Zillow: Little Discount Value in Fixer-Upper Homes

In a data analysis that may give the Property Brothers heartburn, Zillow has number crunched the financial considerations surrounding fixer-upper homes and has determined that they rarely offer a significant value.

In a national analysis of 70,000 listings for fixer-uppers, Zillow has concluded that fixer-upper homes list for a mere eight percent less than market value, which for the median fixer-upper would save buyers only $11,000 for renovations. In some areas, the savings are miniscule: fixer-uppers in Phoenix are, on average, worth $1,000 less than market value, while similar properties in Atlanta and Miami are also listed as very close to market value, thus denying potential buyers any savings for renovations.

In pricier real estate markets, however, buyers see a greater cash savings. Zillow cited San Francisco’s fixer-uppers, which are discounted at a relatively low 10 percent but can provide buyers with $54,000 in upfront savings for renovations. High cash savings were also cited in San Jose ($38,000) and Seattle ($24,000).

"Fixer-uppers can be a great deal, and they allow buyers to incorporate their personal style into a home while renovating, but it's still a good idea to do the math before making the leap," said Svenja Gudell, Zillow chief economist. "While an 8 percent discount or $11,000 in upfront savings on a fixer-upper is certainly a good chunk of change, it likely won't be enough to cover a kitchen remodel, let alone structural updates like a new roof or plumbing, which many of these properties may require."