You can buy the worst house on the block among a bunch of other ugly, rundown fixer uppers, or you can buy the worst house on the best block, among a bunch of fixed up or newer homes. The latter choice is the smartest. But either way, it's a good financial move.
Benefits to Buying the Worst House on the Best Block
You can change a lot about a home -- its curb appeal, exterior and interior -- but it's very expensive, almost prohibitive, to change the location. There is a reason we cling to the three most important words in real estate: location, location, location.
- The nicer homes on the street will pull up the value of the worst house on the block after it's fixed up.
- If a seller had the money or the time to fix up the worst looking house on the block, it would not be the worst house on the block, and it would cost more.
- Other buyers might pass up this home, calling it an eyesore, which will leave fewer potential bidders for the home.
- Buying the worst house on the block is often an affordable way to move into an otherwise unaffordable neighborhood.
- The desirable location will help to ensure the home maintains its value down the road.
Tips For Buying the Worst Home on the Block
The neighbors will be thrilled you bought the home, trust me. They might not ever say anything to the existing owner, but every day they drive by that house, you can bet they are wondering to themselves why the seller has let the home fall into such disarray. They'll shake their heads and tsk, tsk under their breath too, but you won't catch them over there mowing the lawn. They'll simply go about their daily business and complain to each other about its condition.
Here is how to get started:
- First, pick your neighborhood.
Ideally, you want an area in high demand. The best locations are those that offer residents access to good schools, parks, entertainment options, local interest and educational opportunities, shopping and good transportation. Pride of ownership is evident in these types of neighborhoods.
- Next, hire an agent who specializes in the neighborhood.
A neighborhood specialist can be invaluable and give you information you can't get from an agent who doesn't know the area. An agent who sells a lot of homes in this neighborhood will know the history of the neighborhood and be able to give you the downside as well as the upside. There is always a downside. Plus, the agent can spot instantly spot a bargain for you.
- Look at the comparable sales.
Of course you will get an appraisal if you are obtaining financing to buy the worst home on the block, but you want to make sure your offer is low enough to make your investment and improvements worthwhile.
- Obtain repair estimates before making an offer.
People who sell the worst home on the block often want to sell that home in its as is condition. They don't want to renegotiate with you after the home inspection and halfway through the deal. If you get 3 estimates for every job, you should have a nice range to choose from. Choose the highest and submit them with your offer.
- Get a home inspection.
You don't need any nasty surprises after buying the home. A home inspection can spot potential problems and make suggestions for further inspections that you might miss on your own. Know exactly what you are buying.
- Offer less than your bottom line.
Unless you are facing a multiple-offer situation with competing buyers, the seller might be agreeable to accepting less than you may expect. If not, you can leave yourself a little wiggle room to come up in price and / or meet the seller somewhere in the middle.
After closing, don't feel like you have to fix up the entire house at once. Take your time. Mistakes happen when people rush. My personal tip is to start at the top and work your way to the bottom.