A tale of 2 homes

DH and I are torn between 2 homes:

One is move in ready, but has features we don't like: wall to wall carpeting, an older kitchen (but functional), a non-functional garage that we'd have to demo to convert it back. It is very competitively priced, at a value that is slightly higher than recent comps, but sellers won't budge.

The other home is a similar style, but $150K under market value, but NEEDS $150K worth of work. After we'd put in that $$, we'd have a home we'd love, and at fair market value. (The finances for the $150K reno are not an issue). But, we are busy people and the headache associated with that, plus the unknowns of a neglected home scare us.

Which is the better buy?

Re: A tale of 2 homes

Neither-Sorry.

Re: A tale of 2 homes

Re: A tale of 2 homes

Re: A tale of 2 homes

I think "work" on a house always takes longer and costs more than you even anticipate. And if you are busy and don't want to tackle a big renovation project, then I would rule out option #2.

I am not so quick to dismiss the first house. You mention the things you don't like about it, but does it basically satisfy all of your other criteria, in terms of location, property size, layout, number of beds/baths, etc.? Other than the converted garage (which you don't say whether a garage is a must-have for you and why), it seems like your issues with the house are cosmetic (carpeting, older kitchen, etc.). But even if it needs cosmetic updating, are other big-ticket items updated (windows, roof, heating system, etc.). If the house is great in every other way, and it's move-in ready, then it very well might be a good choice for you. I don't know what price point you are looking in, but is getting an updated kitchen and some of the other cosmetic pluses realistic? I just don't know enough about your situation to know.

I wouldn't settle because you feel desperate, but I would honestly assess the first house to see if it fits your needs. If you've been looking for a long time, then you've probably seen everything within your desired area and price point, and you probably know whether the tradeoffs you would be making with the first house are worth it.

Also, you say the sellers are a little above the other comps in the area, in terms of price. That wouldn't necessarily bother me. When I bought my own house, I probably paid a little above market value, but we knew we'd be staying long-term, and it was worth it to us to get a house I loved. As long as the house will appraise, I wouldn't get hung up on that.

Re: A tale of 2 homes

Posted by Christine2

Posted by Blu-ize

Neither-Sorry.

I guess we are getting desperate

We've been looking for about a year and need a home already!

Re: A tale of 2 homes

Posted by Christine2

Posted by Blu-ize

Neither-Sorry.

I guess we are getting desperate

We've been looking for about a year and need a home already!

Re: A tale of 2 homes

Move in ready for me-and then I would upgrade slowly, at my pace.

I can't look at my house and say "everything needs to be fixed now!"-It would drive me crazy.

Re: A tale of 2 homes

I think if you can afford to live comfortably while renovations are being done house #2 isn't a bad option. As long as the location is good and you have a good engineer to make sure the bones of the house are good. I think moving into a house that is totally renovated exactly to your taste for a fair value sounds great.

Re: A tale of 2 homes

House #1 is an excellent location and the house appears well maintained...my real issue with it is, why should I spend a premium price on a home when there are upgrades it needs. But location and property are excellent. There is no attic space, and one of our requirements was a 2 car garage for our cars - and it is a 1.5 (can be converted back to a 2) but at an extra cost. The sellers have come down, but at their lowest they are $20K above a nicer home down the block that sold a few months ago.

House #2 has a huge lot, BUT is across the street from a train. It does bother me more than DH. The home,b/c of the train is worth (at top dollar) at least ~$50K below comps in House #1. The only real benefit is that it is the same style home and after renovations, it would be our dream house. But, like a PP said, estimates are usually off and it could end up costing a ton more than we think.

Re: A tale of 2 homes

I wouldn't buy a house that you had no choice but to renovate. I would buy the move in ready one provided you are happy the neighborhood, you can change things like carpeting as you live there....

Re: A tale of 2 homes

I still say neither.

You don't sound really happy with either.

Re: A tale of 2 homes

The "problems" w/ #1 don't seem like a big deal to me, but I never lived with a garage, so 1.5 seems like a lot & I'd leave it alone.

