We are not sure which one of two houses we should buy! Our concern would be resale later on if we needed to sell. Please help!

Asked by Lisab, Ontario, CA Wed Nov 10, 2010

My husband and I cannot decide which one of two houses to purchase. The first one is in a sought after, prestigious location but needs about $100,000 of renovations as it is dated and in need of repair. The home inspection of it indicated it needs rewiring, new furnace, A/C, windows, doors, new bathrooms (some of which need gutting), new kitchen, exterior repairs and landscaping - alot of work!. The second house is move in ready, very well taken care of with everything you can think of. It has a fantastic backyard landscaped professionally, a pool, and backs onto a golf course. The only downfall - it faces a main street with 1970's rental townhomes directly across the road. Otherwise the neighborhood is very nice with many large, expensive homes close by. If the house was one street over, it would be perfect! However it is priced about $40,000 more than the fixer-upper. What do we do? Buy the one in a great location that needs lots of work, or the great home in a so-so location?

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4
Don Tepper, Agent, Burke, VA
Wed Nov 10, 2010
The fixer-upper, definitely.

You say you're concerned about resale. The first one is in a good location. The second one is in a poor location. It's as simple as that.

Now, if you said that your main concern was moving into a turn-key home that you planned to stay in for 20 years, my answer probably would be different.

But if you're concerned about resale, the answer is the fixer-upper.

Having said that, you then have to make sure that the fixer-upper is reasonably priced based not only on its location but also on its current condition and needed repairs. Ask your Realtor to tell you what he/she believes the house is worth in its present condition, and what it would be worth fixed up. Your next step is to get a contractor in to give you a solid estimate on renovations and repairs. Honestly, $100,000 is a LOT of renovation. I'd bet that the actual figure is probably closer to $60,000 than $100,000. But I don't know and--unless you've already had a contractor in--you may not know, either. And that's a critical point in determining what a reasonable price is for the home in its present condition.

So, get the current value number and the after-rehab number from your Realtor. Get a solid figure from a contractor. And it'd be better to get multiple contractor estimates.

Hope that helps.
1 vote
Phil Rotondo, Agent, Melbourne, FL
Wed Nov 10, 2010
4 years ago these were probably the only 2 homes for sale. Now it's a different story with plenty of inventory out there. Before you choose the fixer upper take one more look for other homes for sale. You just might find the perfect one.
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1 vote
Myra Gouger, Agent, Las Vegas, NV
Wed Nov 10, 2010
Buy the one that needs the work. Homes on main streets are very hard to sell in the future.
1 vote
Steven Rall, Agent, Burnsville, MN
Wed Nov 10, 2010
You do have a dilemma. You have heard I'm sure that the three most important things about real estate is location - location - location. But there is probably more going on here than that. I often tell buyers we I begin to help them find the right house that they will make an emotional decision about the home they want to buy and then later justify it on logic. My suggestion to you is do what is often called the Ben Franklin close. Take both homes and on a sheet of paper list the positives and negatives (you've mentioned many already in describing the 2 homes) and try to assign a numerical value to them say on a scale of 1-5 and see which home gets the best numerical value. Might suggest that you do the lists separately first and see how you each rate the two homes. That will generate important discussion. Personally I'd buy the home for $40,000 more because I'm not good at making repairs. BUT it doesn't matter what I think it only matters what the two of you think.
1 vote
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