There are plenty of upsides to buying a home that needs work. The biggest, of course, is price – one of the few ways to get a deal is when you have to fix a 30-year-old kitchen. There’s also that blissful sense of possibility – you’re buying a space that you can transform into your perfect, ultra-customized lair.
Of course, before you start picking out new fixtures and tiles, there are a few key things to keep in mind. Here are the crucial factors to consider before you sign the contract, courtesy of Remodeling expert Fraser Patterson, CEO of Bolster:
1. Know the building rules. If you’re buying an apartment or townhouse, chances are the building will have very specific – and often very strict — rules regarding what you can and can’t do. A condo or co-op board may put the kibosh on breaking through a wall that holds a freestanding heating or AC unit (particularly if the building is landmarked as historical) or adding a washer/dryer. And for many of them, don’t even THINK about putting in a second bathroom. Make sure you figure out the rules before you leap in. Ask your real estate agent to give you the building’s alteration agreements – every building has one – and review them start to finish. If they eviscerate your vision for the home, it may be worth rethinking the purchase.
2. Know the amount of time you’re going to need. You’re taking on a long-term commitment (in that the remodel will take a long time, and then you’ll have to live with it for a long time), so it’s important to know what you’re getting into. Even after closing, you may not be able to move in until the work is finished. If you’re planning a remodel that will change essential components of the home – like structural, plumbing, or electrical – remember that you’ll need a go-ahead from the Department of Buildings before you start, which will require hiring an architect to create plans and submitting them for approval. Which means more time, time, and time.
3. Tour the property with a contractor before you buy. You are making a huge decision, so it’s best to find a contractor you trust then ask him to walk through the home with you. Describe the work you want to do, and ask for opinions – the contractor will see details and notice potential problems that you won’t see. In addition to being an important step in the buying process, it’s an opportunity to get to know a particular contractor and see if you gel with him.
Granted, there isn’t always time to schedule a leisurely walk-through (think New York City bidding wars). In a time-crunch situation where you’re under pressure to make an offer in two seconds or less, don’t give up — during the period between when your offer is accepted and when you sign the contract, anything goes. Use this time to bring the contractor in to assess the property before you sign. NOTE: In some locations, offers are written and binding – in that case, you won’t be able to back out after you bid.
4. Be realistic about your budget. Once you have a rough estimate of costs from a contractor you trust, figure that number into your total budget for the property. If you didn’t have the luxury of time to plan during the buying process, then factor in another 10% — it’s highly likely that the remodel you want to do will cost more than you initially expected, since you still haven’t priced out or finalized things like tiles, flooring, or even a layout, plus there may be unforeseen hidden costs so it’s really important to insure your project. If the added costs aren’t something you’re willing to take on right now, consider moving on to a turnkey property (or one that requires less work).