We often get phone calls from folks who are have recently purchased an older home and want to make some renovations or upgrades to it. Typical homes in our area – Philadelphia and its surrounds – are 50 to 100 years old. These home buyers usually love the character of their older home. We do, too. After delving deeper into the situation, we often find that the buyers’ real estate agent gave them advice about what certain repairs or renovations for their home would cost, and they purchased it with these cost expectations in mind. Unfortunately, most realtors do not know the true costs for renovations, and they end up giving flawed information, as a result. We don’t fault them, really. It’s not their job to know this information.
As you know, buying a home is one of the most expensive purchases you will make in your lifetime. But you must buy well and plan renovations carefully to make your home a great long-term investment in your family’s wealth. In order to buy well, you must understand issues like the one described above. You have to have a firm grasp of what a house is worth and the amount it will cost to fix it up the way you want it to be, because remember, your home should maximize your daily enjoyment of life.
You’ll want to start by researching the “comps” for your prospective home. The “comps” are comparables, or other similar properties in the area and what they sold for. The comps will give you an idea about what your home should have, such as numbers of bedrooms and bathrooms, granite vs. laminate counters, etc. The comps will also tell you what you should expect to pay for your house.
When I buy homes, I look for both “as-is” and “top-shelf” comps, because I am typically buying fixer uppers. If you plan to live in the house for five years, you might pull “highest priced comps top of the market” and “lowest price bottom of the market,” and create a five-year renovation and financing plan to minimize your monthly mortgage.
Next, try to understand how much future demand there is for the house. Home sales are still a little slow right now. But knowing there is pent-up demand from people wanting to move into the area will mean future home values will increase. If you have a 30-year plan to live in the home, it may really be worth buying in a slightly transitional neighborhood now, to reap greater rewards later.
As you can see, you can’t do too much research on “the buy”.
Need help? We can help you shop for a home and accompany you on home-buying visits, as well as offer project-pricing information so you can create a realistic buying price and renovations budget. This will give you the information you need to negotiate price with your home’s sellers. You will still need a home inspection performed by a certified home inspector, but we can provide a second pair of eyes. We’ll see renovations that should be made to meet code, but also improvements that should be made to enhance your experience of the home and its future resale value. We can create for you a schedule to get renovations made in the right order, when you can afford to do them, or when they absolutely must be done. Using our complete in-house “design to build” services, we can assist you through the many complicated steps between finding a great house you buy at the right price, creating a reasonable budget and design, and making it your home.