Fixer-upper vs. move-in ready? Follow the money

what they might be up against if they opt for a fixer when they fail to budget properly and spend wisely.

On average, people who bought a place needing work spent 38% more than they expected, the survey found. The most frequent over-budget jobs were heating and air conditioning, plumbing, basements, bathrooms, new appliances, roofs, kitchens and electrical work.

People buy fixers for all sorts of reasons. Money, of course, is the main factor. But many simply like the house, or the neighborhood, and a healthy minority figured they’d enjoy working on the place. Moreover, even though many didn’t save any money, 60% of those who broke their budgets said they’d do it again.

But even though the numerous home improvement shows on television make remodeling seem glamorous, you have to be willing to put up with a lot of inconvenience and surprises should you go this route.

Now, in the space we have left, some words on the fix-and-flip set, who tend to make some rudimentary, relatively inexpensive fixes to the properties they buy at deep discount and then peddle them to both owner-occupants and other investors as fast as they can.

“Flip” became a four-letter word after the 2008 housing flop and resulting recession. And with good reason, says Daren Blomquist of Auction.com, an online marketplace for distressed properties: “Speculative home-flippers added little value to homes, relying on price appreciation to fuel their profits.”

But lately, flipping has become less, shall we say, shady, and more on the up-and-up.

According to a study from CoreLogic, “flippers are shifting away from price speculation and toward adding value to properties.” And Blomquist agrees. More and more professional flippers, not those lured into the field by TV commercials, are employing a high-quality renovation approach, he says.

These flippers are still buying at a discount. But they’re transforming their properties into move-in ready homes through extensive renovations. And in the process, they’re raising home values and helping stabilize neighborhoods.

No matter what side of the coin flippers are on, they should budget carefully, just like those who buy fixer-uppers for their own use. Otherwise, there may be no profit or savings at all.

Case in point: According to Discover Personal Loans, more than three-quarters of the nearly 1,000 people it surveyed were way off when asked what it would cost to remodel a kitchen. They missed the mark by $9,500.