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Selling a House that Needs Repairs
Selling your home on the real estate market can be overwhelming if it needs too many repairs. You have to invest time and money, not to mention patience, in the whole process. Thus, you must really think about how to proceed with the sale.
There are four main ways to sell your house that needs a lot of repairs: fix major issues, make minor cosmetic fixes, sell as-is on the market, or sell as-is off market. Among these options, the most financially sound are selling the house as-is to a retail buyer or a cash buyer. If you need immediate cash, the latter is your best option.
Interested to learn more about selling a house that needs repairs? We've got you covered! Here we'll discuss all your options and help you decide which would net you the best value for your home.
Can You Sell a House that Needs Repairs?
Yes. You can definitely sell a house that needs repairs; however, do not expect it to sell at a very competitive price, especially if you don't plan to make simple fixes.
To sell a house that needs work, most people prefer to sell as-is. However, the offers won't be great compared to move-in ready homes since the number of retail buyers interested in "as-is houses" is limited.
If you don't want your home to be listed for long, selling it off-market to a cash buyer or investor might make more sense. These investors are looking for homes to flip and would gladly give you a cash offer for your home that needs major repairs.
How to Sell a House that Needs Repairs
When selling a house that needs work, you actually have several options. Although we have already established that selling as-is is the most favorable, you should also consider your other options since each home sale is unique. You may find that making fixes before you sell your home may net you more money.
Here are four ways to sell your house that needs a lot of repairs!
Make Major Repairs Before Selling
Making major repairs before selling your home means dealing with high-priority issues like roofing, electrical lines, foundations, etc. Often, these high-ticket home repairs are related to safety, so dealing with them can be stressful.
Below is a list of the major repairs you need to make before selling your home:
- Roofing: Most often, roof repairs cannot be DIY'd. If roof replacement is needed, you may have to spend an average of $5,000 to $10,000 before you can sell your home. This may even go upward if the house is huge.
- Foundation Issues: Foundation repairs for your home will run you thousands of dollars, similar to roof repairs. In fact, this may even be the most expensive repair. If your home has foundation issues, it will cause cracked walls, sloping floors, water pooling in low spots, and other hazards, so they should really be addressed.
- Electrical Issues: If the wirings and panels of your home are already outdated, this can cause a fire hazard, so you need to repair them. Keep in mind that fixing and replacing panels cannot be DIY'd either, so you have to hire a professional to do the work.
- Sewer Connections and Septic Tanks: Issues with sewer connections and septic tanks can lead to major health risks and home damage. If your home needs septic tank and sewer line replacement, expect to pay an average of $5,000 to $12,000. These home repairs also take a few days to complete.
- Plumbing Issues: Some of the home plumbing issues you should address are leaking toilets, dripping faucets, clogged drains, undetected leaks, and exterior plumbing problems.
When all these major issues are fixed, you'll be able to sell a house on the market. However, there's no guarantee that you'll gain more profit since you will be investing a lot of time and money to make the repairs.
Make Minor Repairs Before Selling
If you cannot afford the major fixes, working on the least expensive repairs can also help you sell your home.
These simple home repairs may include the following:
- Paint: Giving your home (both internally and externally) a fresh coat of paint won't break the bank and is very effective in improving curb appeal. Using neutral colors is typically more appealing to homebuyers.
- Cracked Drywall: Cracked drywall due to land movement or age of the house can be repaired by concrete patching or joint compound. This is pretty inexpensive, so it's a good thing to work on before you sell your home.
- Flooring: Another minor repair that you should consider prioritizing before you sell your home is the flooring. To spend less, skip replacing the tiles or buying new carpet for your home. Instead, have the traditional carpet washed and the tiles cleaned to look like they are well-maintained.
- Lighting Fixtures: Replacing the lighting fixtures of the house doesn't only update how the home looks but also shows how much space there is inside. You don't have to install chandeliers or other grand lighting-- minimalist aesthetic lighting will do.
When these minor repairs are addressed, the major issues of the home won't be as daunting to average homebuyers. However, in pricing your property, you should still discount the major repairs needed to be made.
Make Major Home Repairs Through a Government-Sponsored Grant
The United States Department of Agriculture (USDA) provides loans or grants to single families that own a home that needs repairs in order to avoid safety and health hazards. This is if the homeowner is elderly or has a meager income.
You may check the property eligibility page of USDA to see if you can apply. The application process and approval depend on the availability of funding in your location. Once you've made the repairs, you can then proceed to sell your home at a competitive price.
