Jake,
Can you qualify for a loan on a renovated home? In this market, we are seeing homes that were purchased for significantly more than current prices that were recently remodeled and upgraded by the current owners who can no longer afford to make the mortgage payments. Some clients of ours just purchased a "short sale" property in San Rafael that had been remodeled and upgraded by the owners in the last 2 years. The sellers spent over $90,000 on the remodeling. While we were waiting for the short sale to get approved, we continued to look for other alternatives for them. The homes of similar square footage in similar neighborhoods that needed remodeling would have ended up costing them much more when you totaled up the purchase plus the upgrades, not to mention the time and inconvenience factor as well.
Your question is somewhat "general" because the answer to the question depends on a lot of factors. In some situations, the lower priced property is definitely the best buy, even after factoring in the cost of remodeling. In most cases, the cost of remodeling will be an out of pocket expense after the purchase, which means that you need to have additional money after putting up the down payment and closing costs.
The most important thing to consider when buying real estate is the location of the property. You can usually change many things about the property, but you can't change the location. Many times people will buy a property that needs work but is in a good location. If the location is desirable and you do not over improve the property, it is usually a good investment.
We both have personal experience in remodeling and upgrading. We try to guide and advise our clients toward making good decisions about the real estate that they are considering for purchase. Our goal is to have clients who are comfortable and satisfied with their property. That is what gives us repeat business and referrals!

Mary Kay and Kathy Yamamoto

Jake, it depends on the type of renovations, is the house move inable (not a word, I realize!) ? Loans for renovations are next to impossible right now. If you can live in the house for awhile the way it is without going too crazy then it might be okay. Though labor maybe less expensive right now, if you don't have cash, it really doesn't matter. I can tell you what is selling right now, it is the homes that are in good condition and priced well. Not homes that need major renovations. People are very afraid to get in over their heads and rightfully so! Be very careful if you do buy a fixer, have a lot of esitmates done ahead of time to figure out the costs are and know how long you plan to live in the property. Good Luck

Hi Jake,
There's never a single, simple answer to these kinds of questions :>). Most buyers today would still rather have a house "ready to move into" than a fixer. However, since people are worried about their jobs, their savings and what may happen in the future, they are being more cautious, so won't pay more for a "perfect" house than they think it's worth. Further, they may ONLY be able to buy a distressed house, as they may only be able to qualify for a certain loan amount. In Marin, my experience thus far is that renovations are not costing that much less today than they were 2-3 years ago. While one would think that since demand is way down and contractors are hungry for work they would be offering to work for less, that doesn't seem to be happening from my experience with getting bids for various jobs for clients. The cities are also ADDING fees and charging penalties as never before. So that adds to the cost. Then, there is the time factor. If a house needs only cosmetic fixing, then you can move in and do it while you're living there. if not, you have to pay the mortgage and the cost of living elsewhere until it's habitable. To pay more for an "identical" renovated house you would want to be sure the renovations are good quality and that you like them enough as they are to not want to redo them again! What I am seeing is distressed properties at bargain prices are being snapped up for cash by investors with the money and experience to renovate then rent or resell at a profit; and renovated homes with lots of appeal selling fairly quickly if they are priced competitively. It's the ones in the middle that aren't too attractive, need some work and aren't priced low enough that are sitting around. Hope this helps even if i didn't give you a simple answer. Maryann

Jake;
Good question & in this economy you may find a great deal on a home that has already been renovated, but the seller can not get the pric ethey want, so you benefit. However will you like all the renovations someone else has done 100 %. Another consideration with the rennovated house its built into your mortgage at very goods rates currently!!
If you buy a fixer & get teh work done or even do it yourself, do you have all the skills & highly suggest you get permits if required. Also presume you have the cash to fund the work, this is an issue for many folks. do you have time and want to live in a house while you are rennovating it which tends to take longer too.
Would be happy to dicuss in more details & specifics. It depends where you are looking to buy, San Rafael or other towns & in what price range, as the markets vary..

Regards, Nigel

Nigel Faulkner
Frank Howard Allen
T: 415 298 2485
E;nfaulkner@fhallen.com

Hi Jake
It all comes down to preferences, some home buyers just want to move in and not deal with the renovations.
Other buyers look for less expensive homes and do the renovations themselves.

Although you are right, there are many contractors that are lowering their prices for renovations, due to not that many home owners are renovating their homes.

A past client of mine got three estimates and started a bidding war for his business. At the end he decided to do the work himself.


Best Regards,

Jes Sierra, B.Sc.
Realtor®