The Perks of Buying a Fixer-Upper
February 11, 2025
There’s no denying affordability is tough right now. But that doesn’t mean you have to put your plans to buy a home on the back burner.
If you’re willing to roll up your sleeves (or hire someone who will), buying a house that needs some work could open the door to homeownership. Here’s everything you need to know so you can decide if this is the right move for you.
What’s a Fixer-Upper?
A fixer-upper is a home that’s livable but requires some renovations. Think cosmetic updates like wallpaper removal and new flooring or more extensive repairs like replacing a roof or updating plumbing.
While fixer-uppers need a little TLC, here’s why they may be worth considering, especially right now:
- They Usually Have a Lower Price Point. Because of the repairs involved, these homes are usually less expensive up front than move-in-ready options. According to a survey from StorageCafe, fixer-uppers come with price tags that are about 29% lower, making them a solid choice if you’re having trouble finding anything in your budget.
- Less Competition. When you’re ready to make an offer, you’re less likely to deal with competition from other buyers who are focused on move-in-ready homes.
- Build Equity Faster. From choosing how to redo the floors to picking which cabinets you want in the kitchen, a fixer-upper allows you to design a space that fits your needs and style. And with smart renovations, you can increase your home’s value faster and potentially see a big return on your investment.
As The Mortgage Reports notes:
“If you’re a house hunter who’s not afraid of sweat equity, buying a fixer-upper could be your ticket to homeownership. Doing so could lead to big savings, even in some of the nation’s largest and most popular housing markets. Plus, adding the right features could help your investment.”
What To Know About Buying a Fixer-Upper
The possibilities that come with a fixer-upper are exciting, but there are a few things to think about first.
- Do You Have a Gameplan? Consider if you have the time, skills, or budget to tackle renovations. Be honest about what you can handle yourself, what you’ll need to hire out, and if a fixer-upper is truly a good fit for your lifestyle. Remember, you’ll likely be living in a construction zone at least for a little while.
- Prioritize the Repairs and Upgrades: Don't stress yourself out thinking you’ve got to do all the work up front. Space out renovations over time in a way that makes sense for your budget and what’s most important to tackle first.
- Location Matters: You want the money you’re spending to fix up a house to be worth the investment. So, make sure the home is in an area with increasing home values and amenities locals love, like parks and restaurants.
- Get a Home Inspection: Hiring an inspector to do a thorough inspection before you buy is a must. What they find will help you understand what needs to be updated, renovation costs, and if it’s a project you want to take on.
- Budget for Surprises: Renovations rarely go as planned. So, be sure to set aside extra money to cover things like extended repair timelines, an increase in the cost of materials, or other unknowns that may come up.
Talk to a Lender About Financing Options: There are some renovation mortgages designed for homes that need a little work. But they may have requirements like spending and timeline limits, so talk to a trusted lender to understand the fine print.
Bottom Line
Fixer-uppers aren’t for everyone, but if you’re open to doing a bit of work, they can be a great way to overcome today’s affordability hurdles and find something in your budget.
With the right mindset and careful planning, you could turn a less-than-perfect house into the perfect home for you.
If you found a fixer-upper that fits your budget and goals, would you consider taking the plunge? If so, let’s connect to explore what’s out there.
