For one reason or another, Americans are going wild for remodeling. In 2018, American homeowners spent 7.5 percent more on renovations than they did the previous year, which amounts to more than $340 billion on new flooring, better backsplashes and updated windows and doors. It’s unlikely that this home remodeling trend will disappear in the coming year – and it’s likely that you’ll want to do something new to your property, too.

If you plan to renovate the next property you purchase, you should be looking at buying a fixer-upper. The worst house on the best block will have a lower initial investment cost, giving you more financial space to play. However, not every fixer-upper is worth your time and money. Here are a few surefire signs that the old house you’re looking at is ripe for renovation – and a few red flags that should tell you to stay away.

Green Flag: Strong Structure
Even if you don’t know the right side of a hammer, you should be able to tell whether a home has a strong structure or not. Large cracks in the floors or walls indicate that there are structural issues that have remained unaddressed, but if the walls look straight, the ceiling isn’t drooping and the floors feel level, you probably have a green-flag home on your hands.


Red Flag: As-Is Clause
When you make an offer on a property, the sellers will provide you with a contract. You need to read this carefully to understand the timeline of your purchase – and to look for an as-is clause. These clauses mean you can’t return the property or sue the previous owner for major faults you find in the home. These clauses are dangerous because the force you to assume all liability for your property, even if the seller leaves out important information about the quality of the home. If you see as-is anywhere in your offer contract, you should consider backing out.

Green Flag: Attractive Layout
The floorplan of a home is more or less unchangeable. While you can knock down some walls and shuffle cabinets from here to there, you really can’t do much about where the kitchens and bathrooms are located – aside from tearing down the entire structure and starting anew. Thus, if you like the layout of a home, that’s a good sign you should buy.

Red Flag: Pressuring Agent
Too often, new or inexperienced homebuyers are pressured into making fast decisions on properties by lazy and over-eager real estate agents. If you feel uncertain about the home you are considering but your agent is aggressively trying to convince you to buy, you shouldn’t just say “no” to this property, but you should find a new agent to represent you. Though some markets move fast, agents should have your best interests at heart, which means good agents won’t increase your anxiety with aggressive sales tactics.

Green Flag: Minor Problems
It wouldn’t be a fixer-upper if there were nothing to fix. However, green-flag fixer-uppers don’t need any serious renovations; ideally, you’ll find what agents call a “Granny house,” which has been well-maintained by a devoted homeowner but needs some minor cosmetic remodeling to suit today’s buyer. There are even a few non-cosmetic issues you should be willing to take on, like low water pressure or a minor pest infestation. These lower the cost of the house but don’t cost you much to set right.

Red Flag: High Price Tag
The point of buying a fixer-upper instead of a move-in-ready home or new construction is that you’ll save money on the initial investment. However, if the fixer-upper you’re eying is at the top of your budget, you probably should move on. Renovations aren’t cheap, and the more of your savings you spend on buying the house (and paying the mortgage), the less you’ll have to fix it up, which means the longer you’ll have to live in a home with problems.

Green Flag: Old Appliances
Like minor problems, old appliances shouldn’t be a turn-off. Though new appliances can be costly to buy outright, there are programs available to help you pay for repairs and replacements of older systems in your home. A real estate home warranty protects not only your appliances but also your HVAC, your electrical system, your plumbing and potentially your roof. Most sellers of fixer-uppers offer a year of home warranty with the sale, but you can continue to cover your home by renewing the warranty every year.

Red Flag: Bad Neighborhood
Whenever you visit a property you might purchase, you should look not just at the house but at the neighborhood around it. If your would-be neighbors don’t take good care of their yards and homes – or if the houses themselves seem to be vacant – you shouldn’t even crack the front door. Your goal should be to buy the worst house in the best neighborhood, not the best house in the worst area. Your neighborhood affects your home price more than you might think, so it’s key to scope the surrounding streets out before you buy.