After Hurricane Michael came through last year and the general deterioration that happens in a home over time, many homeowners are coming to me to ask how to sell a house that needs repairs. Often, homeowners feel trapped, assuming that their house must be in pristine condition to sell it.
Luckily for home sellers, the present inventory shortage makes it quite possible to sell a home that is not in perfect condition. If you are a home seller in this situation, you have two options: make the repairs or choose an appropriate price for your home.
1. Make The Repairs
You can always choose to make the needed repairs before putting your house on the market. Doing this will help to ensure that you receive full market value for your home. However, factors such as financial resources and time constraints may affect whether this route is the best for you.
Another option is to fix only a portion of the issues. Some problems can be repaired at a fairly low cost, but have a relatively high return on investment when selling. For example, painting your walls often pays for itself several times over, versus having a new roof installed that could cost more than ten thousand dollars. Speak with an experienced real estate agent to decide which repairs are best for you to make, if possible.
2. Price The Home Appropriately
When selling a home, it should always be priced according to current market values. With a house that needs repairs, determining the appropriate price may be a little more difficult.
A homeowner might be aware that homes similar to theirs in good condition typically sell for around $275,000 and that their house requires around $50,000 in repairs. Some homeowners might consider pricing their home at $275,000 while planning to entertain offers around $225,000 due to the problems. Others might subtract the cost of repairs and begin by listing their house at $225,000.
However, neither approach is the best in this scenario. The first approach will discourage buyers from even looking at the home in the first place. When placed next to homes in better condition for the same price, the majority of buyers will have little interest in your fixer-upper.
The second approach is flawed in that it lacks an incentive for the buyer to choose a less-than-pristine house. If they won’t gain any equity in the house after going through the trouble of coordinating repairs, why would buyers choose your home over one in perfect condition?
Ultimately, the price for a house that needs repairs should account for both the cost of necessary repairs and an incentive for the buyer to go through the hassle of repairing the home. Fortunately for most sellers today, the incentive amount will be much lower than it would be in a housing market with ample supply.
No matter what you decide, you cannot hide from repairs that your home needs. If you know about a defect, you are required by law to disclose it to potential homebuyers. You are not obligated to repair the issues, but if you decide not to, then you will need to account for them when determining your listing price.
Selling a house that needs repairs does require precise marketing efforts and a strategic home selling plan. You need to attract the buyers seeking homes that require modifications if you want to get top dollar (they will view your home's condition as an opportunity, not one that requires additional effort). Make sure you are working with a real estate agent who utilizes aggressive marketing techniques and who can assist you with choosing a strategy that will maximize the amount of money you will gain from the sale.
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