The real estate market in San Diego is one of the hottest and most lucrative in the country. But that doesn’t mean that buyers are going out of their way to purchase houses that they’re going to later have to dump a great deal of money into in order to comfortably live in. No matter how good a real estate market is, houses can and do sit on the market for years looking for buyers that are willing to buy them at the asking price. Many times, they end up being bought up by developers for a fraction of the cost, fixed up, and then flipped.
#1. Buyers Don’t Want Houses They Have to Pay to Renovate
When a potential buyers is thinking about making renovations to their home, they’re considering things like getting the hardwood flooring they always wanted, or adding an addition. What they’re not doing is hoping to completely remodel the kitchen. There’s a saying among real estate brokers that goes something like this: you’re not selling the house, you’re selling the kitchen. This basically means that interested couples that are looking to move into a house, are fundamentally considering the kitchen as the most important room. If a house needs major work to the kitchen, it’s going to be a major turn off to prospective buyers.
#2. The Cost of Renovation is High
Renovating a kitchen, bathroom, or any other room in the house will run into the 10’s of thousands of dollars. For this reason asking even 75% of the market value on a house that is labeled a “fixer-upper” is likely asking too much for most buyers, who have not only incurred the cost of the renovations, but the responsibility for them. Houses labeled as “fixer-uppers” sell for dirt cheap prices because they’re major headaches to whoever has taken them over.
#3. Health and Safety Concerns
One of the major reasons it’s difficult to sell a fixer upper, even in a good economy, even a real estate market as lucrative as San Diego’s is that are legitimate safety concerns that buyers don’t want any part of.
When you add these three hard truths together, you end up with a prospective buyer that would be more willing to wait for a home that is ready to move into than one who is willing to take on the major risks associated with a fixer upper. The biggest problem for most buyers is that they can never be sure how much money they’re going to have to dump into the fixer upper upon closing on the deal. So almost never ends up being worth it.