In an informative video, Sean Reilly with masshomesale.com discusses reality TV shows where the “protagonists,” instead of buying a new home that is above their budget, buy a fixer upper and spend the remainder of their budget on renovations. Think Property Brothers.
Reilly points out that these shows have unrealistic budgets and timelines and do not show the complicated process of getting the funding to buy a fixer upper and carry out the renovation. In short, unless you are buying with cash, it is not the same process as just buying a finished home.
There are ways to raise the funds to buy a fixer upper and fund the renovation, but the loan products are limited and have many requirements in addition to the usual mortgage conditions. If you do not qualify for special rehab programs, such as the FHA 203k, then you have to pay for the renovations in cash.
“There is a big difference between buying a $400,000 house because that is what you qualify for and buying a house for $280,000 and putting $100,000 into it. Technically, that is $380,000, so you are ‘under budget.’ But you need to have $100,000 to do the renovations in addition to the down payment and closing costs to buy the house. They don’t talk about that stuff, but it’s a big deal,” Reilly says.
While these shows can be fun to watch, think about them as be similar to watching the Apprentice versus going for a job interview. “They are entertainment, not reality,” he quips.
So if you’re in the position of selling your fixer-upper, you can wait (and wait and wait) for the right buyer to come along, you can wait for HGTV to rescue your sale, or you can call us! We’re looking for renovation projects AND we can pay you cash for your home. When you’re ready to sell, FCD Real Estate Investments is ready to buy – we’re only a hassle-free phone call away.