Buying a Home? Don’t Forget to Factor in a Renovation Budget.

A couple of weeks ago, we blogged about our home-buyer consulting service, “Helpline for Home Buyers.” Yesterday, I got a call from a first-time home buyer who was considering buying one of two homes. She wanted to know a little about our services and how we might help her. In her case, since no offer had yet been made or accepted, I suggested that she get some free online remodeling cost information to arm herself with useful general information. I directed her to “Remodeling Magazine’s” website and their annual “Cost vs. Value Report.” That’s a great place to get good information about what typical remodeling projects will cost.

Keep in mind that when you are talking about older homes like those in Philadelphia, renovation costs get higher, as do the returns, or what investment folks call your “ROI” (return on investment).

If you think about it, a house without a usable kitchen or functional bathrooms is at a greater deficit than a home with functioning but slightly outdated facilities. Many old homes in Philly have five bedrooms and only one bathroom. That’s insufficient in today’s world, and it stands out to home buyers. Another common problem found with an older home is a truly old kitchen or very low-end kitchen that a flipper might have installed a few decades ago. Either way, these scenarios stand out as eyesores to anyone appraising a home, but they may mean the buyer is finding a good deal on the house.

Keep in mind a home renovation to an older home will typically include additional work that a newer home may not require — things like structural repairs, electrical system corrections, and plumbing upgrades to bring them up to code. These all add a lot to the cost of a kitchen renovation. It’s more of that “behind the walls stuff” I talked about in another blog entry, “The Hidden Facets of a Bathroom Remodel.”

Once our potential home buyer has chosen a home and has a good grasp of the budget impacts for renovating it, I will meet her at the property to discuss remodeling options she may be considering. I’ll help her understand the problems and solutions I see when I walk through the house. I’ll also help her ask good questions of her buying agent (who is hopefully working for her and not the seller) and push for a purchase price that works for her. With good information, she will buy her home at the right price and renovate at the right amount so she develops the value of her new home! We can even develop a schedule of phases to get renovations done in a manner that fits her budget and life goals.