Perspectives from Your Michigan Bank
Whether you’re a fan of classics like This Old House or prefer newer takes like Design on a Dime or Home Town, fixer-upper shows are inspiring. The idea of transforming a slightly shabby diamond-in-the-rough house into a jewel that shines in the neighborhood and becomes a home resonates in several ways:
- You can add value to your real estate investment.
- You have an opportunity to create the home of your dreams.
- You get to enjoy the rewards of your hard work and vision come to life.
- You have bragging rights with friends and family about your remodeling skills.
Before you make an offer on a fixer-upper, take a few minutes to read insights gathered from local community banks in Michigan to help inform your decision.
Fast Facts About Fixer-Uppers
An analysis of real estate in 100 cities revealed the following facts about fixer-uppers:
- The purchase price is 25 percent lower than the typical house on average. In some markets, however, like Boston, you’ll save less than 5 percent.
- Only about 2 percent of home listings (about 1 in 50) have a fixer-upper label.
- Banks in Detroit noted that fixer-uppers in the region rank #2 nationwide for value, with prices averaging $122,000.
Key takeaway: The potential gems are out there, but it's not always easy to find fixer-uppers. If you discover one in Michigan, you'll likely save significantly on the home purchase price.
Essentials to Consider Before Buying a Fixer-Upper House
The range of fixer-uppers is broad, from houses requiring major structural repairs to solid frameworks needing a little TLC.
- Tip #1: Have a Plan! As you’re assessing fixer-upper possibilities, make a list of the required renovations that will make the house safe and compliant with building codes. Then, prioritize the projects, create a timeline, and calculate a realistic budget for repairs. It's worth your time to talk with a contractor (or two) to help you assess the funds you'll need to buy and fix up your fixer-upper.
- Tip #2: Follow Best Practices for Home Buying. The phrase location, location, location also applies to fixer-uppers. You want to choose a location close to amenities that are important to you and your family. In addition, a house with an easy-to-navigate layout and your targeted number of bedrooms and baths are vital to comfortable living.
- Tip #3: For Solid Return on Investment (ROI), Avoid Over-improving. Banks in Ann Arbor recognize that the idea of adding an in-laws suite with a walk-out deck and hot tub is appealing. But boosting your home’s value more than 15 percent above other houses in the neighborhood can lower the resale opportunities.
- Tip #4: Get Your Financing Set! In addition to securing prequalification for a mortgage, you’ll benefit from exploring how you’ll pay for fixer-upper renovations. Popular financial tools for house repairs include home equity loans or lines of credit (HELOC) and Renovation Loans.
If you’re considering purchasing a fixer-upper home, contact one of our mortgage bankers. Our team will talk with you about your goals and help you find the right financial support to realize your dream!
“It’s not the beauty of a building you should look at; it’s the construction of the foundation that will stand the test of time.”
-David Allen Coe, American singer/songwriter