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advice on buying a fixer upper

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Apr 26, 2013, 10:52 PM
advice on buying a fixer upper
My soon-to-be husband and I are house searching. I am trying to convince him to purchase rather than rent, and purchase a project house we can work on. This is due to several reasons: I enjoy working on projects around the house, it will be more affordable for us starting out, and it will give us freedom to make some aspects of the house the way we want them. I found a home that I am interested in... sort of. It needs a lot of work. Electrical will need replaced, the wood siding will need properly covered with tyvek and vinyl, there is drywall work to be done, and lots and lots of painting- and those are just the things I noted looking at the building from the outside and seeing pictures inside. Has anyone else ever taken on a project house as their first home, and if so, what do you recommend for someone possibly looking to take on a project like this?
Apr 27, 2013, 10:21 AM
I helped my parents redo a turn of the last century home back in the 1980's. They bought the house for $50 probably put $50K in remodeling and after my parents both passed we sold it for around $105K. That was a lot of blood, sweat and tears for not much return. The people that bought it after them in the late 1990's did much better for not much work.

I'm surprised my parents marriage lasted through the process. Living in a construction zone for several years wasn't how my mom envisioned her empty nest time.

Before you take on a fixer upper, you need to know what the house is worth, what the neighborhood is worth, if anyone else is updating the nearby houses, what the upside is and your time horizon. As my parents house showed us timing is everything. Had we held on to the house for another couple of years our efforts would have paid off. There were in the house for 18 years and the last of the renovations were completed 10 years before we sold the house.

Improvements included: new large 2 car detached garage, new roof, new siding on the back, a second floor porch enclosure turned into a sun room, a new large covered porch on the back, new kitchen, renovated bedrooms, living room and dining room, and a renovated laundry room and powder room.

When dealing with an old house today, anything built before 1978 you have to assume lead paint and possibly asbestos will be found. Laws vary state to state but asbestos abatement gets very expensive. Lead abatement gets very expensive when hiring work out as contractors have to take special considerations when remodeling an older house.

If you can find an underpriced house in a good neighborhood with a lot of upside potential and are willing to live in the mess go for it. If you plan on having kids in the near future I would avoid it. A construction zone is no place for an infant. And as a parent of two, that does a fair amount of DIY work your new additions to the family are giant time suckers and what you could get done in 1 day will now take several days.

Helping my parents renovate their old home cured me of This Old House fever.

General Disclaimer

Any advice given here is general in nature and is not necessarily valid for your given area. If in doubt check with your local codes enforcement department for what is required when doing electrical, plumbing or structural work on your house. Permits may or may not be required in your area and home owners may not be able to DIY some tasks. I have no way of knowing if you have the skills needed to complete the tasks you are asking about, when in doubt seek professional assistance.

My advice may be worth exactly what you pay me for it. :-) For the record I did not stay in a Holiday Inn Express last night.
Apr 27, 2013, 10:53 AM
Melissa, I haven't taken on really big projects but do have some thoughts to share.

The projects you enjoy - are these small, medium, or large, long term messy projects that will disrupt your lifestyle during their duration?

Have you and your fiancee ever worked on projects together, and if so were there any issues? Design, DIY vs. contractors, planning, living through the mess? Does your husband have a background in DIY projects? If so, would he be up to the task of a lot of renovation at the beginning of your marriage?

Your comment that he would prefer to rent makes me wonder if he's even interested in the large project you propose.

Is the house livable for some time before you start any renovations? Do you have financing to undertake all the upgrades?

Are any of the potential projects safety or hazard issues, or can they be done at your leisure?

You wrote that you looked at the building from the outside but only saw photos of the inside. I assume you would want to take a good thorough tour of the inside before you make any final considerations. A home inspection would also be highly appropriate, especially if there are already existing issues.

I'm curious what electrical improvements you noted needed to be done from the outside. If the exterior electrical "needs to be replaced", I'm wondering how bad the inside electrical work is.

I have the impression this might be a foreclosure or bank owned home. If so, be very, very careful. Some of these homes can have hidden time bombs.

I think I might have a contractor go through the house to estimate the problems and cost so that you're well prepared up front.

You might also check with the local community's building & code division to find out if there are violations, and to determine if the house would have to pass a code inspection before sale.

If the house is bank owned, try to find out how long it's been vacant (I assume it is). If you're in a northern area, this could make a difference if the house has gone through summers without A/C and winters without heat. Be prepared for some moisture issues.

Starting a new life together will offer some challenges as it is; renovating a house will compound those.

And as Sparky wrote, location is important. Some areas of the real estate market have improved; others are still languishing in recession mode.

