More consumers are considering purchasing a home that isn’t move-in-ready to save money. This trend is driven by the surging home prices and limited inventory, which has led many buyers to accept that they may not find a move-in-ready property. According to a recent RE/MAX survey, over half of prospective home buyers are open to purchasing a fixer-upper, whether it requires minor cosmetic updates or significant structural changes. The survey also found that 80% of respondents may adjust their homebuying plans in the next year, which could involve reconsidering the type of home they purchase, getting creative with financing options like borrowing from family, or even co-buying with others.
The affordability of homes remains a major concern for buyers as home prices, interest rates, and inventory continue to fluctuate. Despite these challenges, homeownership remains a priority for many, as evidenced by the willingness of buyers to venture outside their comfort zones to achieve this goal. According to RE/MAX President and CEO Nick Bailey, “Affordability is a key concern for home buyers, and our survey shows that they are willing to go the extra mile to make their dreams come true.”
The potential for a lower listing price is a significant motivator for 73% of respondents who indicated they’d consider purchasing a fixer-upper. Most buyers (68%) expect to spend less than $70,000 on repairs and renovations, while 10% are willing to invest up to $90,000.
Real estate professionals can add value by helping clients choose projects based on potential return on investment (ROI). A fixer-upper can be significantly cheaper to buy than a move-in-ready home, but buyers need to budget for the cost of renovations.
Frontdoor, a home repair and maintenance resource, recently conducted a study to identify the best markets for finding fixer-uppers at low costs and reselling them for a premium after renovation. The study scoured listings identified as “renovated” or “fixer-upper” and ranked cities based on the difference in average price between the two.
The city with the most fixer-uppers available is New Orleans, according to Frontdoor’s study. Nine percent of homes listed in New Orleans are labeled “fixer-uppers,” which typically cost about 45% less than homes that aren’t listed as fixer-uppers. Cities with an older housing stock, such as Cleveland, tend to have more homes in need of rehabilitation. In Cleveland, the typical home is 84 years old, nearly twice the national median. As a result, fixer-uppers comprise a higher percentage of listings there.
Frontdoor’s study identifies the following locations as having the most fixer-uppers on the market:
1. New Orleans
2. Albany, N.Y.
3. Cleveland
4. Memphis, Tenn.
5. Newark, N.J.
6. Anchorage, Alaska
7. Aurora, Colo.
8. Dover, Del.
9. Detroit
10. Milwaukee