Fixer-upper homes may not be as good a bargain as you think. A new analysis fromZillow Digsreveals that the average fixer-uppers list for just eight percent less than market value, saving buyers only $11,000 for renovations before they break even.
Zillow Digs analyzed nearly 70,000 listings for fixer-uppers around the country to see how the homes’ list prices compared to their estimated values. If renovation costs exceed the home’s discount, then it may be more cost-effective to buy a similar home that doesn’t require renovations.
Of all the metros analyzed, fixer-uppers in Phoenix have the smallest cash discount, saving buyers just $1,000 off list price. This small savings upfront gives buyers very little financial leeway for renovations.
While no two fixer-uppers are alike, buyers are more likely to find large upfront cash savings on fixer-uppers in expensive markets, where just a small percentage discount could save buyers quite a bit of money to spend on renovations. For example, fixer-uppers in San Francisco are discounted only 10 percent, which is lower than other metros, but this still gives buyers $54,000 in upfront savings for renovations on the median home.
“Fixer-uppers can be a great deal, and they allow buyers to incorporate their personal style into a home while renovating, but it’s still a good idea to do the math before making the leap,” says Svenja Gudell, Zillow chief economist. “While an eight-percent discount or $11,000 in upfront savings on a fixer-upper is certainly a good chunk of change, it likely won’t be enough to cover a kitchen remodel, let alone structural updates like a new roof or plumbing, which many of these properties may require.”
Curious what the fixer-upper discount is in your area? Check out the full data below!
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Data last updated: January 16, 2018 6:50 PM
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