March 14, 2011
This is the 2nd part in an occasional series about buying and renovating a handyman special, also called a fixer, Part 1 discussed the process of completing a needs assessment and beginning your internet search. This installment will focus on touring the houses you selected on the internet and making your selection.
You first step in this journey is to select a Realtor®. When buying a handyman special your choice of a Realtor® is critical. You must find one that truly enjoys working with fixer uppers, and doesn't mind going on property tours with a flashlight, boots and possibly a crowbar. Ideally, you also want a Realtor® with some construction experience, either hands-on or managing their own renovation projects or flips. At this stage of the game you won't be bringing in your contractor or an inspector so a Realtor® with construction experience can point out some of the major flaws and issues that may affect your decision. There are more Realtors® with this background than you think so make sure you ask the question.
As you drive up to the house, check out the neighborhood. Make sure this is somewhere you feel comfortable, you will be spending a lot of time here and you will have thousands of dollars worth of tools and equipment on site, so it is worth considering the security of the neighborhood and the site. When I arrive at a property the first thing I do is go inside and get a feel for the house and the layout. If I walk in and there is nothing I can do to improve the layout to make it livable, I don't spend anymore time at the house. If you are new to the remodeling and repair game, solicit ideas from your Realtor®. The first house I did, I stayed locked into my floorplan because I was a little hesitant about tearing down walls and cutting new openings in the side of the house. Once you do it a few times it's very easy but it helps to have advice the first time.
When I'm inside the house I also get a "feel" for the house. I'm a strong believer in instincts and sometimes a house just doesn't feel right. It's hard to describe, but I'll try. If a house engenders a physical reaction in me, like a strong odor, or a slight nausea, I don't worry about it. The worse a house stinks the more profit there is to be made, and I'm very sensitive to mold/mildew so if I get a little queasy in a wet area, I know that there's water and that doesn't bother me either because I know it can be fixed. But if I feel uneasy in a house, a little nervous, or have an instant and deep dislike for a property I move on. I have walked away from houses in seemingly better condition for less money because they didn't feel right. I know this seems like an overreaction, but trust me, you can't talk yourself out of how you feel about a house and that initial feeling colors the rest of the transaction and the remodeling. You're much better off moving on and finding a different house.
Next I go outside and look at the grounds and outbuildings. I try to figure out how the sun is going to move through a lot, if the parking makes sense, if there's a good space for a deck and patio. These are all lifestyle decisions for me. Always remember that the payoff for what is going to be a long and arduous remodeling journey is a home that you are going to love living in, so if you enjoy being outside, make sure you see the same potential in the lot as you see in the home.
Finally, I look at the house slightly more critically, I take some pictures and I make some notes. Ask your Realtor® to provide you copies of the MLS sheet, number the sheets in the order you visit them and number your notes with the same code. One final tip, take a picture of the car, your foot, anything in between houses so you can be sure when the pictures of one property stop and the next one starts. I know, you're laughing now, but after you've seen 10 or 20 houses that are all in bad condition they start to look the same. Also, there are going to be some houses that you don't like at all so you won't have any pictures and that throws the whole system off if you don't document it.
The documentation is critically important. Trust me on this, you will not remember key features from one house vs. the next when you and your spouse sit down to discuss them the next day or even that same evening. TAKE NOTES.
These notes don't need to be elaborate, if you don't like a house, the note can be as simple as "NO". On houses that you have some interest in, write a brief description of what you would do to the house like "siding repair, needs roof, open up kitchen" and how much you liked the house. Then move on to the next property on your list.
You will not be making any decisions today, you are simply weighing your options. If your Realtor®, is someone who has gone through this process before they will understand. If he/she hasn't he will say things like, "This is a really great deal, you should make an offer today", that is a bad idea. I know a few experienced flippers who can see a house, weigh the numbers, come up with a repair estimate and an offer price while sitting at a property but not very many. The ones that are capable of doing this have done literally hundreds of property evaluations and usually have enough financial backing to lose a little money here or there if they are wrong. Plus they don't live in the houses, the stakes are much higher for you.
If you absolutely fall in love with a house and you think it's perfect, then make an offer. But make sure you have iron clad back out clauses that will allow you to change your mind without losing your earnest money. There are a lot more evaluation steps that need to be completed to see if a house is workable and they need to be completed or you are going to set yourself up for some serious heartache.
The next part of this series will talk about the more detailed property evaluation and preparing rough cost estimates for the work to be done in order to determine your offer price.
Thanks for reading,
Tamara
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