You’d think that with nearly a decade and half of real estate sales under my belt, there’d be few surprises left in this highly-attuned climate where everybody is seemingly an expert, thanks to HGTV. (Yes, I'm addicted.)
Wrong; there’s always something new to learn with each and every transaction.
As I have been busier than ever, I've had my fair share of hard-earned lessons this spring, but it's been buoyed by an appreciation for the optimism and innocent thinking of many young "experts." (My heart really goes out to them.) And admittedly, there's a bit of laughter to be had as well (cuz in this challenging market, you gotta keep your sense of humor!)
Currently, I’ve got a “fixer” listing in the Clinton neighborhood, not far from Lake Merritt in Oakland. Advertised as a “diamond in the rough," this circa 1926 traditional stucco home has attracted all kinds of attention far and wide. It doesn’t hurt that it’s strategically priced at $625,000 which makes it incredibly attractive for first-time homebuyers and flippers alike or that's it's all over Facebook. Hey, it's a tumbleweed waiting to be transformed into a flower!
“Bring your architects, contractors and your vision,” emphatically states the marketing, and when Buyers step into the foyer, they should understand why: peeling paint, broken windows, water damage, holes in the ceiling and a whole host of "fixes" await the ambitious Buyer, which is to say that this neglected home has seen better days.
Unlike most of my listings which go through the dramatic production of painting, staging and landscaping, my Seller purposely chose not to present this home as anything but what it is: A MAJOR FIXER! Ironically, homes with "potential" can often outplay homes that are "turn-key." (Go figure.)
On the flip side (see how I did that?) this nicely-proportioned home also offers hardwood floors, beautiful molding, a wood-burning fireplace, an excellent floor plan, abundant natural light, a large lot, and an up-and-coming location making it the "it" property of the week. (Thanks for your support.) From my point of view, it's a fantastic opportunity! (From yours as well given the 40+ disclosure packages I've sent out thus far.)
Even so, there's a LOT of structural and mechanical work behind the walls and underneath the house that needs serious attention before the new owners can begin to create that sexy kitchen and cool bathrooms they've saved on their Pinterest and Houzz boards. Yep, this one may need to go down to the studs, folks, but once done, it's going to be a GREAT house. (No joke.)
Here's the part that keeps me laughing . . .
“So is there anything "major" that needs to be done?" the prospective Buyers invariably ask after walking through the house and then circling back to have a in-depth conversation.
Are you kidding?!? (You have eyes, right?)
"You mean apart from the kitchen, bathrooms, roof, floors, windows, sewer lateral, termites, dry rot, and potentially, the foundation? Ummm, I guess not." (Okay, that’s not how I really respond.)
Instead, I politely answer, “define 'major' for me,” recognizing that everyone may have a different definition of this word. For first-time homebuyers the "To Do" list may be overwhelming, while professional flippers are going to be far less intimidated, but make no mistake - it's MAJOR!
"So the foundation's okay?" (Geeze, that's not what I said at all.)
Years ago, when my husband, Cliff, and I acquired fixers in San Francisco (it’s all we could afford), I’d tell my Agent, “bring me anything short of a foundation," and I meant it. Six renovations later, a rotating foundation wouldn't automatically scare me away (although drainage issues might). Having grown up the daughter of a Broker who favored distressed properties, all the women in my family know how to paint, wallpaper and operate a drill . . . so bring it on!
In short, depending on your level of experience, expertise, finances, tolerance, and risk aversion, a major fixer may be right up your alley – as long as you understand that it’s MAJOR – not minor - work that’s required to set things right.
Ignore what HGTV tells you; these houses are not going to be flipped for $60,000. The materials alone are going to cost far more, not to mention labor, design, fixtures, finishes, appliances lighting, floors, permits and a host of other expenses that these one-in-a-million homeowners clearly aren’t being charged for on Love It or List It, Property Brothers, or Fixer Upper.
In the REAL world of renovations (and I DO love a house that offers upside potential), about 50% of your costs are going to be associated with materials and 50% are going to be your contractor/architect fees. Moreover, everyone living in the Bay Area, be it a day laborer, or a skilled architect, has housing costs to bear and that too, gets factored into our higher costs of renovation and labor costs here in California.
In any case, the way to determine just how “major” something is requires thoroughly READING the disclosures, reviewing them with your Agent, consulting a contractor, and obtaining REALISTIC numbers as to the costs of taking on that “fixer” you’ve been dreaming about.
Because dreaming is great, but if you don’t have a plan (or the budget) to get past the fantasy, you may be living in a house with major flaws and no money to address them for years to come, and that's nothing to laugh about.
Believe me, NOBODY needs to learn that lesson.
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Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.