Life can change quickly, and sometimes people need to sell their homes as quickly as possible, before it is in perfect shape. Navigating the sale of a home that needs repairs can be tricky, but knowing what to expect can help sellers make the right choices for their circumstances. Sell faster and earn more by making these five crucial considerations about selling your home in its current condition.
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Make the Repairs or Sell As Is?
If a home needs repairs to make it comfortable and livable, the seller must decide: make the repairs before selling or offer the home as-is.
If there is time to make repairs, these can often increase the home’s selling price. However, they will require an investment of both time and money upfront. Run a few scenarios to see whether the time and cash invested will pay off in a quicker sale at a higher price.
While the value of making repairs is unique to your situation and local market conditions, focusing on the repairs with a high ROI, or return on investment, is the best place to start. You may even be able to get the best of both worlds by making a few key repairs to increase your home’s value before selling and then save your money when it comes to less important fixes.
It’s also important to note that a quicker sale will save you money. If your home is in enough disrepair to deter buyers, your home will sit on the listing pages for longer, costing you extra money in mortgage payments, property taxes, utilities, and more. This is called “carrying cost” or “holding cost.” Selling for cash or making repairs are both ways to get a quicker sale.
When to Sell As Is
In an ideal world, we’d have all the time we needed to repair a house before selling. But sometimes, a sale has to happen quickly. Here’s when to sell your home as-is:
- When there’s no time to wait for repairs to be completed
- When the seller does not have the funds to make the repairs
- When the repairs cost more than the home will be worth
Houses in need of repairs can be more complicated to sell than homes that are ready for move-in. Transparency is key to avoid costly miscommunications and unhappy buyers.
Get an Inspection
A good initial step for selling a house that you know needs repairs is a home inspection. If you go into the inspection understanding that issues will be uncovered, this can serve as documentation of the state of the home. Make it clear to any buyers that these issues exist.
If the inspection turns up more work than you’re prepared to take on, you can decide whether to sell the home as-is at a discount from its potential value or accept offers that include credits toward repairs in the closing. Both are ways to entice buyers by, essentially, paying for the repairs they’ll have to make.
A home that needs repairs will have costs for the buyer immediately after the sale. Because of this, most buyers will be less willing to pay the same price than they would for a home in good condition.
A real estate agent familiar with your local area can help with pricing the home low enough to be attractive but at a fair price for what the house has to offer. They can also focus on the benefits of the home in the listing. For instance, a home may need investment in a new roof or HVAC, but it might also be in the service area of a wide variety of educational and recreational options.
Understand the Buyers
There are some benefits to selling a home as-is. Buyers who are open to as-is houses tend to fall into one or more of a few categories. Some are investors who intend to flip a home or rent it out. These individuals often have experience making repairs and will not be put off by having to do some work to make money on their investment. They’re also typically cash buyers, which has the benefit of less paperwork, a quick closing, no risk of financing falling through, and more.
Remodelers with skills and experience with home repairs may be in the market for an as-is home. These are often individuals who have a specific vision for a home and won’t be worried about putting in the effort to make it a reality.
Deal hunters are the third category that often seeks out homes that need repairs. They are on the lookout for lower prices and usually will not mind having to expend some time and effort after the sale.
Every home and every real estate market is different. The degree of work a home will need and local market factors will dictate what the seller can expect from a sale. Do some research in advance and manage expectations during the sale. By being aware of the possible outcomes, the seller can get a result that leaves them satisfied.