This message has been edited. Last edited by: GardenSprite,
Apr 27, 2013, 06:33 PM
Thank you for the thoughts... yea, at this point I'm really only at the beginning stages of considering a fixer upper as our next move. My fiance prefers to rent until we can afford a more permanent home... I just feel like renting is throwing away money when we could be investing in something until we make that move to our permanent home. Obviously, we will have to figure that out before we make any final decisions, but I was hoping to get some insight from others as to their experiences to help me decide if this was truly a good idea or whether we would be throwing our finances into a money pit. I only pulled in the drive to look at it as I was commuting and realized I was only about 10 minutes from it. We will definitely make arrangements to see inside before we would purchase.
It is a foreclosure, and been vacant since approximately Jan/Feb. I mentioned the electrical needing updated as it is 100amp service, which I know is not updated, and I would feel more comfortable with a complete overhaul just to be sure that there are no hidden fire hazards.
My fiance and I have lived together for a few months, so he has humored me with my projects around the house since then. We rent from an accommodating landlord who lets us update random things with prior permission. At this point, we have definitely not tackled anything as big as a home reno... we've replaced the kitchen floor, faucets, painted, installed a new bathroom vanity, converted a room into a walk in closet, and made some other minor repairs. He definitely doesn't enjoy the random projects as much as I do, but he actually initiated the walk-in closet, which turned out to be a pretty decent sized project.
Kids are definitely in the forecast for the near future (we hope), and you definitely make a good point that we would have to be able to get things done prior to having a baby... I guess when we walk through I will have to see how things look and whether we think we can be finished the major work in a few months.
My skill level isn't too impressive, however all the projects worked out pretty well. Siding and electric are definitely beyond the scope of my "skills". We would likely hire someone for those tasks.
Checking for code violations is definitely something I had not previously thought of... I do plan to go through the house with an inspector prior to purchase (whether we go with that place or one that is slightly less work). Would a seller's disclosure indicate anything worth while, or is that generally for less significant information? You mentioned that foreclosures can be problematic... what sort of things should I look out for with a foreclosure?
Apr 27, 2013, 06:34 PM
With respect to "under priced" I knew a guy who had the "we buy ugly houses" franchise here in the Raleigh area. He wouldn't touch a house if he couldn't get it for 60% or less than he thought he could get after doing improvements. He was buying to flip not to live in them but that will give you some idea of what you're dealing with. He was typically buying a house from the estate of an elderly couple that passed away, generally from the out of state kids. They didn't have the time or the inclination to clean up the house and prepare if for sale. Usually if the husband died first the wife couldn't take care of the property alone and it fell into various stages of disrepair. If the wife died first the husband stopped caring and it fell into various stages of disrepair.

General Disclaimer

Any advice given here is general in nature and is not necessarily valid for your given area. If in doubt check with your local codes enforcement department for what is required when doing electrical, plumbing or structural work on your house. Permits may or may not be required in your area and home owners may not be able to DIY some tasks. I have no way of knowing if you have the skills needed to complete the tasks you are asking about, when in doubt seek professional assistance.

My advice may be worth exactly what you pay me for it. :-) For the record I did not stay in a Holiday Inn Express last night.
Apr 27, 2013, 07:07 PM
Melissa, sounds like you have a good grasp on what could be involved, as well as what's within reason to do yourself and/or contract out.

This is one area in which the disclosure is literally worthless: I was informed by a realtor that banks are not required to disclose defects. They haven't lived in the house and ergo wouldn't be in a position to be aware of them. There may be some banks that are more thorough than others and actually do an assessment, but in my experience they just want to unload the houses. I haven't checked this issue legally, but assuming the realtor is correct, any discovered problems may likely be ignored and never disclosed.

One national bank, a party to the massive Independent Foreclosure Review action, only paints and puts in new carpet, per the realtor who was representing them in the area of my sister's house (which was foreclosed after she died).

During the period while foreclosure was pending, I called the attorneys handling it and advised them I had discovered a trace of wires which had been partially cut through. The law firm rep told me that I couldn't expect anything to be done, that the bank just wasn't going to take care of something like that during the foreclosure process. Obviously I had no idea if it ever was taken care of.

Some of the other issues in that house were:

(a) Garage lights didn't always work during rainy weather;

(b) The porch was subsiding and separating from the house at the rate of about 1/2" per year. I got estimates of $800 to $1600 for slabjacking it, with no guaranty that the process wouldn't crack the porch. $5,000 was a ball park estimate for porch replacement.

The house was sold by the bank and based on what I've seen when I drove by the subsidence issue wasn't fixed. The wrought iron railing still slants down toward the center of the porch.

