First do not think those shows are real life. Like any tv or movie the people work from scripts. At one time you auditioned to be on the shows. You were given an amount real or not that your character would use. Some have been filmed here and the outside of one house is used while the inside of a larger house was the interior.

What I want to know and this is in real life where are people getting so much money to pay more than the appraised cost of a house or apartment. I know there are people who do earn over $250K+ a year combined income but unless they have an inheritance sitting somewhere or parents paying the difference not something a 20 something would normally have. The other, to me, logical source would be retirement funds. While some of the regulations such as loans on those accounts for purchasing homes has been relaxed the amounts I am reading the taxes on the amounts mentioned on here earlier in the year would be in the highest bracket.

I realize these are not *reality* but often either the realtor or the house hunter will pipe in that because the home less than their budget, they can use the excess to remodel.

As I posted, absent unusual circumstances (large cash payment or whatever) I always assumed that the maximum budget was what you were approved for by the lender based on your income but that the actual mortgage is always going to be a percentage of appraised value - in other words the lender is not going to just fork over money so that you can remodel the kitchen just because you purchased the home for less than what you were approved for.

I haven't seen buyers discuss their mortgage, do we know if they have one, it may be a cash purchase or they have a separate large savings account for the anticipated remodel.

The show is about buying and remdeling a house, it's not about financing so it isn't discussed.

Let's say that I have a $500K price range. To me that means that I have at least 20% cash for a down payment, plus cash for closing costs, and I am approved for a $400K loan, including taxes and insurance (whether paid in an escrow account, it's part of the monthly expense).

I would hope that the down payment and closing is not the full extent of my cash resources.

So I remodel that house to the tune of $100,000, and guess what? I still have a roughly $500K house.

Now if I buy a real junk pile for $300K, and flip it, then sell for $500K, I'm putting in all cash, and my own sweat to do the required work. Beyond the average homeowner's skills, and probably an all cash purchase because no bank would finance a house in that poor a condition.

No, you are correct. Buying a lesser house that is financed doesn't give you money to remodel. And only if you buy a property that needs major functional remodeling will you greatly increase the value of the house.

@C Marlin - For the most part based on impressions of the HH these are not people who are likely to have a lot of cash. For the most part they are first time homeowners who appear to have modest means.

I am really basing it on what they are stating - e.g. that somehow for the ordinary buyer who is relying on a mortgage that somehow if they don't spend up to the amount the are approved, that somehow they will then have this "saved" money in pocket.

Based on the way they are referring to having a "budget" which usually means what one is approved for. In general, one doesn't think of one's cash savings as being part of the home budget except to the extent that one needs a down payment and closing costs and for the most part a down payment isn't significantly less if one spends less than the "budget" - e.g. there isn't a direct correlation for being a home that is $50,000 less than what one is approved for and then having $50,000 for immediate improvements.

ETA - And I am completely ignoring the economics of home remodeling for those who aren't somehow in the business and are paying full "retail" and not doing major DIY. Based on the "plots" (since all reality shows have somewhat of a story line) it is generally the aesthetics that are the issue - e.g. they want white cabinets or spa type bathrooms. Often times the actual expense of taking down a wall to create "open floor plan" is ignored.

Helen, it is a tv show that has writers that tell the people what to say and do. It is not reality no matter if those shows are sold as such.

It's my understanding that these homes are already something the "prospective buyers" own or have already purchased, and the "tour " of homes is just part of the script. The money they have to spend is what they have in cash/loan to fix-up the house.

There have been more than a few lawsuits with the TV personalities/ fixer-upers that did only a cosmetic job of making the house look good for TV but didn't, in reality, give what the owners paid for; and, in one instantance, actually damaged the house and then didn't want to make it right.

My DS is completing his second flip house now. He goes in with financing already set up, beyond the cost of buying the home to be renovated. Reno isn't 'in' the purchase at all.

These TV programs are all part of marketing -- convincing people they want or need 'new' or 'more' of whatever. Scads of magazines are devoted to the same thing. There's an industry that needs you to need them!

You might ask yourself which house will appraise for more: The all-of-a-piece home; or the 'rearranged' one that is a mix of new and old, usually a 'make do' floorplan. We faced this question 20 years ago, when we first planned to remodel an old ranch. We were time and money ahead to tear down and build one all new house. (This may have to change, though, if building material costs keep rising. Maybe old houses will be raided for their lumber as well as their copper!)

Just to clarify - I am fully aware that these shows are not documentaries but they also aren't fully scripted. I also understand that the shows are intended to sell various products for the home and are essentially vehicles to deliver eyeballs to advertisers.

The scenario of the HH or the realtor expressing the option of renovating because they are under budget turns up in a fair number of the episodes.

I am just wondering if I am missing something about *standard* home financing - not flipping; not cash purchases or other out of the ordinary ways people purchase a home. Just the normal person who qualifies for a certain amount of a mortgage and has scraped together enough for down payment and closing costs.

I don't understand how in the *typical* home buying scenario one is able to spend immediately on home renovations because one didn't use the entire amount of the approved mortgage.

You have your answer. The comment is ridiculous and meaningless. Not real. I've heard real estate agents say the same thing. Guess they think it sounds good.

Now you have one more think to not worry about---you are right and you are not missing anything about financing.

Some people have more cash in reserve for the renovations. You can also borrow up to the appeased value, not just the sale price with appropriate down payment. If I have $130K in the bank and put down 20% on a 500K mortgage I still have $30K to spend. There are also people who run right back to a bank for a home equity loan taking back a big chunk of the down payment for upgrades, with some up to 95% of the appraised value.

I loved the show, now I hate it. I never want to here a person say "we can sit out here and have a glass of wine" on any DIY or HGTV show ever again. Too small, not stainless appliances, I want granite......ect. Why did the realtor show them these houses to begin with? Dumb.

You are approved for X amount of mortgage, based on the financials you provide. When you contract to buy a home, it will be appraised to see if your lender agrees it is worth the full -- or a lesser -- amount of what they have said they can lend you. That's all. If you want to spend on renovations, that's outside of the downpayment + mortgage. You'll have to pay for renovations out of pocket or by getting another loan. Mortgages are for existing (real) property, not some eventual value after whatever 'improvements' are made.

It's a shame when people think that they are just fine with only a downpayment + mortagage + closing costs. There are a slew of expenses that a first-time homeowner will soon discover, from moving expenses to general maintenance, right down to needing to buy a garbage can if it's a new home or the previous owner didn't leave one.