When looking to purchase a future residence, homebuyers have a long list of decisions to make. And one of the first (and biggest) considerations is right up there with what area they’d like to live in, how large a residence they can afford, and what type of architectural style and home layout they’d prefer. The decision between a move-in-ready home and a fixer-upper is one nearly every homebuyer faces — and here are five important factors to consider.
Move-in ready vs. fixer-upper: 5 important factors to consider
So just what is a move-in-ready home, and what exactly is a fixer-upper? The decision doesn’t always involve a choice of renovation versus new construction, though newly built homes are typically more likely to be move-in ready than homes requiring extensive restoration.
Just as the name indicates, a move-in-ready (or “turnkey”) home is a residence that’s in good enough condition for the new owners to occupy right away — with no immediate improvements or upgrades required for the home to be livable. A fixer-upper, on the other hand, is a home that’s in need of (often substantial) repair or renovation before it’s up to the new owner’s standards. While a fixer-upper may be in a livable condition, occupying the residence can often require the homeowner to endure less-than-ideal living conditions until the needed upgrades are complete.
When a homebuyer is choosing between the two options, these five leading factors typically play an outsized role in his or her final decision:
- The buyer’s timeframe — After purchasing a move-in-ready home, there’s typically no need for the homebuyer to wait much beyond the closing date to take up residence at the property — and the heaviest lifting involved is often the packing and unpacking that the move requires. Alternatively, with a fixer-upper, move-in may be delayed by a lengthy wait time (of months or even longer, depending on the amount of work needed) while renovations are completed, even if the new homeowner is hiring contractors to do the work. Often, the new homeowner may even need another place to live while the upgrades are being completed.
- Personal preferences — While move-in-ready homes typically require little to no work before they can be occupied, there is often a trade-off involved. In many cases, these homes also give the homebuyer minimal opportunities for involvement in the decision-making process, as choices like flooring types, paint colors, countertop materials, etc., have already been made. A fixer-upper, on the other hand, often gives the homebuyer the chance to make several of these decisions personally, allowing his or her own unique style and preferences to be reflected in many more of the home’s details.
- Convenience — Homebuyers who choose to go the fixer-upper route must either live somewhere else or endure the frequent messes and inconveniences that construction/renovation can bring while the work on their new home is being done. Meanwhile, for those who opt for move-in-ready homes, all of these headaches can be avoided, and the residence can be enjoyed hassle-free right away.
- Cost — With all other factors such as size and location equal, on the front end, the homebuyer typically pays a good bit more for a move-in-ready residence than for a fixer-upper. But the costs of renovations and materials for a fixer-upper can add up substantially, especially if a lot of work is needed — and the projects involved frequently go over budget. Buyers who opt for a fixer-upper should carefully calculate the costs they’re committing to in advance, including both the home-purchase price and the renovation work being done, to ensure it’s all in their budget. (And when it comes to the renovations, it’s often wise to overestimate the anticipated costs a bit to create some financial flexibility, making it easier to afford any projects that come in over the originally planned budget.)
- Market conditions — Especially in highly competitive housing markets, where it’s common for desirable properties to attract multiple offers and sell quickly, move-in-ready homes can be particularly pricey. Such conditions often leave prospective homebuyers on lower budgets priced out of their top-choice neighborhoods and areas — or force them to endure lengthy waits before the right, in-budget property becomes available. But in many cases, fixer-uppers in the desired neighborhoods attract less interest from home shoppers, offering opportunities for lower-budget buyers to find and purchase homes in the specific areas where they want to live.
Are you a first-time homebuyer looking to get a mortgage loan? For helpful insights on some of the moves you should consider making before you apply, check out our blog article, “9 Tips for First-Time Homebuyers Seeking a Mortgage Loan.” And to get a better sense of exactly what a mortgage payment covers, read our blog article “Understanding the 4 Components of Your Mortgage Payment.”
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