With rising home prices and stagnant wages, the attractiveness of buying fixer-uppers is growing. As of January 2021, the median home price was $269,039. Unfortunately, for a majority of those looking to buy a home this year, the increase in home prices is driving their homeownership goal further from their reach.
Of those looking to buy, 17 percent said they could only afford to buy a home priced under $100,000. In a compromise, many of them are choosing to buy fixer-uppers. In fact, 68 percent of millennials would buy a fixer-upper.
However, while fixer-uppers can give you the chance to create your dream home, they can also come with hidden costs you never anticipated. So before pulling the trigger on a doer-upper, do your research (and math) on the costs that come with buying a fixer-upper.
The Cost Of Bring Your Home Up to Health And Safety Code
If you are buying an older home, you need to be prepared for gaps in its health and safety compliance. Many older homes are sold as-is- which means they often are not up to code.
For a house to be up to code, it needs to meet the minimum requirements of an electrical inspection. Each electrical inspection typically costs $125 to $250 per session. However, if there are faults you can expect to spend a lot more.
For instance, according to estimates by Home Guide, the cost to rewire a 1000 square feet home ranges between $2,000 and $6,000. Also, if you are buying an older home you may be faced with changes to the safety code since its last inspection- another expense that adds to the expense of bringing a house to code.
The Price Of Hidden Hazards And Shorter Lifetimes
Fixer-uppers can also come with a long list of hidden hazards. From hidden mold and asbestos to irregular stair placement, these hazards can pose a significant risk to you and your family’s health. Poor ventilation and placement of appliances like a water heater can also be a hazard.
According to the National Fire Protection Association, water heaters accounted for 11 percent of fires started by home heating devices. The price tag of fixing a faulty water heater averages $506, but depending on the length of time it was ignored, you may be better off budgeting for a water heater replacement cost instead of repairs. Also, leaky water heaters can create the ideal conditions for mold and bacteria growth.
The Cost Of Getting The Right Permits
It is great to be able to see beyond the repairs of the house and imagine its potential. However, many renovation plans you have in mind may require the filing and grant of permits. This permit process and costs depend on the state and extent of the work you need to do on the home.
However, the cost can go as high as $7,500. For instance, if you plan on re-roofing your home the cost can vary between $225 and $500. For a garage conversion, a permit can cost between $1,200. This is in addition to the labor and material costs of the renovation.
So how do you know it is worthwhile? The best advice is to head into owning a fixer-upper with eyes wide open and realistic estimates on the condition of the home. Do as much research on the home as you can and don’t be afraid to tackle it one project at a time. This way you remain in control- of your budget and your dream home plans.