Comments on: Renovations And House Price – Reader Question

By: Gas Prices, Upcoming Business Launch, Crawling and More!

Gas Prices, Upcoming Business Launch, Crawling and More! — Wed, 18 Jun 2008 13:31:30 +0000

[...] Renovations And House Price – Reader Question [...]

By: Mr. Cheap

Mr. Cheap — Thu, 05 Jun 2008 18:16:19 +0000

Guinness: I found the same thing. Got a condo with “cosmetic” work needed (new flooring, patch up walls and repaint). I originally intended to do it all myself as a learning exercise, freaked out when I was going to start and ended up contracting out all the work. Even with hiring people, there was a pretty constant stream of things I had to check out and decisions I had to make (I wasn’t working at the time, between contracts and intentionally focusing on the renos).

By: guinness416

guinness416 — Thu, 05 Jun 2008 15:02:17 +0000

You have to have the time too. We lowered/finished our basement a few months ago, and without my husband being between jobs and able to supervize and answer questions it wouldn’t have happened. I work with a guy who bought a fixer and THEN figured out that given their workloads neither he nor his wife would be able to give spec’ing, bidding or performing the project much time at all (and we work in construction….).

By: nobleea

nobleea — Thu, 05 Jun 2008 03:46:23 +0000

I wasn’t suggesting that you actually get the seller to make the changes. More of a tactical move to open their eyes at the amount/cost of work involved. With all the work required, if you put it all as a condition, I doubt the seller would accept.

By: Four Pillars

Four Pillars — Thu, 05 Jun 2008 01:12:57 +0000

Nobleea – I agree with Cheap – I ran into this situation with my first house where the owners put in a new roof and they got the cheapest of cheap roof.

Matt – nothing wrong with buying a fixer but as you say, you have to know what you are getting into.

By: Matt

Matt — Wed, 04 Jun 2008 18:59:19 +0000

We just recently bought a house that needs a bunch of repairs and the end result for us will be that in the long term we’ll end up making a lot of money on the property. Buying a fixer even if you might need to put money into the house can be well worth the investment. But you have to know the neighbourhood and the market you’re buying into or you might be wasting your money.

In our case I believe we got the house at a steal because of the few pieces of work that need to be done to it.

By: Mr. Cheap

Mr. Cheap — Wed, 04 Jun 2008 15:46:27 +0000

Nobleea: That’d be a good idea to make a point, but typically its not considered the best idea to get sellers to make repairs. Why? Because they have no vested interested in making sure long term quality work is done. They’ll hire the cheapest and use the cheapest materials as long as it’ll pass inspection.

With respect to the idea of coming back at a later date with another offer: Violent Acres has a great post where she mentions using this strategy: http://www.violentacres.com/archives/121/fleecing-old-ladies

She actually DROPS her offer to punish the seller for not taking her earlier offer I love it.

By: Nobleea

Nobleea — Wed, 04 Jun 2008 15:09:07 +0000

An idea for showing the seller how far out their pricing is would be to make a reasonable offer, but then put conditions in that they have to install new furnace, roof, siding, windows, etc.
BTW, replacing the windows and furnace might get you a rebate cheque from the government.

I definitely agree that making an offer within your range now and then coming back in a month with another offer of the same (or lower) amount is a good idea.

The PITA factor has been mentioned and it is certainly a big factor. Especially if you’re doing so much work.

By: Four Pillars

Four Pillars — Wed, 04 Jun 2008 14:53:04 +0000

Brad – good comment.

Billy – very true. The pita factor or the two mortgage factor is yet another thing that some buyers will just ignore.

Mike

By: Billy

Billy — Wed, 04 Jun 2008 14:42:38 +0000

Don’t forget to also factor in extra costs for somewhere else to live during the renovations (or a PITA factor if you plan to live there).

While the list above (windows, furnace, roof(which I assume means shingles)) may be possible while living there, many other things are great inconveniences — electrical, plumbling, kitchens, full on additions, etc.

Depending on the extent of the renos, you may even decide to carry both the old and new house for some period of time. As someone who has done this, it can be stressfull seeing double mortgage payments come out, the bank may want to have a firm purchase on the old house to secure your bridge loan — which means a long closing to overlap the new house renos and a myriad of other stressors.