There are lots of different buyers in the world of real estate but the common thread is that everyone wants to be able to get a deal when they buy a house. When a new buyer client calls who wants to buy a house that needs work, that’s usually code for that exact desire.
But what do you, the buyer, expect in that house?
And are you prepared, financially, to buy it… and to improve it?
Expectations: Are you looking for something that’s just dated? Needs new appliances, new cabinets, new flooring? Or something that just needs paint? (I honestly think buyers should approach almost all purchases as needing at least some painting, if only to customize the look to your own tastes.)
Will your financing allow you to buy a house that needs work?
There’s a reason why your REALTOR asks you to get a pre-approval before you start looking. One reason is to see how much you’re comfortable paying per month and in turn, how much house that mean you can buy. Another reason is to see what sort of property that means you CAN buy, based on that financing. If you really want to buy a house that needs work and you don’t have the cash to outright buy the house and improve it, you can use fix-up financing (there are FHA and conventional products for this… ask your loan officer). Even if the only thing in the house is that it doesn’t have the beautiful bathroom you’ve always wanted, you can finance that improvement into the purchase. (Check the minimum improvement amounts required with the product you’re using.)
If you are a first-time buyer, using FHA 203(b) (the traditional FHA mortgage), chances are that you won’t be buying a house that needs work, unless you have a Seller who’s willing to make repairs. FHA has minimum standards that the property will need to meet including things like a railing on a flight of three or more steps, no chipped and peeling paint, minimum life expectancy on the roof, working utilities, and functioning kitchen.
Talk with your REALTOR and your loan officer about what you are willing to accept before you look at properties. Let them help you set realistic expectations. Make sure what you can afford, not just the amount for which you’re approved. Much as your REALTOR will love working with you, the last thing they truly want is to work with you again, too soon, because you purchase the wrong property.