An endangered species: Traditional fixer-uppers a rarity in current market

One of the first things Spokane-area home buyers tell real estate broker Bryan Crabbe is that they are searching for a deal.

Once a market littered with homes with potential, also known as fixer-uppers, the Spokane market’s current lack of inventory has redefined what many would consider a find, said Crabbe, who works with Five Star Real Estate Group.

“The first statement I hear out of all of them: They are looking for a deal under market value,” Crabbe said. But “that market value is a different thing than it was a year ago. Even the dregs of the home market are going for asking price and over.”

Just 10 years ago, former Spokane City Councilman Rob Higgins said about 20% of Spokane homes sold for less than $100,000. Currently, only 0.6% sell under that mark.

Higgins, executive vice president of Spokane Association of Realtors, said that new benchmark for a “fixer-upper” now probably sells for $150,000 to $200,000.

The higher prices have reduced the list of affordable homes for first-time buyers, who often don’t have as much money to put down as speculative buyers, or previous home owners, who have money left over from the sale of their previous houses, Crabbe said.

“You have the first-time buyers who are willing to consider a home they wouldn’t normally consider. But, the price has gone up so much, that’s all they can afford,” Crabbe said. “They are competing with people who are downsizing or people who are looking to fix-and-flip or fix-and-rent them out.

“So, you have this large group of people shopping for the same pool of homes,” he said.

Some 90% of the business that Michelle Mendez does are homes her company purchases and then resells.

Mendez, the director of operations for the Lee Arnold Team, which is licensed with Keller Williams, said her company buys fixer-uppers and then remarkets them.

“We buy homes directly from sellers who might have probate issues, tax issues or code enforcement issues,” she said. “We work with them to help them sell their homes and get cash quick.”

In the past, Mendez would focus on those things that buyers tend to look for, which include upgraded kitchens and bathrooms, to ensure they would sell for a higher. price But right now, homes are moving regardless of the upgrades.

“We used to do granite counter tops, gut the kitchen, gut the bathroom and put in wood floors,” Mendez said. “Now it’s like, ‘That carpet looks pretty good. Let’s clean it.’ People just want something that is clean and livable.”

The market has become so tight that Mendez often must agree to rent the homes back to the seller for six months so that they can find another home to purchase, she said.

“That’s our biggest stumbling block, is people who are reluctant to sell their house because they don’t have a place to go,” Mendez said.

The popularity of television shows about refurbishing homes makes many of the old improvements moot, she said.

“What we have found is that the buyer doesn’t necessarily like what we have chosen,” she said. “They want to fix it up themselves.”

But buyers must also consider the hidden costs of trying to make that fixer-upper into the home of their dreams, Crabbe said.

“They are not for everybody. It has to be the right person,” he said. “There is going to be work that needs to go into it. They need to consider those costs as part of the purchase price.”

An added problem is that lumber prices have recently skyrocketed to new highs. And, because so many homes are under construction, homeowners may have difficulty finding contractors with time to consider home improvement projects.

“If they are relying on subcontractors, most are tied up with jobs for bigger contracts,” Crabbe said. “You can get into a home for a fair price, but it if sits there for four months unoccupied, you still are paying taxes, utilities and mortgage.”