Skip to main content


map-marker-altLocations | ATMs

Pros & Cons to Consider BEFORE you Buy a Fixer-Upper


We all know them - those friends, relatives and coworkers who have sacrificed every weekend this year working away on their “easy” fixer-upper home. And yet, there’s something about the project house that keeps people coming back for more - especially in cities like Seattle or Portland where turnkey, single-family homes are increasingly fewer and farther between.

Unfortunately, for every ultimate DIY house that turns out customized, efficient and exactly what the buyer envisioned, there are at least half a dozen folks that end up over their head with half-finished projects and a mound of debt.

So how can you determine if that fixer-upper is worth the investment? Here are a few things to consider:

Pros: Lower purchase price.

Buying a fixer-upper house is, without a doubt, cheaper than purchasing a ready-to-go home. Since no two houses are the same, it’s hard to do a true, apples-to-apples comparison as to just how much money you’d save, but be warned that your savings may not be as high as you think. 

A report last year from the online real estate experts at Zillow found that the average fixer upper listed for an average of just 8% less than market value, saving buyers only $11,000. In Seattle, this allowed fixer upper purchases to make $24,000 worth of repairs or improvements before they broke even. While that may sound like a size-able amount, as any remodeler will tell you, it can go quickly…

Cons: Prepare to go over budget.

In fact, you may want to plan to go over budget – 4 out of 10 fixer uppers do.  What’s even more startling? Only 1 in 5 come in under their budget. Most experts suggest adding 10-25% to your remodel budget for unplanned, surprise costs.

What could possibly go wrong? Things like unexpected asbestos in your subfloor – resulting in paying for new flooring and the cost to dispose of the toxic substance. Or removing the wallpaper or drywall only to find rot in the beams or redo.

Pros: Choose where your money goes.

One of the best things about a fixer-upper is the opportunity to invest in the areas of the home that matter most to you. Spend a lot of time in the kitchen? Make that one of your top priorities when you’re remodeling. If you’re purchasing a move-in-ready pad, then you’re subject to the prior owner’s interests and investments. 

Pros: Less competition.

This positive aspect needs little explanation. San Francisco, Seattle and Portland aside, you’re far less likely to end up in a bidding war for a fixer upper than a turnkey home. Why? Fixing up a house is a lot of work and there are almost always unexpected costs - often resulting in a riskier investment for the buyer.

Photo of a man finishing a house project

Pros: Greatly increase your home value.

The opportunities to greatly increase your initial investment can be much higher with a fixer upper than a move-in-ready home - if you know what to look for. As with any major purchase, be sure you do some calculation to find out just how much your renovation plans will cost you and whether you’ll get that money back when you resell the home.

Projects with the best return? Bathroom updates and outdoor, curb-appeal improvements, like a new entry door or updated veneer. Where are you least likely to get your money back? Adding a deck, home office or swimming pool. 

Pros: An "in" to a better neighborhood.

If you’re eyeing a particular neighborhood, but there aren’t any homes listed, then a fixer upper could be a great option - especially since the homes in your area have an impact on your fixer upper’s final value.

Heads up: Be sure to keep your updates in line with the neighborhood. Otherwise you could have difficulty recouping your remodel investment costs when it comes time to sell. 

Cons: Money, money, money.

Finding the funds to pay for your project(s) can be one of the more difficult logistics to navigate. Because no two remodels are the same, there are less “standard” options available for financing, leaving many homeowners left to finance equipment and projects with their credit card.

Don’t do it! Credit cards should only be used for small costs that you’re sure you can pay off in a month or two. Credit card financing is one of the most expensive ways to finance your project. Interest rates are much higher than a remodel loan that you might get from a bank or credit union, and the interest that you pay on cards isn’t tax deductible.

If you have a sizeable amount of equity in your home, then a home equity line of credit could be a good option. With a HELOC, you’ll apply for and be approved for a certain, maximum amount. From there, you can draw out and use only what you need. Expect to make interest-only monthly payments during a draw period, followed by principal-and-interest payments over the remaining term.

For larger remodel projects, you may want to consider ​our All-in-One Remodeling Loan, which is based on the estimated value of your home after the remodel. Why is that an advantage? Extensive remodel work can out strip the available equity in your home, especially if system upgrades or major structural work are in your plans.

To determine that value up-front, we order an appraisal based on your plans for improvements. The entire project is underwritten at one time and you can lock in a permanent, fixed interest rate before you even start the project. (Note that rates can change daily and are subject to a lock-in deposit.)

When the project is finished, the loan automatically converts to a standard mortgage. The mortgage is a fully amortizing loan with principal and interest payments spread over 15 or 30 years.

However big or small your project, we're here to help!

Talk to your local neighborhood loan officer or call us at 1-800-324-9375 to find out more. All loans are subject to credit approval. ​

Learn About WaFd Bank's Home Loans

Have Questions?

Schedule a call or meeting with your local WaFd banker.

Find a Branch