It doesn’t take too long while watching HGTV programs before you’ll come across a show focused on taking a distressed property from dowdy to WOW! For instance, Texans Chip and Joanna Gaines of the popular show, Fixer Upper, demonstrated when the right contractors and designers are consulted, buyers can uncover a home that was a hidden gem. Each episode is a lesson in hiring contractors plus a home inspector for an informational evaluation before making an offer. There are financial gains to be made from purchasing this type of home if you’re familiar with fixing up homes and all everything this involves.

As you cruise through home listings in the newspaper or online, you’ve read at least one listing written as a “handyman’s special” or “a fixer upper.” Curious what this description really means? The seller is offering a distressed home—a home typically in need of numerous repairs or it could be in poor condition.

In general, a handyman’s special or fixer upper are sold “as is” so any necessary repair costs are up to you to finance.

Additionally, you may notice foreclosure homes listed as a distressed property with the listing description indicating a lack of appliances, damaged walls/floors, or having electrical or plumbing issues. It’s wise to reach out to a REALTOR® with experience in distressed properties to advise you on purchasing such a home and its after-repairs value potential. I’m happy to answer any of your questions about purchasing a fixer upper plus share with experiences from buyers who have uncovered some home treasures.  

Possible Surprises to Be Aware of

It’s important to understand because of the home’s condition not all distressed properties can meet a lender’s requirements. Do your due diligence and don’t skip asking for an appraisal. The lender will review the results of the report and assess the home’s value and the probability of the home being lived in. Oftentimes securing a prequalification loan first will allow a buyer to come in with an all-cash offer—becoming a stronger bidder on the home.

These types of homes often come with an increased amount of paperwork before you can take possession of the home. It takes some patience to maneuver through this process but be assured as your agent, I’m by your side each step of the way. I’ll be available to answer questions and help keep to everything moving along smoothly.

The necessary costs for repairs can make one gasp if they aren’t prepared. To guard against sticker shock, it’s wise to seek out at least three estimates from trusted repair services and contractors.

Know your true cost is more than only the listing price. It’s also very important to know any neighborhood restrictions, homeowner's association fixed fees/costs, potential assessments, taxes or any local entity sales charges to ensure you are fully aware of any additional holding costs going forward.

The Benefits to Buying a Fixer Upper

Because the seller is often in the position to want to sell and sell fast this puts a homebuyer in a good place to purchase a low and affordable home. This has the potential to save you money going forward.

Because distressed homes are typically being sold below market value, an investment buyer with access to cashflow and knowledgeable in repairs has an opportunity to make a nice profit should they want to resell the home later. Whether the home becomes a rental property or a new home for the homeowner, having the freedom to customize and remodel the home to your liking is a plus. Remember as the value of the home grows, your equity increases too. If you have questions about buying a distressed home, don’t hesitate to ask.   

Since 2004 Sara Lyn Nguyen continues to bring a wealth of knowledge and expertise about buying and selling real estate around the Houston area to those she serves. Sara is a multi-year award winning REALTOR® and relocation specialist where her clients trust her to have up-to-date information on the real estate market. She has been one of Gary Greene’s Multi-Million Dollar Top Producers and was the #2 Top Producing agent in 2020 citywide. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Fort Bend/Sugar Land and the surrounding region.