Should You Buy A Fixer-Upper In A Slow Market?

Flip that home and make big bucks. Buy a fixer-upper and clean up. This is the common theme of more than a few television shows and they make it look pretty easy. The real questions, of course, are whether this can actually be done and whether you should be doing it now.



The good news is flipping fixer-uppers is normally a good way to make some serious profit. Many couples buy a fixer-upper as their first home and slowly, but surely, improve it over the years. They then sell it and use the profits to move up in the market. Millions have done it and so can you.



The question is should you try to do it now? This is not a typical real estate market. We are looking at a situation where a confluence of factors has resulted in a market that is frankly dive bombing. Nobody is really sure where the bottom is, but most believe we still have a ways to go.



In such a market, does buying a fixer-upper make sense? The answer is debatable. Why? Well, one has to think about home values in an overall sense. Let's first look back at the beginning of this decade.



From 2001 on, the real estate market set a pace of appreciation that was simply staggering. Homes in Las Vegas, for instance, were appreciating at a whopping 25 percent a year or more. Money was easy to borrow, cheap and the fuel of a real estate market out of whack. The question, of course, was would the good times last forever? Of course not and we are seeing the results now.



All of the people that touted a never ending real estate boom are idiots. How do we know this? They've switched to the other side now. In a few short years, they've gone from proclaiming never ending gains to proclaiming never ending doom and gloom. As always, they are wrong.



The simple fact is this real estate market will recover. Yes, it is down. Yes, it will keep going down. By 2010 to 2011, however, we are going to see it recover strongly. When that happens, home values are going to appreciate strongly and homeowners are going to see serious gains.



So, what does this have to do with fixer-uppers? Well, the entire market is depressed at this point. The difference in price between fixer-uppers and solid homes has been minimized in most areas. As such, why buy a home you are going to have to have to spend money on to get much out of it when for a bit more you can buy a home in good shape? After all, both are going to show big appreciation gains when the real estate market recovers.



If you like working on your home, a fixer-upper may make sense. If not, buying one isn't really necessary.



Raynor James writes about issues faced by FSBO buyers for FSBOAmerica.org where you view homes across the country from your computer for free.