4 Reasons to Buy a Fixer-Upper Right Now
Last week, we talked about the advantages of listing your home for sale in the winter months, flouting all conventional wisdom that has always insisted that the spring market is THE TIME to sell.
This week, we want to talk to you Buyers out there. Especially you small investors who are looking for a fixer-upper or flip project, or something you can put some sweat equity into. The last couple of months of the year can be prime time for you to find that diamond in the rough. Here are a few reasons why:
YOU GET TO SEE THE PLACE NAKED
November in Southern Ontario can look a lot like January or February, which is to say, barren of foliage or landscaping beauty; exposing the hard surfaces like walkways, foundations, and exterior finishes of a house. With the trees bare, and the flowers and bushes pruned down, you see the property at its most raw.
As a potential flipper, your goal is usually to find the “ugly” and turn it into something attractive. You also need to know how extensive the required work will be, so that you can prepare an accurate budget for your project. This time of year is actually quite ideal for that! As you walk through, you will get to feel how drafty or cold, or even leaky, the house might be, thanks to the weather being less than pleasant a lot of the time. These are insights you don’t always get if you buy in late spring or summer.
FEWER BUYERS OUT LOOKING FOR FIXER-UPPERS
Since the majority of buyers follow the traditional schedule of hibernating through the winter and coming out to shop in the spring, intrepid investors who keep their eyes peeled in the colder months find themselves with less competition for potentially profitable properties and fixer-uppers.
With fewer buyers in the market, you reduce your chances of being caught up in a multiple offer situation. It could still happen, of course, but you likely will be competing with one or two, instead of 10 other interested parties.
In the month of December 2018, our office reported approximately 4,000 buyer showings vs 14,000 in the month of May (peak month of the year).
These same months reported sale prices of $489,754 (December 2018) vs $547,029 (May 2019) (11.7% increase)
List to sale ratios were also softer in December (96.19%) vs (98.63%) in May.
As you can see, less showing traffic almost always translates into fewer offers and lower prices. The opposite is also true.
WINTER SELLERS ARE MOTIVATED SELLERS
Selling and moving at this time of year isn’t the first choice for most families. If a house is for sale now, it could mean that there has been a change in circumstances – perhaps even a death in the family- that requires them to sell a property.
We are not suggesting that Buyers behave like vultures to take advantage of someone who is going through a hard time. However, when circumstances demand that a home be listed for sale under less than ideal circumstances, a quick sale is sometimes worth more to the Sellers than a high sale price. This can be especially true if the property is in need of extensive repair work or immediate maintenance. These Sellers are usually aware that their offering is a fixer-upper.
TIME IS ON YOUR SIDE
Assuming your project will be a full-time venture, and can be completed in 3-5 months, you could complete a renovation just in time to add back some attractive landscaping and list your flip in that hot spring market that the masses will always appreciate.
No matter what time of year you buy any fixer-upper, be sure to do all your due diligence with the help of your realtor. Research comparable sales in the area, find what other homes have sold for, both before and after renovations like the one you have in mind.
Have the property fully inspected by a licensed home inspector if you are not qualified to perform such an inspection yourself, and investigate anything that could impact the resale value: things like zoning, whether there could be a buried oil tank on a property, the presence of lead water supply pipes, etc. Know what you are getting into, and make offers only after fully calculating the cost.
Spending the winter months working on a successful flip project is immensely satisfying – and a For Sale sign on your lawn in spring time could bring you a well-deserved reward for your hard work!