Evaluating a "Fixer-Upper" Home in Toronto
Evaluating a Fixer-upper Home in Toronto
A Guide for First-Time Home Buyers and Real Estate Investors Alike to Evaluating a Property Before You Buy it
BVM Contracting is a general contractor that specializes in new home construction, custom home building, Home Additions, full interior renovations, and creating legal multi-unit properties in Toronto.
This article is meant to give anyone trying to buy a home that is in need of renovation the tools to evaluate the property (or properties) of interest. This method should be used anytime you are looking to avoid overspending and being put into a position where the cost of the home renovations were way higher than what you expected.
A large portion of this article will center around how BVM Contracting can help add value to Real Estate Agents and the buyers they work with to create a win-win for the transaction of buying a fixer-upper. We will go over the following topics in this blog:
Who is this guide for?
What to look for when buying a property in need of renovations
Adding aBVM Contracting renovation consultation as a due-diligence step for the property before putting in an offer of purchase and sale
The value this service brings to Clients doing purchase plus improvement mortgages
Download our “Site-walk Through Checklist” to make sure you properly evaluate the home during your visit
Although this guide can be used by many different parties, we have seen a lot of traction from the following groups of people:
Real Estate Agents (Buyer’s Agents specifically)
First-time Home Buyers in Toronto
Real Estate Investors in Toronto and the surrounding regions
Buyers who would like to utilize the purchase plus improvement mortgage for financing their home
The fact of the matter is that if you want to live or invest in Toronto, you have to understand that the value of the homes is mostly based off land value now-in-days, so when you are paying $700 K, $800 K, $900 K, or even over a million dollars and the house is still in need of renovations this guide will help you in properly evaluating the investment.
Another realization that people need to make about the real estate market in Toronto is that it is competitive and the likelihood of a multiple offer scenario on less expensive homes (i.e. fixer-uppers) is very high. This means that as a Real Estate Agent or Buyer you have to waive certain “key” conditions if you want your offer to be competitive, one of which being a home inspection. Many times with the more run down houses in Toronto the seller will not have a home inspection at the risk that it comes back with a huge list of issues that detract people from putting in their best offers.
Just because you usually can’t get access home inspection doesn’t mean that you cannot inspect the house yourself and ask the right questions! Here are the list of some key considerations when completing your site visit:
Determine when the house was built, your real estate agent should have access to that info.
Determine if any HVAC equipment is rented or outright owned. This is usually included in the description of the listing but should be checked in the mechanical room if it is not obvious.
What type of electrical is currently in place? Take a picture of the electrical panel and reference after your site visit to determine. If it is knob and tube it will need to be upgraded with any renovations
What is the size of the water meter? To avoid water pressure issues you can usually find the water meter at the front foundation wall of the home in the basement (usually concealed in the wall)
How old is the furnace/AC units? Try to find a model number on the units themselves and reference after the site visit. If the units are getting closer to 10 years old you will want to budget in the cost of new equipment.
Take advantage of asking the seller questions if possible. If there is no indication of when the roof was replaced see if you can get your agent to ask about it. Same with any other questions about the property.
See if the current seller has a survey of the property
Determine if the walls/ceilings have insulation if possible (sometimes this isn’t possible and should be accounted as a cost until proven otherwise)
If there is exposed foundation, determine if it is block or poured concrete and the thickness of the wall (try to get the measurement through a window opening)
Run the taps to see how the water pressure is
Check the furance/air handler to see if there is a duct cleaning sticker and see how long it has been since the last one
Check to see if there is a back flow preventer and/or sump pump installed in the basement
Determine if the basement is waterproofed, if there is a sump pump you can assume that it is but you can also check the exterior walls for a black plastic covering against the walls to confirm. The black covering is usually dimpled.
Are there smoke/fire detectors installed? Are they hardwired?
Check for exterior hose bib shut offs in the basement if the hose bibs are not frost-free hose bibs.
See if you can determine the age of the windows in the house. Depending on the age they may need to be upgraded.
These are just some examples of questions, and the list can go on for a very long time. It also takes a lot of experience to look for all of these items so depending on your home/renovation acumen you may want to get outside help and complete a renovation consultation
With the amount of experience we have gathered over the years walking through fixer-upper homes, we have created a great procedure and value-added service for real estate agents and property buyers that allows you to gather a representative idea of the cost of renovations before making one of the largest investments of your life.
With our renovation consultation service, you can book us in to walk-through the site during your scheduled site visit, which allows you to not waste time in your decision-making on a home. We are able to turn-around estimates within 24 hours and will be able to work with you and your ideas to effectively build your wish-list for any property and give you a budget for the renovation work that is accurate and based on real numbers.
Please note that this consultation service is not meant to replace a home inspection, we take the perspective of a general contractor/project manager who would be bidding on the project and put pricing together that way so you know the actual renovation costs.
With the gap in the marketplace with this service, and with the speed/flexibility we have in doing these visits we are able to charge for this service. Although, since we are also able to offer home financing services through Ryan Meagher Mortgages, if you or your client works with us on the financing side we will be able to complete up to two visits at no charge to add value to the process of buying a home. The regular cost of this consultation service varies depending on the size of the home, but the range is between $250-$400 + HST.
We believe that the cost of doing these consultations is well worth it for buyers because it allows them to feel confident in making purchases on homes. Would you rather force your client to spend the maximum amount of money on a worn out home and be house poor, or would you like to give them to opportunity to do their due diligence and feel good about every submitting every offer? If you have built your real estate business based on value and referrals your answer is the latter every time!
Further than doing this consultation service for fixer-uppers and worn down homes, sometimes there are houses that are in decent shape but the client still wants to complete some renovations. This is where a purchase plus improvements mortgage comes in. You can add up to $45 000 to your mortgage to help with the cost of renovations to your home. BVM Contracting’s renovation consultation service can help people with getting the necessary estimate required by the lender to complete this work, which allows you to qualify for the purchase plus improvements mortgage. We still charge for this service (whether it is the real estate agent or buyer paying) but with the speed we are able to estimate you will find no better option in estimating cost for your home purchase!
To get access to our thorough guide to completing a property evaluation of a fixer-upper please enter your information below and we will send you our site-walk through checklist so you can better evaluate your properties of interest. Further, if you are interested in our renovation consultation service please enter your property address and additional info (i.e. MLS listings, etc.) for the property below and we will contact you about pricing for your property.
About BVM COntracting
BVM Contracting is a full-service General Contractor or Home Builder located in Toronto. We provide home renovation and building services for major home renovations (kitchen renovations, bathroom renovations, basement renovations, full interior renovations, home additions, lot severances, and new home construction). Our goal is to help guide our clients through the process of renovating their home, from concept to completion.
Further than providing General Contracting and Project Management for major home renovations, we also offer value-added services such as renovation financing, renovation rebate consultations and services, building permit and design services, smart home installation services, and real estate investor services.
To learn more about our offering by visiting our services page.