Are You House Hunting? Here are 5 Reasons You Should Avoid a Fixer-Upper

Fixer-uppers can be very appealing if you’re house hunting and want to get the most for your money. But you have to be careful — especially when it comes to biting off more than you can chew. While it might be easy to imagine rolling up your sleeves and turning a property that’s rough around the edges into your dream home, the odds are it’ll be more work than you think.

The Rocket Mortgage® survey of house hunters shows that many people want move-in-ready residences. In fact, three in five say they’d be open to going over budget to get homes requiring no renovations.

With that said, here are five reasons why it may be a good idea to avoid buying a fixer-upper.

1. Renovation Costs Can Skyrocket

One of the most common misconceptions about fixer-uppers is that they’re a steal of a deal compared to properties requiring no immediate renovation work. It’s true that the up-front costs for a fixer-upper can be lighter on your wallet, but renovation expenses can add up quickly. That’s one reason you might want to scratch fixer-uppers off your list when house hunting.

Problems such as outdated electrical systems, plumbing leakages, cracks in the foundation, and roof issues are not unheard of when tackling fixer-upper projects. After the walls are torn open, you may realize that the home you purchased for below-market value was a costly mistake.

Even cosmetic repairs, like installing new flooring or fixtures, can quickly go over budget. If you add up all the expenses, sometimes fixer-upper homes are as costly as, or even more expensive than, move-in-ready residences. The difference is that the latter option means less stress, since you won’t have to tackle renovation projects right away.

2. Home Renovation Projects Will Take Longer Than You Think

Renovation projects can be unpredictable. It’s not uncommon for them to take longer than originally expected. So, what starts off as a three-month remodeling effort could, when problems rear their ugly heads, push the deadline forward. That can be an issue when you need somewhere to live and don’t want to reside in a house resembling a construction site.

When it comes to families, people working from home, or anyone with a lot on their plates, it can be downright exhausting if a fixer-upper takes too long to wrap up. Things can get even more stressful if the house is uninhabitable during the renovation project. You might have to stay with family or even spend money for a hotel room while the house is being worked on.

3. Financing and Insurance Can Be More Complicated

If a house has structural damage or lacks the functionality a residence should have, you might find yourself unable to secure a traditional home loan.

However, there are special renovation loans that are more complex and involve more paperwork. Moreover, the interest rates are also higher. It might be tough for first-time homebuyers to cope with the more complicated process of securing loans for fixer-uppers.

Another challenge may arise when seeking insurance. Insurers might balk at offering coverage for a house with major issues or could demand higher premiums. In some cases, the homebuyer may need special insurance coverage until the house is renovated.

4. Renovation-Related Stress May Be Overwhelming

Buying a home should be one of the most exhilarating experiences in a person’s life. However, with a fixer-upper, this experience can be filled with stress. Renovations take time and money — and there will be many decisions to make. It can get really stressful really quickly. 

Design choices, budget overruns, and time constraints could be a source of discord in relationships, especially where couples and their families are involved. You can make things easier on your entire household by sticking with a property that’s move-in ready.

5. There Is No ROI Guarantee

One reason some people target fixer-uppers is that they believe the return on investment will be substantial after the renovations are done. Real estate is usually a good investment, but you can’t be sure how much you’ll make after buying and renovating a fixer-upper. You might spend a ton more to fix up the property than you believed would be the case, and that’ll eat into profits.

Fixer-uppers are a good choice for experienced flippers with flexible schedules and deep pockets. But homebuyers are increasingly opting to skip the projects and get the homes they want from the start. A move-in-ready property will provide the gift of time to make memories instead of overseeing a construction project that tests your patience and drains your wallet.

When house hunting, it’s best to focus your attention on something that won’t cause headaches.