(c) There were critters in the attic which I couldn't get out; I have no idea how much damage they might have done, including to electrical wires.

(d) The dryer vented directly into the garage.

(e) The prior owner had installed a shed too close to the house, in violation of local codes. The base of the shed was rotting, mold was building up between the shed and the house.

(f) There was a severe drainage issue, with water accumulating in the front and rear ditches. The rear ditch was so wet and unstable I actually sunk into it.

(g) The bathtub faucets leaked; there was no access panel other than tearing out the paneling in the adjacent room.

(h) The initial gutter installations didn't include a connection from the second floor to the first floor. When rain occurred, it gushed down like Niagara. The areas it hit eventually became very moldy.

This is not to say that your house could have the same problem, just to illustrate the various things that could exist and be left untouched by the bank.

In that particular area were subdivisions of so-called "estate homes". Local handymen, contractors and others with whom I spoke about fixing my sister's house told me they had been in some of them. Angry homeowners in foreclosure did a lot of damage, including in one case ripping the cupboards off the walls.

One of the code enforcement officers in my area told me that in the west side of the city vandals were breaking into vacant houses and stripping out the copper wire as well as the plumbing.

Typically the heat, water and electricity are turned off in vacant houses. The pipes may or may not have been drained, depending on who did the turnoffs, and when. The house next to me has been vacant for 2 years. It was 3 or so months before the utilities were turned off, and it was done because of the unpaid bills, not because the mortgagees took action.

To the best of my knowledge, the utility workers did not have access to the interor to drain the pipes. Depending on whether the heat was off before or after the water was, there might be water damage from burst pipes. Moisture levels are high in this area; without heat in the winter there could be mold buildup.

If you're in the south, the considerations would probably be higher for mold buildup.

There's another interim and middle of the road option which is to get a house which doesn't need as much work, especially the major issues that you mentioned on the siding.

If you do inspect the house, do it in dry and rainy weather.

This message has been edited. Last edited by: GardenSprite,
Apr 27, 2013, 08:37 PM
i didnt read all the comments. my advice is simple
foundation...if the foundation is solid your diy experience will be ok. but if your foundation is crappy you will spend to much money fixing it.
and termites
get inspections and focus on foundation an termites
the rest can be gutted to suit your needs
my wife and i lived in a travel trailor and we built our house togather. damn near had a im kidding. i am not stupid. i give in, i dont care what color. just point and i do

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Apr 27, 2013, 11:18 PM
Melissa, another issue about which to be concerned if you purchase the house is getting clear title. I only have experience in this area with my sister's house, so I don't know about other methods of conveyance for foreclosed houses. But it's worth taking note.

Typically when you purchase a house you will get a Warranty Deed, by which title is warranted to be clear, other than restrictions listed in the title work (typically "building and use restrictions and easements of record", and sometimes taxes not yet due and payable.

When my sister's house was eventually sold by the bank, there was a covenant preventing the purchaser from (a) selling within 3 months, and (b) selling for more than a given price.

This may have been to prevent flipping, but it also restricts the purchaser from ever selling for any more than the specified price, forever as nearly as I can tell.

In addition, the conveyance wasn't by Warranty Deed; it was by a Covenant Deed, or a Deed C, as it's known. This type of deed does not warrant title beyond the period in which the seller (the bank) owned it. In other words, it doesn't address any claims to title which may have arisen prior to or during the foreclosure.


A caveat: I'm only familiar with these Deeds as they're used in Michigan. Your state may have some other mechanisms of conveyance.

If you're not familiar with title work, I'd definitely recommend hiring an attorney to review it to ensure that you get clear title.

This message has been edited. Last edited by: GardenSprite,
Apr 28, 2013, 10:53 AM
Further thoughts on the legal issues...

Foreclosed houses are subject to redemption periods, during which the mortgagor (the borrower) has the right to redeem the house. Redemption periods vary from state to state. I'm only familiar with the specific terms in Michigan, as they existed a few years ago.

In Michigan the county Sheriff's Department handles the foreclosure sale, which is basically an auction held at the courthouse. Typically the bank bids and acquires title to the house. The redemption begins to run from this sale.

If the house is occupied, the mortgagor has a 6 month period to repurchase the house. After that, the mortgagor has no rights to redeem. If the house is vacant, the redemption period is only one month.

Any house purchased during the redemption period is subject to the rights of the mortgagor, so if you do purchase this house, you'll need to determine when the Sheriff's Sale took place so you can tell whether the mortgagor has any rights which would pre-empt yours.

