You’ve seen the ads. “Diamond in the rough” or “Just needs a little TLC!” Chicago-area real estate for sale with headlines such as these can bring in more potential buyers. It indicates that just with a little bit of elbow grease, the property will increase in value, far beyond its listing price. Sometimes though, “fixer-upper” is in the eyes of the beholder. Sometimes a fixer-upper needs too much fixing.
For example, you visit a home for sale that says it needs a little work. You and your agent take a visit and from the street you can easily tell that, “Yes, it does need a little work.”
You proceed to inspect the property and see the fireplace has a few cracks in it and the basement has signs of water entry and the water pipes make a rattling noise when you turn on the faucet. Oh, it could use some new paint, too.
So is it a fixer-upper? Unless you’re a seasoned real estate investor with a general contractor on speed-dial, you need to sit down with your agent and do a little homework. It’s easy enough to figure the cost of caulk, paint and other cosmetic touch-ups.
But for other jobs such as the problem with the chimney or the rattling in the pipes, you need to have a licensed contractor evaluate the current condition and the cost to repair. If the repairs can be made for an amount less than or equal to the value of good properties in the area, then the fixer-upper might be a good deal. You and your agent will decide.
Now let’s pretend that after an inspection, that same property revealed foundation problems and a bad roof. Is the fixer-upper worth it now, after the foundation and roof is repaired? And what about the mortgage company, do they care?
Yes, they care. Before a mortgage can be issued on a home, the home can’t be in need of significant repairs that can affect the livability of the property. If the home is found to have a bad foundation or roof, a lender won’t make a loan on the home until the repairs are made and re-inspected. Fixer-uppers can indeed be a diamond-in-the-rough. Sometimes though they simply need too much fixing.
The Hancock Group with @properties specializing in downtown Chicago Real Estate including The Gold Coast, South Loop, West Loop, Streeterville & Lincoln Park for over 10 years. Call/Text/Email Us today at 312-296-9300, or Find us on Google+