I want to buy a house that I can fix up.

Vicki Dimmich
Vicki Dimmich

I want to buy a house that I can fix up.


When you buy a potential rehab house, there are a lot of things that you need to think about before you sign a contract. We’re very familiar with many of the joys, headaches, and pitfalls of taking on a project like this.

1. Decide what you can do yourself

TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don’t know how to do will take longer than you think and can lead to less-than-professional results that won’t increase the value of your fixer-upper house. 

  • Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.
  • Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?

2. Price the cost of repairs and remodeling before you make an offer

  • Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do.
  • If you’re doing the work yourself, price the supplies.
  • Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.

3. Check permit costs

  • Call City Hall and check if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money in the short term, but it *will* cause problems when you resell your home and probably cost more than the permit fee to fix.
  • Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.
  • Factor the time and aggravation of permits into your plans.

4. Doublecheck pricing on structural work

If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems. 

Get written estimates for repairs before you commit to buying a home with structural issues.

Don't purchase a home that needs major structural work unless:

  • You’re getting it at a steep discount
  • You’re sure you’ve uncovered the extent of the problem
  • You know the problem can be fixed
  • You have a binding written estimate for the repairs
  • You are planning on living in the home for at least 5 years.

5. Check the cost of financing

Be sure you have enough money for a down payment, closing costs, and repairs without draining your savings. 

If you’re planning to fund the repairs with a home equity or home improvement loan:

  • Get yourself pre-approved for both loans before you make an offer.
  • Make the deal contingent on getting both the purchase money loan and the renovation money loan, so you’re not forced to close the sale when you have no loan to fix the house.
  • There are several programs out there to help fund renovations and repairs. Some of them are only available on HUD-owned homes or Fannie/Freddie-owned homes, some are dependent on the area or the city. St. Louis City has some funds and tax incentives available, as does the state of Missouri. We can put you in touch with people in these programs.

6. Calculate your fair purchase offer

Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs and the costs of reselling.


For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.

A comparable house in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement. 


The cost (with cushion) to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Factor in about 7-8% of your target sale price as the cost of selling. From there, it is easier to figure out what your top offer for the property will be. 


7. Include inspection contingencies in your offer

Don’t rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:

  • Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a trained eye to usually find the water leak behind them.
  • Radon, mold
  • Sewer line. A collapsed sewer line can ratchet your remodeling costs way up if you have to repair or replace it. Make sure you know before you buy.
  • Pest inspections - Termite and other wood-eating insect damage may make what seems like a cosmetic update into a gut-rehab.
  • Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or negotiate money towards closing costs to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don’t want to deal with.

If that happens, this isn’t the right fixer-upper house for you. Go back to the top of this list and start again.

This article was edited from a publication of the National Association of Realtors.


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