Do I Take a Fixer-Upper?

How to avoid those expensive surprises when renovating your new home Written by Lori Johnston

Before you buy that diamond in the rough, some crucial questions can help determine how much you might actually spend updating an older home. More than 1 million homes per year undergo major renovation or remodeling, according to the National Association of the Remodeling Industry, which estimates that the U.S. remodeling market topped $275 billion in 2005.

To avoid money pitfalls, it's important to get a realistic picture of necessary changes, in addition to cosmetic changes you envision. "You've bought your first home and you're excited about it and you have all these great ideas, but things cost money," says Warner McConaughey, owner and founder of HammerSmith Inc. "Everything is really more expensive than you could ever imagine."

Although your real estate agent may be acting as your main source of advice, seek out a remodeling company that offers free estimates or consider hiring someone as a consultant to walk through the home. Warner also suggests taking notes while the home inspector is going through the house, instead of just looking at the report-they also may be willing to answer questions about needed repairs.

Ask about the mechanics of the house, such as the age of the heating and air conditioning systems and roof, advises Karen King with Home Rebuilders. She adds that organizations such as NARI (remodeltoday.com) provide online searches for remodelers.

Older homes sometimes come with costly, unglamorous issues such as roof repairs that may take precedence over adding a bathroom or renovating a kitchen. "Those things just get more and more expensive," McConaughey says.

Instead of a project-by-project basis, determine everything you would need to fix in the first few years, and even create a master plan for the future. You want to know if those are some things you need to anticipate and plan for within your first one to three years," King says.
The costs, of course, vary, depending on the size and age of the house. McConaughey estimates that in the $10,000-$20,000 range, people can turn a window into French doors leading out to a patio or give the home a facelift with paint, accessories, shelves and other changes.

Projects such as adding a bathroom, walls between rooms or extensive kitchen work are likely to be more in the $20,000-$50,000 range on an average home. But McConaughey adds that some folks spend as much on the renovations as they do purchasing the home.
Those choosing the do-it-yourself route need to be realistic with their time and money, says McConaughey. Projects might drag on for months when homeowners can only devote weekends, and costs for buying or renting tools may add up.

Still, he encourages buyers to work on their home at some point, whether it's painting a room or tackling a larger project. "It gives you a feeling of ownership," McConaughey says.

Stretching Your Budget

" Hire a professional contractor familiar with local building codes.
" Have a well-written contract to prevent costly mistakes or additions to the project's scope.
" Plan ahead by choosing everything you want to include, from appliances to light fixtures.
" Compare products and prices before you make final decisions.
" Pay attention to how labor-intensive some design features may be. 

Source: National Association of the Remodeling Industry