Should You Buy a San Francisco Fixer-Upper or a Move-In Ready Home?

Finding a good real estate deal can be challenging when buying a home in San Francisco. Even the “fixer-uppers”, which traditionally come at a bargain, can go for well over asking price here. Last year a house in the Outer Sunset that was described as being in a “deteriorating state” was listed at $799,000 and sold for $1.21 million, in cash. In San Francisco, this could still be considered a bargain for a four bedroom home with ocean views.

Homes that need major remodeling aren't for everyone, even when they do come at a bargain. Sometimes a move-in ready house is a better option, even in San Francisco seller’s market. Whether you're a first-time homebuyer or a seasoned investor in San Francisco real estate, it's important to understand the pros and cons of each option before you make a decision. And who knows? That dilapidated San Francisco fixer-upper just might turn out to be your dream home.

Pros of a San Francisco Fixer-Upper

There is often a certain charm to fixer-uppers, especially in San Francisco. Last fall, a house listed as a “dilapidated shack” sold for over $400,000, but the homebuyer saw the appeal of converting a refugee shack, built to house 1906 earthquake survivors, into a Bernal Heights home. It’s fixer-upper gems like these that await San Francisco homebuyers who are willing to take on more adventurous projects.

Other benefits to buying a San Francisco fixer-upper include:

• Lower price: Homes that require some updating tend to be priced lower, and many renovations can quickly add value to your home.
• Creative control: When you're the one in charge of updating your home, you can customize it however you choose.
• Tax incentives: Many renovations you do to your home can be dedicated from the overall property value when you sell your property, which will reduce the amount owed in capital gains taxes (Disclaimer: We are not accountants! Make sure to check with your professional CPA before embarking on your renovations to ensure accurate tax planning).
• Unique finds: San Francisco has many historical homes in need of repair that could make your fixer-upper the most unique home on the block.
• Staying in budget: Purchasing home at a price that is lower than the market average may be necessary for your budget.
• Purchasing a fixer-upper allows you to buy a house you can afford, and then you can take your time to save for the costs of fixing it up.

If you’re prepared to roll up your sleeves, the benefits of buying a fixer-upper in San Francisco can make the experience quite rewarding.

Cons of a San Francisco Fixer-Upper

Buying a fixer-upper in San Francisco, or anywhere for that matter, is not without its challenges. There is a lot of time, money, and energy that will be invested in fixing up a home and obstacles that you could encounter along the way.

Disadvantages of buying a fixer-upper in San Francisco include:

• Delayed move-in: The planning and work involved to fix it up can significantly delay your move-in date.
• Unexpected costs: No matter how well you plan, major renovations are always subject to unforeseen expenses.
• Building permits: All cities require permits for major home renovations, but San Francisco in particular has several building codes that need to be followed due to the number of historic homes and neighborhoods.
• Time: Any renovation project is going to take up a significant amount of your time, and can almost be like having a full-time job when all is said and done.

If any of the above disadvantages of buying a fixer-upper are deal breakers for you, consider working with a qualified San Francisco real estate agent who can help you find the home that’s right for you.

Pros of San Francisco Move-In Ready Houses

If time is a factor, then a move-in ready house is certainly an easier option than a fixer-upper. There are also more move-in ready houses than fixer-uppers available on the San Francisco real estate market, so finding your dream home will be a much quicker process.

• Quick move-in: Can't wait to begin nesting? With a finished home, you can start moving in as soon as you get your keys.
• Energy-efficient technology: New and renovated homes are often outfitted with the latest energy-efficient options when it comes to kitchen appliances and heating and cooling systems, which can save you money over time.
• Less paperwork: Since the home is already in a move-in condition, you won’t need to spend the time filling out the paperwork and permits that are required for home renovations.
• More options: Since most homes on the market tend to be in move-in ready condition, you will have more options available for the type of home you want to purchase and the neighborhood in which you want to live.

Overall, a move-in ready house in San Francisco is an easier process and may cost you less time and effort than purchasing a fixer-upper.

Cons of San Francisco Move-In Ready Houses

While purchasing a move-in ready house is the norm, it is not without its disadvantages. This is why working with a qualified real estate agent, like Danielle Lazier :: SFhotlist Team and Keller Williams San Francisco, will help you find the home you’re looking for and get you the best deal for your dollar.

Some of the disadvantages of buying a move-in ready house in San Francisco include:

• More expensive: To recoup the costs of updating, sellers often price move-in ready homes much higher. This is especially true in San Francisco seller’s market.
• Creative restrictions: Move-in ready homes don't always allow for easy customization.
• Questionable quality: When you're not there to oversee the update process, you're unable to ensure that high-quality work and materials are used for your home.

Work with a San Francisco real estate agent to determine whether a fixer-upper or a move-in ready house is the right choice for you.

Looking to buy? Contact Danielle Lazier :: SFhotlist Team and Keller Williams San Francisco to set up a free consultation!