Think a Fixer-Upper Will Save You Money? A New Survey Suggests Otherwise
It’s a big question while looking to purchase a new home. Should you opt for one that’s move-in ready but not customized—or one that requires some work but could be perfect?
America’s home-buying preferences and willingness to undertake a renovation are influenced by many factors, but most recently, television shows have played a crucial role. Series like Fixer Upper, Good Bones, and House Hunters Renovation shine a light on the wonders of buying a handyman’s special. But as other home renovation shows such as Love It or List It reveal, for many buyers, this is a hard choice: opt for a turnkey home or embark on a renovation?
Porch, an app that connects homeowners with contractors and designers, recently conducted a survey to find out more about the divide between fixer-upper and turnkey purchases. Interviewing 1,069 American homeowners, the company discovered some fascinating conclusions. Among the most interesting? A fixer-upper won’t necessarily save you money.
It can be easy to jump to this conclusion. Say there’s a $100,000 price difference between a move-in ready home and one that needs repairs. If you can renovate the fixer-upper to the tune of $80,000, well, you’ve just saved yourself a hefty chunk of change, right?
According to the Porch survey, it’s not necessarily the case. The survey found that after renovations, turnkey houses actually cost just about the same as a fixer-upper. On average, owners paid $250,000 for move-in ready homes, while those who renovated fixer-uppers spent an average of $247,000. And if renovations went over budget, turnkey houses could cost significantly less. Fixer-upper homeowners that went over budget spent an average of $275,741.
Of course, not all home renovations are created equal. A home renovation is much more likely to come in under budget, and be much less expensive overall, if no structural changes are needed. Building an addition, knocking down walls, moving plumbing, and other structural changes come with a host of potential issues, as well as a higher bill. Houses don’t come with a full history, so you might encounter expensive surprises like water damage, mold, or insects during structural renovations. If you want to keep a renovation under budget, look for houses that only need cosmetic changes, like new cabinets and countertops.
When considering a fixer-upper, look for warning signs that your optimistic renovations might turn into a money pit. A clause on a house saying it’s sold “as is” is one of those; it means the seller isn’t responsible for any problems. (In fact, pro tip: Drew and Jonathan Scott say they'll never buy a house listed "as is.") Check for a sagging roof, cracked foundation, a fuse panel instead of a modern circuit breaker, and significantly sloping floors, according to a guide from Bob Vila. All of these indicate expensive repair bills that could dramatically spike your budget, turning your bargain fixer-upper into a burden.
This isn't to say you should never contemplate a fixer-upper. The benefits are obvious: you can make a house your own, personalizing it exactly as you want. You can bring an old house back to glory, or turn a new house into the right fit for a growing family. Just don’t assume that you’ll save money in the process.