By Charlene Peck
With the average price of Ontario homes on the rise, the Ontario Real Estate Association (OREA) recommends potential homebuyers look beyond “turn-key” properties that are move-in ready and consider homes that are in need of renovation.
“Buying a fixer-upper can be an excellent way to build sweat equity in a home especially for buyers with limited resources,” says Kelly Purcell, president of the Parry Sound Real Estate Board. He urges buyers to watch for properties that are currently, in livable condition but need attention. Homes that need paint, trim, flooring refinishing and other obvious repairs and decorating – that may require a lot of work, but not a lot of money – are often passed over by buyers, says Purcell.
“They can be the ‘diamond in the rough’ if you can use some vision and are prepared to put up with a less-than perfect home until you have time to complete the work,” says the local real estate board president.
Some traps buyers acquiring this type of home fall into include under-estimating the costs and the real amount of work involved.
“Do your homework on materials and probable time to carry the project through,” Purcell recommends. “Be sure you are not buying a property with other problems that are very expensive or impossible to overcome.”
Examples buyers could face might include a wet basement, huge plumbing, wiring or structural issues, rot, and other problems that a qualified home inspector might find.
“A good home inspector should be able to help you avoid buying someone else’s serious problems,” advises Purcell.
“Most home purchases are made with the benefit of a home inspection and in some cases, the home inspector has been responsible for saving the buyer from making a disastrous mistake.
“Knowing what you are purchasing is the key to ensuring that you protect yourself against making a bad purchase or at the very least, verifying that you are not setting yourself up for any nasty surprises. Home inspectors will often point out repair and maintenance items that will save you the fee you pay many times over.”
Local realtors can identify properties that will build equity and help potential homebuyers research what the top homes in the neighbourhood are selling for.
“Over-improving a home in a neighbourhood is a very common mistake that homeowners make,” cautions Purcell.
“If considering making a major renovation or buying a home that requires a lot of extensive renovations, be sure to consult a realtor to confirm that the end product will have a high enough market value to justify the cost. Renovation costs can easily get out of hand with unforeseen problems, changes and upgrades. Always be sure to consider this in your budgeting and planning.”
Realtors can help potential homebuyers review their budget and stick to it, whether they are considering a fixer-upper or a property that needs no improvements. An OREA video about how to calculate home affordability is available at “http://bit.ly/OREAaffordability” OREA president Barbara Sukkau recommends that before looking at any home, potential homebuyers discuss with their realtor what their budget is for both the property and any possible renovation.
“Even though it is difficult, remain emotionally detached when looking at homes,” Sukkau says. “And if a property is beyond your means, then move on to the next one.”
Mike Ryder, real estate broker with ReMax Parry Sound-Muskoka Realty Ltd. suggests that cost can sometimes be weighed against how willing buyers are to complete the required renovations as they can afford them.
In addition to the time and money factor, Ryder believes that it’s important to understand a buyer’s skill sets when viewing homes in need of TLC.
“It depends on the buyer’s abilities and the degree of structural work they can do,” he explains. “Some just want something they can paint and do cosmetic work on. Others are prepared to do alterations, making rooms bigger to meet their needs; extending a building; changing from an oil or electric heating system to natural gas in town; or upgrading the wiring.”
In the spring of 2008, he showed a 621-square-foot home, to local contractor, Berj Dermenjian, who enjoys carpentry and home refurbishing. The client liked the home’s location on a quiet street in a country setting and says he could see potential in it.
“I was inspired by the property and the fact that the price was right,” says Dermenjian, who paid $60,000 for the place. “And when I started looking at how an addition could be put on, it really lent itself to a straightforward addition.”
He gutted the interior, designed a floor plan that maximized space and added a 400 square foot addition. A new septic was contracted out, as was the insulating. Drawing on his carpentry, plumbing and electrical skills, Dermenjian completely renovated the interior including the kitchen and bathroom. He installed a new foundation on the addition and an entire new roof. Outside, he landscaped the property and added a fence. An artisan design in timber and stone around the front entrance completely transformed the exterior appeal.
Some properties can be improved without major reconstruction.
Purcell describes a good fixer-upper as a home that shows poorly, one that other buyers pass over without considering what it can be with some hard work and minimal-to-moderate expense.
“It may have bad curb appeal, be messy, have a lot of junk in the yard or need exterior paint, etcetera,” he says. “It may present badly inside due to grime and smells etcetera.
“Most of these problems can be dealt with but require a lot of work, soap and water and paint. Stay away from problems that you are ill-equipped or not qualified to deal with. Don’t underestimate the work, time or expense.”