Buyers Should Beware of Fixer-Uppers

Before you get into the “fixer-upper” business, learn the ins and outs of fixing homes up.

Bob McAnarney, owner of AmeriSpec Home Inspection Service in Fayetteville, warns clients of the financial hazards that could await them when investing in homes that need substantial refurbishing.

“The problem people run into is that they are so enamored with the style and character of older homes that they forget to keep a lot of their reserves in their account to pay for things that need fixing up,” McAnarney said. “And if you don’t have the skills to fix a lot of the things, you’ll end up paying through the nose for a professional to do the repairs needed.”

McAnarney advises anyone considering the purchase of a home in dire need of repairs to first have a home inspection and then ask around to find a reputable repair business. Aside from being sure of the individual’s or the company’s reputation, keep in mind that estimates can be expensive. Most repair businesses charge a fee for estimates if they don’t get the job.

Individuals with the knowledge of home repair are a step ahead of the game. Having a professional do the repairs could cost four times as much as it would for the buyer to do them, McAnarney said.

Housing economist Robert Sheehan performed an analysis in 1998 of a hypothetical brick house built in 1968 that was purchased at $38,300.

After 30 years, the house would have been worth $250,200. Sheehan used standard industry sources to estimate the lifespan of various components as well as the cost of labor and materials. The study found that the cost of keeping the home up to current standards would be four times that of the original purchase price.

Experience is invaluable. Therefore, first-timers should talk with someone who has experience dealing with older or damaged homes. First-timers should really get to know what they’re getting into, McAnarney said.

“If you’re a new buyer of an old house, you don’t know what you’re in for,” McAnarney said. “It can get really dicey.

“But if you’ve had restoration experience, that would be a tremendous benefit. Contractors want so much money. A lot of their prices are really out of line. The pricing game is something most people don’t expect to get into when they buy an older house. But it’s amazing what it costs to fix things nowadays.”

And, McAnarney said, many contractors will charge double on a small job such as house repairs as opposed to a large-scale project.

While some folks like the idea of living in a home half-a-century old, a home inspection before the purchase can either prepare the buyer for costs that lie ahead and lead to additional repair money from the sellers, or scare off the prospective buyer altogether.

Anything from chimney flues that leak to pipe, furnace, electrical, roof and wood problems could make the difference between a sensible purchase or a nightmare.

“Talk about high risk and being a money pit,” McAnarney said. “A lot of homes 40 years or older almost all have damage from wood-boring insects. Some of them have been well-maintained, but a lot haven’t been. They just got by each year. I’ve seen them where instead of scraping off old shingles there would be four or five layers of shingles.”

A home inspection, which McAnarney said could save the buyer $30,000 or more in some cases, costs $200 to $400, depending on the size and the age of the house. An inspection takes two to three hours.