows, faucets and appliances to ensure that everything works and that you'll understand any expenses you'll be taking on.
When to be wary
Impulse buys are fine for shoes and clothes, but a home is too expensive and trouble-prone to let your brain abandon you when you need it most. "The biggest problem for first-time homebuyers is that they're emotionally charged," Gray says. "They get invested and don't really investigate it far enough."
Here are signs to back away, no matter how deeply you are infatuated:
- Single bathrooms. A solo bathroom can limit a home's resale value. And experts disagree on the wisdom of adding an additional bathroom later. "There's no way you should buy something with just one bathroom in a suburban area," Wysocki says, although he adds that it might be OK in urban neighborhoods popular with singles. Fritschen, however, views adding a bathroom to a one-bath home as "free money" because it can substantially boost the property's value. It all depends on potential resale value, on your skills, your money and on whether you're getting such a good deal that your finances allow for the extra expense.
- Galvanized steel plumbing or aluminum wiring. Galvanized steel pipes, used before copper plumbing came along, are vulnerable to sediment buildup, leaks and corrosion. Newer plumbing uses polyethylene (PEX) or polyvinyl chloride (PVC) pipes. Aluminum wiring, a potential fire hazard, is no longer used in home construction; copper wiring's the standard today. Either of these elderly materials signals the need, eventually, for expensive upgrades. "Each of those is a $10,000 bill," Fritschen says.
- Roof replacement. A home inspector (Read "4 tips for finding the best home inspector.") can tell you if a house needs a new roof. A new roof today can last up to 50 years, depending on the material, but you don't want to be the one to pay $20,000 to $40,000 for a new one. The investment won't increase the home's resale value or your pleasure. Unless a super deal makes the roof cost pencil out, find a house that has a roof with lots of life left.
- Siding or window replacement. New siding ($10,000 to $13,000 and up) and windows ($10,000 to $18,000 and up) are not only big expenses, need for them is a danger sign: They can indicate water damage hidden inside the walls, Wysocki says.
- Water stains. A good home inspector will point out signs of water damage. But you can keep your eye out, too. Inspect ceilings, walls and floors for stained, warped or uneven, peeling, discolored or damaged drywall or flooring. Why are these blemishes a big deal? Because they may point to mold or rot beneath the surface.
- Rot.Check all surfaces, including in the basement, for rotting wood. Gently poke trim and wood surrounding windows and gutters with a pencil tip to spot soft, spongy or crumbly wood. Not only is replacing trim an expensive headache, but visible rot may just be the tip of the iceberg.
- Foundation problems. Drainage and foundation repairs are thankless expenses that can run tens of thousands of dollars. To detect foundation trouble, tour the exterior, checking for cracks. If you can slide a quarter sideways into a crack, it's too big, Gray says. Try to visit after a rain to look for water accumulating around the foundation. (Read "Six signs your home could be a lemon" for more guidance.)
We bought a house in 2002, after we bought it you know what my father told me???
If you can not find anything wrong with the house, you are not looking hard enough.
I will never forget those words as long as I live. I knew nothing about what to look for in a house.
We live in Crappville, Florida. When we move up north I am going to have a list so long of what I am looking for in a house. The realtors are probably going to run hide from me. LOL
Dh and I have learned a lot from buying this house. Not anything bad but we have learned a lot. We also know more of what we want in a house to.
A full-scale remodel -- moving walls, plumbing, vanity and wiring, and replacing tub, sink, toilet, flooring, paint and counters and building a new tile or stone shower -- costs $40,000 to $55,000, depending on the job and choice of materials.
Is the author crazy? You can do a very nice bathroom for way less than $40,000 to $55,000, particularly if you can do all or most of your own work. No wonder our country is in such a mess financially. People spend like drunken sailors.
Welcome to the infinite and he infinitessimal where rational reality resides.
Let me get this straight. I am looking for a home in a good location, a good neighborhood, that is not very old, doesn't need any substantial work, has plenty of light and closet space, an open floor plan, updated maintenence records, that does not need a roof, siding, windows, wiring, or plumbing work, but is priced way below market. I've got some news for the writer. That home is pretty much nonexistent, unless the sellers are retarded! What a sad excuse for an article.
