With surging interest rates, runaway inflation and record low inventory coming to a head, many prospective homebuyers are navigating this difficult market with a DIY mentality. And nothing screams DIY like a fixer upper—sales of which have been increasing over the last several years, with the upward trend expected to continue.
For DIYers, as well as flippers and investors, it’s easy to understand the perks of buying a fixer upper—high risk, high reward with less buyer competition for unwanted or neglected properties. However, ongoing price increases for labor and materials could potentially discourage all of these buyers, who would otherwise jump at the chance to buy one of these properties and do their own renovations.
That’s where you come in. It’s about finding the perfect balance of, on one-hand, providing a blueprint for the financial undertaking and potential market cons, while highlighting the pros on the other—whether that’s the home’s location, the potential ‘ta-da’ transformation results or the lower cost than a move-in-ready home. Providing them with the full-picture and guiding them in the right direction thereafter are invaluable traits every agent should demonstrate.
Here are four tips for your fixer-upper buyers:
1. Set the offer
Those willing to purchase a fixer upper most likely have collateral in place to ensure that unexpected renovations and structural issues can be resolved, but for that reason, they’ll want to keep the asking price low. Explain that working with an experienced agent will help them with important considerations like calculating repair costs, assessing the property’s selling points instead of its flaws, arriving at the right offer and, of course, expediting the sale.
2. Know your history
Michelle Drum, a real estate professional who recently participated on an NAR Center for REALTOR® Development podcast, suggests that when people are looking to purchase a historic fixer upper, they’re not just interested in the building, but also its history.
Do your research on the property’s history and be prepared to share that with your buyers. If the home is more than 50 years old, it’s considered historic, which can potentially increase the value if it exists on a city’s national registry. Take note of aspects of the home that potential buyers might want to renovate or keep in their original integrity, like crown molding, wood beams, uncommon floor plans or glass-stained windows (if they’re looking at an old Victorian). Building relationships with area historians can be advantageous for agents too, as they may be able to provide you details of the property that could not only further increase the home’s historic charm to the buyer, but also its value.
3. Play up best features
Point out standout features of the home to your buyers. Maybe it’s a grand staircase right in the foyer, or a hexagon turret backlit by the setting sun. Note desirable features outside the home, such as having a private lot or a desirable neighborhood, which can also boost interest of the buyer.
4. Be honest
Make sure you get to know as much about the home as possible from cosmetic issues to the potentially more problematic and costly ones, including those that your buyer would need to secure permits to do any future renovations. The ARV (after-repair-value) is the most important number investors and flippers care about. Pinpointing this number will help you minimize delays and close faster.
Joey Macari is RISMedia’s associate editor. Email her your real estate news ideas at email@example.com.