Lenders are often willing to give you a mortgage that is ultimately based on the eventual fixed-up value, but they give you partial payments along the way, like 75% when you buy and 95% when fixed up. Negotiate this before you buy.
You can ask the seller to provide some financing for 6 months to a year. If they are despirate to get out they may be likely to accept. Here, the seller agrees to hold paper (a second mortgage) without receiving payment until you've done the work. Then, when you're done with the work, you refinance (or get your payoff as noted above) and pay the seller. If you play your cards right, you can sometimes make the purchase with little or no money of your own in the deal!
Sometimes the seller of the fixer-upper is a lender who has taken the property back through foreclosure. Here, the lender may be more inclined to give you a construction type loan. In some cases, the lender may provide both primary and secondarey financing on the same property just to be rid of it!
Usually agents present offers to sellers without the buyer present, but if its a fixer-upper, you should be there to eplain exactly what you have in mind. (NOTE: Some agents will tell you its against the law for you to come to negotiations, this is simply not true.)
When buying a fixer-upper, spell everything out in the purchase agreement, indicate that the financing and the deal is subject to your obtaining it. Also indicate whether the seller is to provide any financing by carrying back-paper.
Steps to Presenting an Offer on a Fixer-Upper
Present worth of home if in perfect shape, get the buyer to agree with you. (Provide as much evidence as possible)
Indicate the problems that exist with the property. (Have professional opinions)
Indicate what needs to be done to fix the problem and explain the cost. (Again, have professional opinions)
Explain that you expect to be paid for your time working on the property, indicate how much.
Do the math.