Scott McGillivray's Tips On Buying, Selling and Renovating Your Fixer Upper
Thanks to house-hunting and renovations shows like Fixer Upper, Flip or Flop, and Property Virgins, we all know that buying and selling fixer uppers can be a super lucrative, not to mention exciting endeavor. Scott McGillivray, host of the home renovation show Income Property, is teaming up with Owners.com, an innovative online brokerage that offers tools and services to help buyers and sellers save money and time. We sat down with him to discuss how to buy, sell and renovate your very own fixer upper.
Do you have any tips for buying a home on a budget?
Absolutely, first thing's first, let's start with buying a home. Owners.com did some research and interestingly enough 51% of the population is willing to buy a fixer upper in order to afford a home which is probably the #1 way in which people can look into getting into a market or area that they want—affordably. The flipside is being willing to do the work, which is always a part of creating value. What's really new and it's still being rolled out across the country is the buyer's rebate. You actually get a rebate when you purchase a home through some of these portals.
Pro Tip: Buyers in select markets can get up to half the buyer's agent commission back upon closing–up to 1.5% of the purchase price.
What about selling a home?
With selling a home, looking at reducing transaction costs is probably the fastest way to more money in your pocket. Also, using online brokerages like Owners.com and paying flat fee versus commission when buying and selling properties. Work throughin order to facilitate any transactions so you don't pay a 2.5-3% commission, you pay a low flat fee, which saves thousands of dollars right there.
Do you have any home improvement ideas that can help with selling a home?
There's lots of things you can do to prepare your home for sale. Don't go overboard. You don't have to fully renovate in order to sell a home. But, you do have to update in order to sell it for top dollar.Things like painting a home and updating fixtures, appliances and hardware. In terms of paint colors, you want to appeal to the majority of buyers. In urban areas, we're seeing gray as being the most popular paint choice. In more rural areas, we're seeing beige is still predominantly the color of choice for buyers. If you're not sure, “greige" is the hottest color of 2017.
What are the pros and cons of fixer uppers for young couples?
Affordability–fixer uppers allow you to get into the market below the purchase price.
Customization–fixer uppers allow you to customize the renovation to your taste.
Forced Appreciation–you actually build value back into your home which becomes equity. In the long term, you typically end up making more money off of that.
Lots of work–if you don't have experience with a fixer upper it can be challenging.
Stress–staying on budget is always a challenge.
What should homeowners keep in mind when purchasing a fixer upper?
When you're looking to buy a fixer upper, you need to be prepared. Seventy-five percent of millennials are concerned that they won't even have enough cash for a down payment. They're not sure how they are going to finance it. They're worried about mortgages. Making sure that you're educated and prepared is probably number one. Look at your credit score, talk to your mortgage advisor and start to do some research online for properties to see what's realistic.
Once you do purchase a fixer upper, you have to have a renovation budget or plan for financing your renovation. You may want to get a contractor to come in with you when purchasing a fixer upper if you're not savvy on renovations so that you can determine a realistic timeline and budget and you can then decide what you can do yourself and what you need to have someone else help you with.
For someone's first fixer upper, what is a good house model to look for? Is there anything that's key that you look for in a easy first fixer upper?
The most desired properties are three bedroom two bathroom so that's always great if you can get close to that. If you're thinking about long term value, detached single level homes like a bungalow, are great. Also, another thing to look for are easy improvements—like new flooring, paint and kitchen updates. I would avoid major structural updates or possible tear down rebuilds.
If you had a small budget and could only renovate some portions of the home, what rooms would you do first?
The kitchen is going to have a great return on investment, so definitely do that first.
Are there any aspects of the renovation a couple can do themselves?
Pick three or four things you're going to do and you're going to do well. Definitely take on certain aspects of the renovation, like demolition. Demolition is mostly labor costs, so if you're willing to rip up floors, carpet and take out trash, that's a great way to save on some of the costs. Be realistic about the tasks in your skill set. Don't take on electrical or plumbing or the HVAC, those are best left to professionals. You may want to do the painting and choosing the elements of the home or searching for the property or listing the property for sale.
For information on Scott and the great tools at Owners.com, click here.