Think Twice Before Buying That Fixer Upper

Dated: 09/16/2016

Views: 251

Fixer-upper homes may not be as good a bargain as you think. A new analysis from Zillow Digs reveals 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.

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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.”

 

Empty bright room with one window, beige carpet floor.
Empty bright room with one window, beige carpet floor.

 

Curious what the fixer-upper discount is in your area? Check out the full data below!

Metro Renovation Breakeven Fixer-Upper Discount
United States $ 11,000 7.6%
New York-Northern New Jersey $ 12,000 4.4%
Los Angeles-Long Beach-Anaheim, CA $ 12,000 2.7%
Chicago, IL $ 19,000 13.8%
Dallas-Fort Worth, TX $ 6,000 5.4%
Philadelphia, PA $ 17,000 13.7%
Houston, TX NA NA
Washington, DC $ 15,000 5.9%
Miami-Fort Lauderdale, FL $ 4,000 2.9%
Atlanta, GA $ 4,000 4.9%
Boston, MA $ 10,000 3.6%
San Francisco, CA $ 54,000 9.5%
Detroit, MI $ 6,000 8.7%
Riverside, CA $ 3,000 1.2%
Phoenix, AZ $ 1,000 0.4%
Seattle, WA $ 24,000 8.2%

 
By Alexa Fiander on 

  

David Brewer

Real Estate is one of the most exciting investments one can make. After all, owning property is a large part of the great American Dream. The experience of buying or selling a home should be fun and ....

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