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Weighing the pros and cons of different property types

October 29, 2019 — Written by Heidi Knight

4 property types to know

A home’s location, price and size are all criteria you’re most likely to think about as you start your house hunt; however, there’s another factor that’s equally important to consider. It directly affects everything from move-in dates to financing options. We’re talking about the home’s condition.

So, what’s best? What’s worst? Well, the answers to those questions are subjective and will vary from buyer to buyer. The right choice depends on your budget, goals, skillset and buying timeline. That said, there are four main types of homes you’re likely to encounter as a buyer on the hunt. This guide can help you narrow in on the right type of property for you.

There are lots of options when buying a home. Finding the right home type really depends on your goals as a homebuyer, as well as your budget, your timeline, and your skillset.

Not sure which type of home is right for your purchase? No problem! We’ll walk you through the pros and cons of a few of your options.

New Construction Homes

New constructions are newly constructed properties that are typically purchased directly from the home builder. Alternatively, you can also choose purchase a lot first then build your home on that location. Whichever option you choose, you get a brand new, never-lived-in home.

There are some definite perks that come with buying a new construction. For one, not only is the home new, but everything inside it is new as well. This means you can expect low to no replacement/repair costs for your home, appliances and fixtures in the near-term.

On the other hand, new construction sales can take a while. If you start from scratch, it could be months or even years before move-in — which can make it difficult if you’re selling your current home in the process. If you’re selling your home and buying a new construction at the same time, having flexibility around your closing date can make the process a bit easier.

Pros

  • More control over design and amenities
  • Ability to oversee the build
  • May offer energy efficient options
  • Less maintenance and repairs up front
  • May come with a home warranty
  • Should have easy appraisal and inspection processes

Cons

  • May prolong your move-in
  • May cost more (especially with upgrades)
  • Less room for negotiation
  • There could be delays in the construction process

Flipped or Recently Remodeled Homes

Another option is a flipped home. Flipped homes are those that have undergone a substantial remodeled. These homes could have been purchased as “fixers” and restored by an experienced real estate investor. They could also be properties whose owners have upgraded with new appliances, paint, fixtures, etc. before putting them on the market. Either way, they’re typically older properties that have been given a makeover.

One of the biggest perks of these properties is that they’re generally move-in ready. You most likely won’t have to make any significant repairs before moving in, and you can usually expect a home that’s in fairly decent condition.

While not necessarily drawbacks, there are some important factors to consider when purchasing a flipped or remodeled home. First, you’ll want to ensure that any work done to the home was done properly and is up to code. You’ll be able to determine this by requesting permits for the work completed. Homes with unpermitted work can present quite a few problems for buyers.

You’ll also want to make sure that any cosmetic changes made to the home aren’t hiding deeper issues that could be expensive to resolve down the line. New flooring and window treatments are great, but not if they are masking an issue with the homes foundation. The good news is that any of these issues will mostly likely be uncovered during the inspection period of the homebuying process.

Pros

  • Usually have upgraded features and appliances
  • Usually move-in ready
  • Few repairs or upgrades needed

Cons

  • No way to guarantee repair quality
  • Could have hidden problems

Turn-key / move-in ready

Homes that are move-in ready are often referred to as “turn-key” properties. Turn-key homes are those that don’t require any significant work to be inhabitable and are essentially ready to go as soon as you close escrow.

The advantage here is obvious: your move is faster, easier, and more convenient. You also won’t need to worry about any extra costs getting the property up to move-in standards. While these types of properties won’t require repairs to be suitable for living, please note that they can also be dated in terms of decor. Turn-key refers to the property’s structural, not cosmetic, condition. So, you might not need to worry about repairs to the home, but you might still need to do a few cosmetic touch-ups here or there to make sure the property is aesthetically to your liking.

Pros

  • Require little to no work
  • Ready for move-in
  • Should have easy appraisal and inspection processes

Cons

  • May cost more
  • No control over look or design of the home

Fixers

If you’re a handy type who’s yearning to live your HGTV diy fantasy, a fixer might be the perfect option for you. Fixers are homes that will require some kind of work in order to comfortably/safely inhabit them. Fixers come in various states of disrepair and their issues could be due to anything from deferred maintenance to just plain old age.

The biggest perk of buying a fixer-upper is the price. Because they usually come at bargain-basement prices. In addition to the savings they offer, you also get full control of the home’s look and feel. Upgrade the kitchen, change the layout of the living room, or even add a sunroom. The options are endless, just make sure you choose your remodeling projects carefully and focus on ones that will improve your home’s value in the long run.

On the downside, you may also find that financing options for fixers are a bit limited. This is important as you’re likely to need a significant financial investment to repair the property once it’s purchased. Depending on the structural condition of the home, you most likely won’t be able to move into a flipper immediately as renovations could take months (or longer) to complete. Don’t forget that you’ll still need to get the work permitted by the city once complete. It will require additional time and funds to do this as well.

Pros

  • Usually cheaper than other options
  • Opportunities to add value
  • More room for negotiation
  • More room to design the home as you see fit

Cons

  • Limited financing options
  • May need permits to make repairs
  • Inspections may reveal many issues
  • Require work before you can move in
  • Repairs and renovations will cost extra

Final Thoughts
Every home has its own pros and cons, regardless of condition. As long as you’re clear on your goals, budget and preferences, you should be able to zero in on the type of property that’s right for you. When you do, check out how our trade-in program can help easy the transition.

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