Everyone re-does their ktcthemn to some extent at some point, so if it works, I'd leave it for now.

Changing or removing the carpet is the only thing I would do right away.

You have to figure out the balance between settling & being too picky.

If you are not super in love with either, I might wait. If the sellers of #1 don't get any otehr offers, they may come down again. You may lose out on it, but if you really feel it is over priced, then it isn't worth it.

Message edited 3/7/2011 3:15:37 PM.

Re: A tale of 2 homes

Re house #2: Even if the train doesn't bother you (or your DH) enough to make you pass up the house, it would have a huge impact on potential resale value. So it's just something to consider, in case you want to move.

The cosmetics and finsihes of a house can always be changed, but location (across the street from a train) is forever. Cliched but true!

Honestly, a year seems to be a long time to be looking, IF you've been seriously looking during this entire time and have seen a lot of houses. There is a lot of inventory on the market right now. Are you limited to a very small geographic area or do you have other unuusal criteria?

Do you have one agent that you've been working with who knows your needs/wants and is on the lookout for new listings and price reductions of existing listing that meet your criteria? I know a lot of people look on their own online, go to open houses, call up different agents to see different houses. But it really helps if you have one person working with you consistently.

Feel free to contact me if I can help you in any way. Good luck!

Re: A tale of 2 homes

Can I just ask what you plan on doing for $150k?

I have sold a lot of homes that needed tons of work- but none every required that much

what would you do for that? a new kitchen and 2 baths would not cost that much

I would just make sure you are basing your decision on real numbers

Re: A tale of 2 homes

Hearing after that we'd have a home we'd love I would go for the 2nd house but we are the type who look for homes that need tons of renovations since we love that sort of thing

Re: A tale of 2 homes

I would buy house #2 hands down. When you are done you will have a home you love. Yes, it's a headache, but in my experience it is worth it in the end (and this is coming from someone that just did a MAJOR renovation that caused us and our toddler to move into an apartment, oh and I was also pregnant the whole time!). The only thing that I will say from experience is that it is 1000000x easier to renovate an existing space if you don't have to add on to it. The addition is really what set our project over the edge.

Re: A tale of 2 homes

Re: A tale of 2 homes

I would have said house #2. I love a good renovation. We redid our entire house (down to the studs) but once you said it was across from the train I would never buy it. I lived in an apt that was a block away from the train and in the winter it wasnt an issue but in the summer when the windows are open you couldnt hear the tv when the train went buy. And if you want to sell not many people would buy next tot he train so you have a small pool of buyers.

Re: A tale of 2 homes

I don't know if you plan to get financing, but if you do, have you talked to your lender? It doesn't sound like it is mortgageable, unless you get a 203(k) rehab loan.

A 203(K) rehab loan is an FHA product, by which you roll the costs of the repairs into the loan. There is a streamlined version, but I *think* the cost of repairs need to be in the range of $5K to $30K, which is way less than what you are estimating. With the regular 203(k) loan -- which I am admittedly not as familiar with -- I think it's a lot more paperwork and complexity. There is an FHA planner involved, licensed contractor to provide estimates, etc.

Beth probably knows more, because I know she's said she specializes in distressed properties.

You may already know all of this, because you said financing the repairs aren't an issue, but if you didn't, and it could be one extra negative/hassle to factor in with house #2.

Re: A tale of 2 homes

Home #2 for sure!
We bought our first home needing everything, and since we DIY a lot of the projects it wasn't as expensive as we expected. And our house came our perfect n the end.
Our second house didn't need all that work, but we are doing it all anyway
You could probably get a good deal on house #2, offer even lower since it needs a lot of work.

Re: A tale of 2 homes

Re: A tale of 2 homes

If you're not 100% in love and are torn...I'd keep looking until you find the one you're not even torn over!

Re: A tale of 2 homes

Trust me if you think it is going to cost $150k it will cost $200k, renovating the right way is expensive. Nevermind everything you wont anticipate!!!