The Sheriff's Deed is recorded with the county register (sometimes called "recorder") of deeds. If you don't have a legal description, usually a department such as Tract Index can provide you with it. It may also be possible to look up the transaction by using a Sidwell, which is a property ID number.

Just make sure to check this out if you decide to buy this house.
Apr 28, 2013, 06:17 PM
thank you for the advice!! Wow... a lot of stuff to consider with foreclosures!! I had heard about the redemption law... in PA, to my knowledge, the individual does not get this option. Obviously something I should definitely clarify with certainty!
With the warranty deed, do you get to see these restrictions prior to purchase? Could I search for that the same way I can search for the Sheriff's deed?
Apr 28, 2013, 06:48 PM
There is just way to many repo's, bank sales, short sales, to even bother with one in that bad a shape. Unless your buying it for what the land is worth.
I've worked out many a deal with people that are trying to by a fixer upper, where I go in and do a complete inspection, protise what needs to be done and even come up with what it's all going to cost.
I get paid a fee plus most of the time I get some if not all of the work.
Your at an extream disadvantage, you really have no clue what something like this cost or how long things take.
Changing a vanity is a DIY 101 job, knowing what your looking at to rehab a whole house is a totaly differant story.

Apr 28, 2013, 07:44 PM
Melissa, I did a quick check on PA's foreclosure laws. You are right; there is no redemption period according to what I found. However, that may be because PA provides for judicial foreclosure.

This raises some other issues. I'm familiar with two types of foreclosures: by advertisement, and judicial (through litigation).

Michigan and some other states allow for foreclosure by advertisement as well as judicial foreclosure (typically for commercial and/or complex title situations). Notice is posted on the door of the home and in a public newspaper (typically a legal newspaper) for a specified time and a date set for the Sheriff's sale. The time framework is predictable within a range of months.

Judicial foreclosure is actually litigation. Depending on the court dockets, it may be quick or it may drag on. The mortgagor has an opportunity to retain counsel and challenge the foreclosure, so in essence he/she isn't deprived of an opportunity to work out an arrangement to preserve his/her interests.

The issue now raised is the stage of foreclosure for your target home. I found that PA foreclosures are held in the Common Pleas Courts of the county in which the house is located. The process may take up to 120 days or longer. If a mortgagor hires a skillful attorney, it can probably be dragged out with various motions and hearings. So this is really a big, big "if" as to whether foreclosure has been completed, and/or when the house would be available.

There's a brief synopsis here of PA foreclosures here:

You'd have to contact the CP Court to determine the stage of the foreclosure, but would have to know the name of the mortgagee (lender) and borrower. If there's a sign on the property, you could contact whatever entity is named there to see if you can shortcut the process. In my local county, current litigation info is available online. If the specific CP Court in PA has this, it would make it easier for you.

As to your questions on verifying title restrictions, typically the only way to be sure is to get a title commitment, which would be provided to you after signing a purchase agreement. It would, however, only reflect existing restrictions of record.

In addition, a full title search requires specific knowledge that extends beyond that and is best left to a pro at a title insurance company. Even with about 7 years in commercial real estate, I wouldn't consider myself competent to determine all the restrictions that might exist, especially in a foreclosure.

You can check existing deed restrictions on your own same way that you would search for Sheriff's Deed, but there is no way to determine without entering into a purchase agreement what the bank might pull out of its magic hat.

Theoretically, these restrictive covenants should be in the purchase agreement. The Deed restrictions on my sister's home wouldn't be reflected in anything that could be checked beforehand if they weren't in the purchase agreement. And they could vary by lender and specific situation.

One of the realtors I dealt with told me that the bank which held the mortgage on my sister's house was the most difficult to deal with - calls weren't returned, it took months to get issues resolved, and when a closing was finally set the bank decided to do some work on the home and delayed the closing indefinitely. Bank reps refused to tell him what was being done.

Dealing with the banks in these situations is not like dealing with a motivated seller.

Your attorney should require an opportunity to review closing documents for any sneaky deed restrictions, but by then you would be well into the purchase process. Given the power of the banks, I don't know of any way to ensure that something (like restrictive deed covenants) wouldn't be thrown in at the last moment.

Even though your purchase agreement should be contingent on not only title issues but inspection and repair issues, I don't have the impression that banks play fairly with these foreclosed homes.

And frankly, I wouldn't put a deposit on any foreclosed house with as many problems as this one has.

I think Joe makes a good point; there are so many "ifs" and potential pitfalls to this house that it might be better to walk away. But definitely do a walk through. I think you'll find there are a lot of problems inside and this is something that should be passed up. At least then you'll know for sure whether this is even a doable deal.

This message has been edited. Last edited by: GardenSprite,