Do your homework to ensure your fixer-upper home purchase is a success
Turn on your TV and there are shows aplenty with always-eager renovation crews turning a run-down house into something out of a show-home showcase.
Browse the Internet and you can find real estate websites devoted to fixer-upper properties that just need a little “TLC” to become your dream home.
There’s even an offering from Canada Mortgage and Housing Corp. (CMHC) and Genworth Canada called Purchase Plus Improvements, allowing you to finance some future renovations into the cost of purchasing a home.
But buying a fixer upper is not for everyone, and requires due diligence just like any other real estate purchase, starting with a home inspection.
Although someone deliberately buying a fixer upper might decide to skip an inspection, since they already plan to spend money fixing things, “that’s absolutely a bad idea,” said Alan Fisher, president of the Canadian Association of Home and Property Inspectors (CAHPI®)-Alberta.
“People still need to do a home inspection, as it does take a trained and experienced eye to look for those hidden items – structural problems, changes that have been made to the house, or even the wiring,” he said.
“People need to be critical of their own skills and what they are capable of doing. Will they need to hire someone to do the renovations?”
Fisher says saving money by buying a fixer-upper won’t make sense if it has serious issues that are expensive to remedy, such as moisture problems from a leaky basement, or hazardous materials.
“Older homes may contain hazardous materials like asbestos, and although we’re not doing lab testing during a home inspection, we can recognize those products and recommend that further tests be done on them,” he said.
Fisher says anyone looking to buy a fixer-upper needs to make sure they don’t bite off more than they can chew.
“People need to be critical of their own skills and what they are capable of doing,” he said. “Will they need to hire someone to do the renovations?”
Keith McTaggart, president of Calgary home renovation and repair company Benross Home Services Ltd., says having an idea of the cost or feasibility of necessary renovations doesn’t have to wait until after you buy a home.
“It’s a good idea to have a contractor on site [when looking at a house] who can say, ‘this is a wall that can quite easily come out, and you could put an island here and open a wall so it has a nice through-flow feeling,’” he said, rather than buy the home and find out the wall is structural and would be expensive to remove.
“I’ve had a good number of calls for just that purpose by people looking at buying a home and asking to meet on site before they make a purchase,” he said.
McTaggart says you also need to consider various factors to determine how much money it would be worth putting into a fixer-upper home.
“Look at the state of the house, and the state of the neighbourhood, and [then] decide: what is it worth putting into a home in this neighbourhood?
“In certain areas of Calgary you can quite clearly see that there are infills being built and the area is under development, whereas other places have kind of been sitting at a standstill for 30 years.”