"The seller usually pays for the inspection, which runs around $300, depending on the locale."
May be a typo, but the seller almost NEVER pays for an inspection. The BUYER usually pays for the inspection.
The two biggest concerns when looking into purchasing or living in any building is the roof because it covers up or protects your investment & the foundation because it keeps it standing straight. Use your eyes carefully. Don't be led astray by fancy doodads or fixtures. Sagging roof & foundation lines are good reasons to walk away. The rest may be costly, but if it is mostly livable for awhile until repairs are done you'll be okay.
Foreclosures may be nice. But, many come without conditions & are sold as is. Stay away from them for the most part. Many are left because they weren't built that good in the first place. IE; Chinese drywall?
Don't completely trust realtors. Many don't know any more than you do about a place. Most don't really listen to your concerns, wasting your time & theirs. Many can't even read a tape measure correctly or figure out square footage either. And, too many only care about how much money you can put into their pockets as their main concern. They don't always work for you at the end of the day.
A home inspection may sound like the answer or cure all to some. But, they can be as flawed as the home might be too. They can over or underplay a potential problem depending on their experience or the time spent inspecting a property. Inspectors can & have been wrong from my experience. From missing cut main beams to not seeing other pesky problems or infestations. Best bet is to leave the foreclosures alone unless you understand at least basic building methods. And, even then, be prepared for many buried surprises. Common sense plays a large role in any building purchase. If it doesn't look or feel right, it usually isn't.
Do your homework well. A basic working knowledge of building terms will help you out immeasurably down the road. So, you can at least understand what or where the contractors are coming from. And, hopefully so you know what you're getting into as well.
Most buildings come with little to no "how to" instructions.
I had a drywaller come over in July. He told me there had been flooding here in the past. He also told me that the sheet rock in the house wasn't finished correctly, so if I got about five boxes of mud and some tunes, he would come over one day and get it fixed. It started raining one day and I got water in the back door and along the north and east walls in the addition. Water flowed down the street I live on and onto the street and all of it flowed east. The drip irrigation was leaking and too long, so I cut it out and replaced all the line. I save water and the trees get the water they need. I started painting the exterior in April and quit in July and switched to the interior. The house cooled down considerably. I went from a medium blue to white. The interior I went from white to a really light tan. I took down all the window hardware and replaced it with new curtains and blinds after I filled all the holes in. I replaced the closet rods so they all work now. I caulked all the holes I could reach that were left around the cooler vent when they put it in. I have killed over 20 Black Widow Spiders in and around the house. I discovered the wind blows sand into the windows in the original house.
The vent in the bathroom is now plugged. The toilet won't flush correctly. All of the windows leak air and/or water. The eaves in the original house are tight. The various additions are spotty and being used for nesting platforms for the birds, who have broken through the screen in the eaves and now have the attic.
I bought a house August of 2008. I did a walk-through and did not notice any evidence of leaking roof or windows. The first thing I did notice was the previous owner had two refrigerators and freezers plugged in, plus two swamp coolers and three ceiling fans. I had the power put into my name and unplugged two freezers and one refrigerator and got thermostats for the coolers.
I had one leaky hose bib, so I called a plumber. From the time I called him to he showed up, the kitchen drain started giving me problems. He replaced the hose bib and the water line to the cooler and checked the drain. It was plugged with congealed animal fat. Through the course of him coming over, he figured the whole drain was coated with lard, which would drop off the top and plug the drain up. The vent in the kitchen plugged up. The toilet sprayed water out of the tank, so he replaced the piece of inner tube held down with a wood screw for the real parts and sealed the tank. He told me at one time the toilet was leaking and they didn't do the repair correctly. They should have replaced the bad flooring and bolted the toilet to the flange. It is caulked to the floor.
In December I decided to move the computer into the guest room/shop because it was the warmest room in the house. Also, my sewing machine would be good there because the warmth kept the oil fluid. I found out of six outlets in the room, only one worked. I called an engineer out and he determined that when they wired the room, they didn't do standard wiring. He couldn't pull the cover off the outlet and find the wires; they are off to the side and that makes for an expensive repair.
The drain in the kitchen was snaked two or three times and I poured boiling hot water down it three times. The rest of the time I use a plunger. Every time I think I have made progress, I am back at the beginning.