Selling a House As-Is or with Major Repairs
As home owners lean towards selling, thoughts turn to sprucing up the place, fixing a few obvious, easy things and even some light remodeling - basically fast cosmetics.
These may come in handy for you too:
What if the property’s minor defects prove to be increasingly troublesome or costly in the near future or what if the home has undeniable defects; a rusting hot water heater, leaking roof, faulty electric, severe plumbing or septic issues?
In these cases, sellers are usually aware of the problems, if not they soon are as they begin preparing to sell. When you sell a home as-is you lose negotiating power.
I would say in these cases, for the most part, in most cases, the heavy lifting projects and work should be part of the negotiation vs an expensive undertaking prior to selling.
Price the home properly, work with a Realtor skilled with distressed properties and great real estate investor connections. To move the property fast, one must account for the necessary repairs to make the house health and habitable.
Start with the comparative market analysis or highest price analysis. Run the comps for what homes in fair to great condition are, figure out the average fair market value and start subtracting the repair costs.
Seller’s Homework and Advice
1. Have a formal inspection done – You may not like the sound of that, but having your own inspection done, you know what the buyer’s inspections are going to reveal, hence, you are already prepared with estimates handy, have the advantage and ready to negotiate.
2. Estimates – Get estimates for all the major repairs, don’t forget to include staple things like carpet and paint, get more than one estimate. Your best bet to save money on estimates is to get them from general contractors vs individual professionals. Keep the estimates handy and available.
This is going to serve you well; one buyer might believe it will take $50,000 to make the house habitable while another might have the impression $15,000 will do it. Again, have those estimates handy.
3. Look into the future - Buyers that are interested in your property, having found it online after listing, because it was in their price range searches would have missed it had you sunk all your money into these repairs to command top dollar. They were interested because they could afford it, and possibly do FHA renovation financing.
4. Complete disclosure - Be thorough and honest with the property disclosure with complete details, updated as buyers have inspections of their own done. Somethings that are old but functional you may not want to include in the repairs and leave it as a item of negotiation. Say, a hot water heater, past its prime but still working. You could throw in a home warranty as in incentive, install a new one or take some more off the price to accommodate a new one.
5. Keep the door for negotiation open - If a buyer is totally aware upfront about all the ugly truths, they may be willing to offer a higher price to a seller willing to make the repairs. Keep that in mind, but don’t just renovate and wing it before listing if it’s a truly distressed home.
Talk to a good Realtor experienced with distressed properties.
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