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“Fixer Upper” fans may recall last week’s episode in which Chip and Joanna Gaines renovated a house for a widow who had moved to Waco, TX, to be closer to her two grown sons (see our recap, “New Chapter, New House“).
But guess what? This widow is moving on, and out, already! She’s just listed the two-bedroom, 1.5-bath home for $349,900. Despite its big markup, in the world of inflated “Fixer Upper” valuations, this seems like a deal. Right?
The quick resale has a heartwarming backstory: Patti Baker, whose husband of 37 years died in 2013, had moved from Albuquerque, NM, back to Waco where she’d once lived. She bought a 1,432-square-foot bungalow in late 2016 for $162,500. Since it needed work, she applied to “Fixer Upper” and was picked to appear on the show.
Just months after filming wrapped, Baker reconnected with her pastor, a widower. On their first date—which included a tour of her fixed-up home—the pastor popped the question. They’re now happily married. Sweet!
But that also meant that Baker would have to leave behind her beloved bungalow, which shouldn’t be a problem to sell. After Baker’s story appeared in People, the home’s listing agent, Shelly Negrete at Magnolia Realty, was deluged with over a thousand eager buyers.
“I had to turn off my notifications because my phone would not stop going off,” Negrete told realtor.com®. “It’s been overwhelming.”
So with such an astounding wave of buyers beating down her door, we had to wonder: Did this widow price her home way too low? Couldn’t she have asked for a whole lot more?
Why this ‘Fixer Upper’ home is a bargainFor starters, let’s just say that at this asking price, Baker stands to make a healthy profit. With $88,000 in renovations by Chip and Joanna, the cash investment in this home totaled $250,500. If this home sells for Baker’s asking price, she’ll make a cool $99,400 profit.
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That seems great, except for the fact that most “Fixer Upper” homes are listed for insane prices. The infamous five-bedroom “barndominum,” for instance, is currently listed at $1.2 million. Even the tiny one-bedroom shotgun house is on the market for $950,000.
So in that kind of company, a list price of $349,900 seems rather modest, if not the bargain of the decade. What’s up with that?
All becomes clear when you look closely at the bungalow in question.
“The house is adorable, of course, but the size is a significant limitation,” points out Wendy Flynn, a real estate agent with Keller Williams of Bryan College Station, TX. “With only two bedrooms and 1.5 bathrooms, the number of potential buyers is limited. A traditional family is unlikely to purchase it because there are not enough bedrooms or bathrooms.”
In fact, “from my perspective, the price is on the high side,” Flynn continues.
Denise Supplee at Sparkrental.com agrees, saying, “Without that ‘Fixer Upper’ infamy, the home is overpriced.”
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Even listing agent Negrete concedes that they’re going out on a limb.
“The price is a little high for the comps in the neighborhood,” says Negrete. “But it does have that ‘Fixer Upper’ factor. That’s what we’re banking on.”
So what will the home sell for?
“I would see this house selling for $275,000 to $300,000,” says Flynn.
Adds Supplee: “I would even suspect it may sit on the market a bit.”
The problem with the ‘Fixer Upper’ factorThe problem isn’t that buyers won’t pay through the nose to own a home designed by Chip and Jo. But that flurry of interest could get stopped in its tracks by the home appraisal. That’s where a mortgage company takes a cold, hard look at the home to estimate its value, and “Fixer Upper” fame may not make much of an impression.
“While buyers may be interested in a ‘Fixer Upper’ house, I’m not confident that appraisers would place that much value to TV fame on the overall appraisal price of the property,” Flynn says.
Why does this matter? Because mortgage companies will loan only as much as the home is appraised for. So, if the home is appraised to be worth $300,000, that’s the maximum loan a home buyer can get. So if this home sells for $349,900, the buyers would need to cough up $49,900 of their own money to cover the difference—or more, if there’s a bidding war.
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This narrows the buyer pool considerably.
“It would probably have to be a cash buyer or someone with a significant down payment,” says Negrete. “Twenty percent is not gonna get it.”
All-cash buyers aren’t unicorns, either. According to the National Association of Realtors®, in January 2017, 23% of all residential sales were made without a home loan.
So hopefully, there are more than a few loaded buyers in those thousand-plus calls for this property. In other words, this widow’s “happy ending” could soon be a whole lot happier.
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The post Wow, a ‘Fixer Upper’ Home for Sale That’s Cheap? A Sneak Peek Inside Reveals Why appeared first on Real Estate News & Insights | realtor.com®.
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