Monday, August 26, 2019 / by Burt Horwitz
IF YOU THINK BUYING A FIXER-UPPER HOUSE IS GOING TO SAVE YOU MONEY, YOU MAY WANT TO THINK AGAIN
Porch dot com recently published a survey on turnkey homes versus fixer-uppers and found that even when fixer-upper homeowners stay within their budget, they end up spending about as much as homeowners who purchased a move-in ready house. So does it really make sense to buy a home that needs work? Buying a “turn-key” home may be the way to go.
On average, people who purchased a move-in ready home spent about $250,496, while fixer-upper buyers within their budget ended up spending about $246,891 in total. Meanwhile, fixer-upper homebuyers who went over budget actually spent approximately $25,000 more than turnkey homebuyers, the survey found. Their total spending ended up being about $275,741.
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According to the survey, the average purchase price of a fixer-upper was $199,819, while spending on renovations averaged $47,072 for those who stayed within their budget and $75,922 for those who went over budget on renovations.
Despite the fact that fixer-upper homebuyers don’t actually end up saving all that much money, savings were the top reason for purchasing a house that needed repairs, even across three generations. Sixty-three percent of millennials, 61 percent of Gen-Xers and 59 percent of baby boomers cited saving money on the purchase price as their reason for buying a fixer-upper.
Meanwhile, for respondents who bought a move-in ready home, the top reason was that they liked the home. Forty-three percent of respondents said renovations and repairs are inconvenient, 35 percent said they had no time for renovations and repairs and 28 percent said they had no money for renovations and repairs.
The report, which surveyed 1,069 homeowners in the U.S., also found that only 5 percent of fixer-upper purchasers finished under budget. Meanwhile, 52 percent finished on budget, while 44 percent finished over budget. Of those who finished over budget, they spent approximately 38 percent more than they planned. A new HVAC was the top project that went over budget (at 54 percent), followed by plumbing projects, the basement, bathrooms and new appliances, according to the survey.