If you are interested in buying a fixer-upper house and want to make sure you pay the right price, you will need to do a few extra things to achieve this goal. One thing you should do is find comps for the home you are buying, and the second thing you must do is determine how much money you will need to spend to fix the house up. By taking these two steps, you can find out how much you should pay for the fixer-upper you are thinking about buying.
In the world of real estate, comps are a very important and useful thing. Comps refer to comparisons of similar homes in the area that have recently been sold. You can find comps by looking online or by asking a real estate agent, and you should make sure that you find comps that are similar to the home you are thinking about buying.
The comps you use should be homes that are turn-key homes. In other words, they should not need a lot of work, and they should not be considered fixer-uppers. By looking for comps like this, you will get an idea of how much the home you are buying will be worth once you complete all the necessary repairs.
Calculate the work that is needed
The good part about buying a fixer-upper is that you should be able to buy the home at a discounted price. This means that you will pay a price that is equal to the home's current value, which will be less than what the values are for the comps you are looking at. The bad news is that it can cost a lot of money to renovate a home.
When you look at a fixer-upper that is for sale, you must make sure you carefully examine the entire house so that you know exactly what you are getting into. After doing this, you can create a list of the work the home needs and get bids to have the work done.
How to use this information
Once you have completed these two steps, you can determine if the home is a good deal by using the information you have gathered. You should start by taking the average value of the comps to find out what your home should be worth when the repairs are completed. Next, you should subtract the amount of money it will cost to make all the repairs. The answer you get will reveal the top amount you should pay for this particular house.