Steps to Buying and Renovating a Fixer-Upper
How to line up your renovation with your home purchase
Getting organized for a new home
Buying and renovating a fixer-upper is one way to attain both the desired square footage and location at a more affordable price. If you are buying with the intent to renovate, cost is not the only item to consider. Use your time efficiently by syncing the construction timeline with the closing schedule. When do you bring in the architect and general contractor?
Here, Sweeten offers a practical guide to juggling a purchase PLUS a renovation. Click here to download our guide.
Sweeten matches home renovation projects with vetted general contractors, offering advice, support, and secure deposits—for free.
Bidding on the home you want
- Speak with a mortgage broker or lender (1 – 3 weeks) Determine how you want to pay for your renovation. A construction-to-permanent loan allows you to finance your renovation as part of your mortgage application in one go versus two separate processes.
- Hire a real estate attorney (3 days – 2 weeks)
- Find your new home and make an offer (1 – 4 months) Take into consideration how much of a reno budget you’ll have after the purchase. On the reno front, decide the time/budget of what you can afford. (Don’t forget about closing costs; your agent and attorney can guide you on the cost range.) Keep in mind how long you want to carry a property after closing. You will most likely be paying for housing elsewhere unless you plan on roughing it in the unrenovated space.
- Negotiate the offer (2 days – 2 weeks) In the meantime, read up on how much labor and materials cost, along with the average home renovation costs on Sweeten’s blog. You can get a head start filling out your project details on Sweeten to better understand what you need. ie) alteration agreement, building insurance requirements, space dimensions for the renovation). Then, post your project after you close on your property.
Inspect and sign the contract
- Schedule and conduct an inspection, if applicable. In a competitive market, this is a contingency a buyer may choose to forgo to make their bid more attractive. This can also be done while negotiating the offer (1 – 2 days). If you’re buying to renovate, you’ll want to know what will be possible to change, given existing conditions. You may not care whether the appliances are working or if the walls are orange. However, you’ll want to know about the state of the electrical and plumbing systems and if upgrading them is possible. The inspection will provide additional insight into the condition of the apartment and the building.
- If you plan on moving walls, you’ll need an architect or a designer.
- Get a heads-up about other financial or building issues. If the inspector tells you the apartment building needs a new roof or boiler, for example, look into whether there will be an assessment levied or if money has already been raised. With an assessment, you’ll bear the expense as the new owner. This may cut into your renovation budget. The same goes for a house: if there are pressing repairs, you’ll foot the whole bill.
- Have your attorney conduct due diligence (2 weeks) At the same time, the attorney should also review the alteration agreement to make sure nothing prohibits you from the vision you have planned. ie) Checking the wet-over-dry rules if you plan to relocate the kitchen.
- In a house, be certain zoning will allow the renovation plans you have. ie) If you’re in a landmarked district, you’ll be restricted in what you can do to the home’s exterior.
Start your general contractor search
- Sign the contract to your new home (5 – 7 business days) Now’s the time to post your renovation project to Sweeten with details about your wish list, budget, and timeline. You’ll be matched to vetted general contractors based on scope, location, and budget. Review your contractors’ past work and testimonials.
- Apply for a mortgage and receive a commitment (3 – 6 weeks) Reach out to your contractor(s) and set up site visits. Here’s how to prepare for it.
- Complete and submit your co-op/condo application package (10 – 20 business days or within 3 days of receiving mortgage commitment)
- Keep the conversation going and negotiate the terms of the renovation budget, timeline, and other contractual details with your Sweeten contractor. Here’s a primer on how to evaluate different bids (Sweeten can help you bid-level for free).
- What are the contractors’ schedules for the coming quarter/6 months? Where would your project could fit in? You’ll want the contractor to start immediately after your closing date.
Board approval and begin your renovation
- Meet for a board interview (this can take anywhere from 1 week to a few months).
- Receive board approval (again, be prepared for a wait time from 1 week to a few months after the board interview).
- Schedule a closing (2 weeks after approval). Once your closing is scheduled, let your general contractor know so that room can be made in the schedule for your project to begin.
- The keys to your new home are in hand! Sign the contract with your Sweeten contractor. If you’re in a condo or co-op, you’ll also need to get the renovation approved by the board.
When buying and renovating a fixer-upper, some overlap exists between your renovation and your property purchase schedules. The bulk of the renovation process that happens prior to closing is prep work. Use this time to educate yourself about costs and processes. Begin the search for contractors and who would be the best fit for your project.
While you can lay this groundwork, don’t pull the trigger until you own the property (you never know what might happen!). When you’re ready to get started on your home remodel, work with Sweeten to renovate with the best contractors.
Sweeten handpicks the best general contractors to match each project’s location, budget, and scope, helping until project completion. Follow the blog for renovation ideas and inspiration and when you’re ready to renovate, start your renovation on Sweeten.