What Are Some Important Tips for Purchasing a Fixer Upper?

Buying a fixer upper can be a stressful task, but there are certain tips you can follow to make sure the process goes smoothly.

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We’ve all seen those shows on HGTV where a lovable team of construction-savvy husbands and wives, fathers and sons, or siblings and business partners buy a rundown house and in 30 minutes of TV time turn it into a masterpiece and create tens of thousands of dollars of instant equity. 

While that scenario is certainly possible, these shows gloss over some of the most stressful parts of actually buying a fixer upper. Lots of people overlook the expenses that are involved and the expertise needed to handle so many different facets of the process. In the end, though, the allure of a fixer upper can be irresistible. If you budget your renovations right, you can get a steal of a deal on a rundown house and customize it in any way you desire. 

Do your homework before embarking on a fixer upper.

Here are some tips to be mindful of if you’re going down the fixer upper path so you can be prepared for what’s ahead:

1. Get a home inspection. This will help you find out what you’re in for behind the scenes, such as the plumbing system, electrical framework, and the HVAC units. You may have been able to turn on the water and flip on the lights when you made the offer, but the electrical system could be a recall, or the HVAC might be on its last leg. Older homes might not be up to code with electrical systems and could have dangerous materials in them. If you don’t know about these things up front and deal with them, it can come back to bite you. 
2. Bring in an architect and/or contractor. Many buyers of fixer uppers want to make big structural changes, and an architect or contractor can help you with this kind of thing. They can estimate the cost involved and help with design elements. Do your research when hiring contractors—the cheapest is rarely the best option. A good contractor can give you an honest estimate for your projects and help you stay on schedule.
3. Check the zoning. This isn’t the most fun process, and you rarely see it on TV, but zoning can go a long way in determining what is and what isn’t permitted to do on a property. Zoning laws vary from city to city, but you can do a lot of research about it online. 
4. Look into some tax incentives. Depending on the area you live in, you might be eligible for a tax abatement or a tax credit for improving a property’s value. 

A fixer upper can be a long and stressful project, but if you have the patience to research what you need to research, you can find yourself in your own custom dream home with a good amount of free instant equity. 

If you’re considering buying a fixer upper or have any other questions, don’t hesitate give us a call. We’d be happy to help you.

Three Reasons We Are Still in a Seller’s Market

Even though interest rates have shot up considerably since December, we are still in a strong seller’s market. Homes in the San Fernando Valley and Porter Ranch are selling quickly and we expect this trend to continue for the foreseeable future. 

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One question that we’ve been getting bombarded with on pretty much a daily basis is, “Why are we still in a seller’s market if the rates have gone up dramatically since December?” 

There are several reasons why the San Fernando Valley and Porter Ranch areas are still in a seller’s market. A few of them stand out in particular.

First, we have extremely low inventory. Right now, we have just 1.5 to 1.7 months of available inventory in most neighborhoods in the San Fernando Valley. In Porter Ranch, there are just about 60 properties for sale out of the 11,409 single-family units that are in the area. For comparison, there were over 300 properties for sale during the foreclosure crisis in 2008.

Secondly, you are seeing a situation where homeowners are moving up but not selling. They were able to secure such a low rate when they bought the property originally that it makes sense for them to keep it, rent it out, and qualify for a new home. As a result, there is less inventory coming on the market.

The lack of new construction at entry-level price points is disappointing.

There isn’t a lot of new construction taking place right now, either. Part of it is because of zoning laws, part of it is because there isn’t any more space to build out in the San Fernando Valley. The homes that are being built don’t cater to the largest pool of buyers in the entry-level market. This includes buyers who are coming back into the market after a past foreclosure and buyers who are coming from other areas in the market like Pasadena, Burbank, and Glendale. The latter group is getting a lot more bang for their buck in areas like Porter Ranch and Granada Hills.

Don’t anticipate anything changing in the near future. We should be in a strong seller’s market for a while now. Despite the fact that rates have gone up a bit, we are still seeing more and more buyers come to the market in order to lock in rates before they go up even more.

If you have any questions for us, don’t hesitate to give us a call or send us an email. I would love to hear from you.