Perhaps you've decided to sell your home, but you're intimidated by the Instagram-worthy houses on home buyer websites. Don't let these picture-perfect houses deter you from selling a home in poor condition. Selling a house that needs repairs, whether major repairs or not, happens all the time.
Real estate experts say that "poor condition" is a matter of opinion and that half of the homeowners believe that there is always something to improve on in their property.
Armed with a well-informed strategy, selling a house as is is entirely possible and has every chance of success. Find out how to get the highest price for your house in poor condition.
Before you can sell a home in most real estate transactions, it needs to pass a handful of inspections facilitated by licensed home inspectors. There's the general home inspection, mold inspection, termite inspection, and pest inspection. Homebuyers request a separate water damage inspection on occasion. It's safe to say that if you fail your inspection reports, you may indeed be selling a house in poor condition.
Unfortunately, the fastest way to land your home on the poor condition list is by being in a competitive local real estate market where the benchmarks of hard-to-please prospective buyers are over the national average. You also regard an area as competitive if there are constantly new developments and construction or the residents consistently update their houses with the latest design and trends.
On the other hand, selling a home that needs repairs may not necessarily mean it is in poor condition. A bit of home improvement or cosmetic repairs can set it right and help it fetch a reasonable sale price. Discover if repairs are worth your time & money in the following sections.
Your home for sale may be in bad condition to you but could be full of possibilities for potential buyers. Let's see where your home falls under.
To be deemed uninhabitable, a house should have established extreme chimney damage, lead or asbestos presence, faulty foundation, extensive termite damage, excessive mold, and a roof that needs replacing.
A home may be inhabitable but need repairs if faucets are due for replacement, has damaged floors, defective heating and cooling systems, cracked foundation, plumbing issues, a leaky roof, and some electrical problems.
You may not need to worry that you are selling a home in bad condition when your house is only in need of minor, quick fixes like changing the lights, applying fresh paint, updating the bathroom & kitchen, and overall deep cleaning & organization.
Suppose you're willing to go through the repairs in the hopes of selling a house at a profit. Ask for help from a local real estate agent before making any final decisions. Without sound advice, it's easy to waste thousands of dollars on remodeling that won't have a return on investment.
Gauge if it's feasible to recoup your hard-earned money with these estimates.
Major repairs are those where a system that is critical to the livability of the home has been compromised. Many buyers will think twice about a home with major looming repairs or signs of deferred maintenance. These are issues that a home inspector will identify and flag on the home inspection report. If you don't plan on making major repairs prior to listing, then you should be prepared to make concessions during negotiations.
Windows: $65 - $1,400
Flooring: $80 - $4,900
Kitchen: $5,000 - $60,000
Bathroom: $2,500 - $30,000
Siding: $50 - $5,000
Finished Basement: $6000 - $50,000
Electrical Issues: $1,00 - $1,500
Minor repairs are those that are largely cosmetic and could be done for a few hundred dollars. When visual repairs are needed, buyers assume there could be underlying issues as well. These low cost repairs enhance the curb appeal of your home and ultimately fetch a higher price. One study found that a fresh coat of paint increased the offer by an average of 1% - 3%. If you are even remotely handy, you can save money by making these a weekend long home improvement project.
Landscaping: $50 - $7,000
Shutters: $70 - $900
Shades: $50 - $1,800
Cabinets: $50 - $972
Paint: $350 - $5,000
HVAC system replacement: 85% return
Garage door: 95% return
Hardwood flooring: 100% return
New wood flooring: 106% return
New roofing: 107% return
Some homeowners are willing to finance their house repairs by availing of these types of loans:
Study your community before you list your home. Remember our second marker for what makes a poor condition home? If every house in your place looks brand new, with fresh paint, new appliances, and updated finishes, your poor condition house will inevitably stand out in the real estate market. Your home may have more floor or lot area and be in a better spot than other houses in the neighborhood, but it will likely sell for below the asking price if it's in clear poor condition.
If you're in a hot seller's market, you may be able to sell close to the current market value of your house without investing in many repairs. Otherwise, a slower market might force you to make those remodels and put extra effort into (sometimes dreaded) showings.
Selling a house is much more complex than you think. Here are some fees to pay before you can bid your poor condition home goodbye:
Other fees to include:
The final step is to compute how much you will make on your poor condition home if you proceed to make the repairs. The formula is subtracting the repair costs, remaining mortgage, and other fees from your sale price.
- Less Remaining Mortgage
- Less Repair costs
- Less Other Fees
= Estimated Profit
Let's take the average value of a home in Texas ($211,199) as an example:
$211,199 sale price
-$114,000 remaining mortgage
-$19,708 repair costs
-$15,238 closing costs
= $62, 253 estimated profit
The estimated profit seems attractive enough, but your situation might not be as uncomplicated as you hoped. Perhaps you do not have the time for extensive repairs or attend every meeting with your real estate agent. You may not also have the cash upfront for the costs enumerated earlier. Fortunately, there are other options for selling apart from the traditional selling process.
A real estate investor or cash buyer can make a ready cash offer on your fixer upper. If you want to sell your house fast, you can close in as quickly as two weeks with a cash buyer. There's also a chance that you could make a larger profit when you sell to a cash buyer because you won't have to recoup the costs for repairs or closing fees. For example, if an investor offered you a lower price of $200,000, it could feel like it is well below market value, but you would be keeping more profit.
Lastly, if your home falls under the legally uninhabitable or condemned category, selling to real estate investors at a slightly below market price is better than not being able to sell at all to traditional home buyers.