How to Find a Home with Great Potential

by Washington Federal Team on June 11, 2013

For some people, finding a new home that’s “move-in ready” is very important. But if you’re handy with tools and willing to put in a little sweat equity, you may be able to get a great deal on a “fixer” home. To score a steal, you need to know how to spot potential versus trouble.

Things to Ignore

Before we discuss what to look for in a fixer-upper home, let’s go over some things to ignore. The “fixer” homes we’re talking about here probably aren’t going to “show” very well. They may be overgrown, dirty or dated. That’s okay. Beaten-up flooring and terrible paint colors should be overlooked. Weeds and tall grass in the front yard is actually a good thing for you. The worse the curb appeal, the less the competition and the better your chances are of getting a good deal. As you walk through the home, try to ignore those features and focus on the true potential of the property. By doing so, you’ll have an advantage over a lot of other people who can’t see past cosmetic flaws.

Signs of Potential

finding-home-with-potential-monopolyLocation, location, location

Location is everything. If the home you’re interested in is located in a great neighborhood, it can get a “pass” on a lot of other issues. Talk to a real estate agent if you don’t know which neighborhoods to target. Agents can give you a good idea of which areas are more valuable than others. Be sure to learn about the neighborhood’s safety as well as the assigned school system. Even if you don’t have
children now, neighborhood safety and school district location can affect the resale value of the home down the line. Take a look at the areas immediately surrounding the neighborhood and do a little research about potential issues with traffic and commuting times. Proximity to parks, shopping and entertainment is also important.

Age is a factor.

A relatively new home is usually your best bet. Look for something that was built in the past 25 years. Building codes change frequently, and homes are constantly becoming safer and more energy efficient. If the home is more than 50 years old, it may have galvanized steel plumbing, aluminum wiring, lead paint, or asbestos. Any of these can become a health hazard and you should be prepared to spend more on improvements.

A good floor plan is important.

The flow and layout of a home determine how your family or a buyer’s family will live and interact in the house. Does the house work well for a modern family without having to change the layout? If the floor plan needs updating, how much structural change is needed? Will you need to knockout walls? Change the location of doorways? Is there room to add on, either out or up?

While two-story homes continue to be popular, one-story ranch homes are coming back in a big way. In most parts of the country, finding a solid ranch house shouldn’t be too difficult. If you don’t want to add on, look for at least two bedrooms and one and a half bathrooms.

Natural Light

Lots of natural light can make up for all sorts of short comings. Homes should feel bright and happy during the day, even without any lights on. Consider whether the home needs new windows. Does it have skylights? If so, they may need updating too.

Storage

You need a place to put your all of your family’s belongings. Finding a house with a lot of storage space is always a positive. Large closets and crawlspaces are great, and a garage is consistently one of the most sought-after features in a home.

Signs of Trouble

If you’re considering buying a fixer-up, be sure to have a qualified home inspector and make any offer contingent on the results of that inspection. Here’s why:

Structural Issues

Fixing up a few small things is fine, but you want to avoid major structural issues. As you walk through a home, keep an eye out for cracks in walls, ceilings, floors, and the foundation. Fixing a sagging home takes some serious cash, and the asking price should reflect that.

Plumbing Issues & Water Damage

If you discover water damage in your home or realize that the plumbing needs to be fixed, that ‘great deal’ you got may turn out to be a money pit. Inspect the house for any water stains or rot, particularly around sinks, tubs, showers, laundry rooms, and any walls where plumbing runs. Look for salt stains or rust marks on concrete basement walls. These can indicate flooding or sewage that will need to be addressed with drainage systems.

Electrical Systems

Make sure the electrical systems meet building and safety regulations. An electrical system that isn’t functioning properly or is seriously out of date can be a fire hazard. New wiring can be expensive, and an old electrical system can be dangerous if it’s not been taken care of properly.

Lack of Energy Efficiency

As mentioned earlier, homes are constantly being built with more energy efficient features. If you need to replace windows, install insulation, or replace roofing in order for the house to be energy efficient, make sure the price reflects these shortcoming and have extra cash on hand. These are expensive projects to undertake right after buying a home.

Pick a Winner!

Knowing how to spot potential in a home is a great skill. It takes a discerning eye to look past the cosmetic shortfalls to see the true value in a home.

If you’re interested in learning how Washington Federal can help you finance your home purchase or loan you money to remodel, contact your neighborhood branch manager or call us at 800-324-9375.

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