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You're scrolling through listings on your phone and everything looks good until you see the price (or the estimated monthly payment). Then you close the app. Because even if you love the house, the numbers feel impossible. But here's the thing, they may not be. Nationally, there are more homes sitting on the market than there are people out there looking. And when sellers need buyers more than buyers need sellers , that shows up in the price. Lower asking prices. More price cuts. And homes priced for what buyers can actually afford – not what sellers hope someone might pay. And it may be enough to make buying more doable than you’d think. 4 Out of 10 Sellers Are Cutting Their Price One of the clearest signs sellers are adjusting? Price cuts. HousingWire Data shows more than 40% of sellers are dropping this price. That’s just slightly behind the volume we saw last year ( see graph below ):
Lately, headlines have floated an eye-catching idea about tapping into your 401(k) to cover a down payment on a home. Maybe you've caught the buzz and wondered whether that money could get you into a home faster, especially with affordability as tough as it is. Here’s what you need to remember. Pulling from your retirement savings is a big decision, so take time to weigh all your options first and be sure to talk with a financial expert before you do anything. A lot of buyers ask if they can use retirement money for a down payment. The short answer is: sometimes. The better answer is: there are a few different ways to do it, and they are not all the same. 1. 401(k) loan (borrowing from yourself) If your employer plan allows it, this is usually the cleanest option. You borrow from your own 401(k), typically up to 50% of your vested balance or $50,000, whichever is less. There is generally no income tax and no 10% penalty as long as you repay it on schedule. The interest you pay goes back into your own account. Two things to watch: If you leave your job before the loan is paid off, the remaining balance can become taxable. Some plans allow a longer payoff period when the loan is used to buy a primary residence. 2. 401(k) hardship withdrawal Some plans allow a withdrawal for costs tied to buying a principal residence. This is not a loan. You do not pay it back. You will usually owe income tax, and if you’re under 59½ the 10% penalty often still applies. There is no special first-time homebuyer penalty exception for 401(k)s. 3. IRA first-time homebuyer exception IRAs work differently. You generally cannot take a loan from an IRA, but first-time buyers (no principal residence in the last two years) may withdraw up to $10,000 penalty-free. A married couple can often use $10,000 each. Traditional IRA withdrawals are still taxable. Roth IRA contributions can usually come out tax- and penalty-free; earnings have extra rules Why Dipping into a 401(k) Can Be Tempting Data from Empower shows many Americans have built up considerable retirement savings. The median 401(k) amount for anyone in their 40s-60s is six figures (see graph below ):
When's the last time someone told you what your house is worth? Not what some online valuation tool guessed. Not what your neighbor's house sold for. What yours is actually worth right now . For a lot of homeowners, it's been years. And if you've been thinking about moving , but higher home prices or mortgage rates have made you hesitate, here’s why it’s time to take a second look at that number. Your House May Be Worth More Than You Think Home values have climbed significantly over the past 5-10 years. And even though today's market is more balanced , homeowners are building wealth every day just by owning their homes. That’s how equity works. As home values rise, and as you make your monthly payments, your equity grows. And it adds up fast. According to Cotality , the typical homeowner with a mortgage now has $310,500 in equity. That's not a small number. It’s six figures. And that’s only the national average. In many states, homeowners have built even more equity than that. Take a look at the map below and see where your state stands. The darker the blue, the more equity the typical homeowner has there (see map below):
Few things are as rattling as the thought of your home sale falling through at the last minute, right before closing. All that waiting, all that progress, out the window. But if you’re getting ready to sell, here’s what you should know. Even in today’s market, it rarely comes to that. Buyers who are moving at today’s rates and prices are generally moving because of some big life change. That means they’re motivated, and eager to get all the way to the closing table. According to the latest data from Redfin , only about 1 in 7 pending sales are falling through . Meaning the vast majority make it all the way to closing. And the single biggest thing that puts a deal at risk is the one you have the most power to prevent. It just takes a little smart planning before your house hits the market. Why Some Deals Fall Apart Before Closing A Redfin survey sheds light on the most common things that trip up a sale ( see visual below ):
Ask around and almost every homebuyer out there wants to know if there’s a way to get a better deal . And just about every seller wants to know if they'll still get top dollar . The interesting thing is... both can be right at the exact same time . It just depends on where you live. That's because today's housing market isn't moving in one direction anymore. Some markets clearly favor buyers. Others still favor sellers. But most are sitting somewhere in the middle. And knowing which market you're actually in can completely change the strategy you use to buy or sell (and what expectations you should have). Let’s break it down. One Number Tells You Who's Got Leverage So how do you know which market you're in? There's one number that tells the story faster than anything else: the months' supply of homes for sale. It's the clearest signal of who's got leverage – and what strategy you'll need. Think of it like this. Imagine no additional homes were listed starting today. Months' supply tells us how long it would take to sell everything that's currently on the market based on today’s demand. Generally speaking, if months’ supply is: Fewer than 4 months: Sellers usually have the advantage. 4 to 6 months: Buyers and sellers are on more equal footing. More than 6 months: Buyers can usually negotiate for a better deal. Right now, the National Association of Realtors (NAR) data says that number is 4.6 and that puts the overall market back in balanced territory ( see graph below ):
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