Sell As-Is
If you don't have the time or money for minor and major repairs and the house isn't eligible for a grant, your last option is to sell your home as-is.
Selling as-is means selling the house in its current state. In other words, you won't make any major or minor repairs and the buyer would not expect you to cover repair costs for them. Essentially, the house is sold as a fixer-upper.
There are several reasons why homeowners need to sell property without making repairs...
You Need To Move Right Away
If you need to sell your house immediately because you need to move places due to a job offer or a sick relative, selling it as-is would make everything easier.
You would no longer think of home repairs that could take weeks or months and you also save some money.
This is especially true if you sell to a cash buyer or investor. These companies buy fixer upper houses fast and they pay with cash.
You Don't Want to Deal with Home Repairs
Repairs are very costly. They could get you broke depending on the issues that need fixing. But aside from taking a toll on you financially, repairs also have soft costs like your time, energy, and patience.
If you don't want to go through all these and still net some money from your home, selling as-is may be a better fit.
Your Home Is Not Worth That Much
It is possible that your home isn't worth that much depending on the current state of the real estate market in your area.
Even if you decide to make extensive repairs, the resale value may still not net you enough money. This is when selling a home as-is becomes a financially logical choice.
Pros and Cons of Selling a House As-Is
To help you further decide how to sell a home that needs repairs, check out these pros and cons of selling a house as is.
Pros of Selling a Home As-Is
- Save money on renovations. As illustrated earlier, a repair or an improvement to your property can easily cost you thousands of dollars. If you can't afford the cost, this may put you in debt if bigger issues are discovered while making renovations. You can skip the renovation costs when you sell as-is removing the risk of going into debt.
- Save time. Keep in mind that repairs sometimes take months to finish depending on the damage and on how fast the contractor works. If you need to sell the house fast and save time, selling as-is is the answer. Since a fixer upper is cheaper due to the repairs needed, the retail buyer would be able to pay in cash and won't need to apply for a mortgage. The process is even faster when you sell to a cash buyer or investor.
- Avoid haggling over repair costs. When selling a home as-is, you can set a price discount and tell the buyer that that is your limit— you won't be covering repair costs or giving further credits. Once you have laid this out, there's no repair costs to negotiate even after the inspection. If you're selling to a cash buyer or investor, it's even easier since there is no formal inspection. Cash home buyers will give you a cash offer based on their assessment of your house as-is.
Cons of Selling a Home As-Is
- You'll receive fewer retail offers. While the asking price of a home that needs repairs is typically low, the repairs may still scare some retail buyers off. Also, most lenders do not approve mortgage applications on fixer uppers due to lender required repairs. This means that when you sell the house on the market, the number of potential buyers is limited to those that can pay cash.
- Lower sales price. Selling a house as-is means the buyer needs to eat the cost of all the repairs needed. Thus, sellers won't be able to set a competitive asking price compared to move-in ready homes.
- You may not be able to. If you are set on selling to a retail buyer who requires a loan, expect to pay for repairs that allow the loan to be approved. If you cannot pay for the necessary repairs, you will not be able to sell the home to a conventional buyer. However, if you are willing to accept an offer from a company that buys houses for cash, you are guaranteed to avoid paying for any repairs.
Steps in Selling a House As-Is on the Real Estate Market
The process of selling a home as-is on the real estate market is faster in terms of preparation but slower when it comes to actually closing due to the limited pool of buyers.
To sell a home that needs repairs on the market, here are the steps you need to follow.
Hire a Real Estate Agent Who Has Experience in Selling a Home As-Is
Real estate agents know how to price your property through comparative market analysis (CMA) and considering the repairs needed.
While this may seem a small task when selling your home, the right pricing prevents your house from sitting in the market for too long.
Another good thing about hiring a real estate agent is that they can connect you to homebuyers that are looking for as-is houses. These buyers know what to expect when buying a house that needs work.
Moreover, since real estate agents already have a lot of experience, they know how to make a fixer upper appealing to the real estate market even though it needs renovations. They'll also help you negotiate a fair deal.
However, for all of this work, a real estate agent requires commission fees that will cut into your profit.
Do a Home Inspection
Before listing your fixer upper on the real state market, make sure to have a home inspection done. This will help you identify all the house issues, whether minor or major, that you need to disclose to the buyer.
Although a home inspection can cost you $300 to $400, this is actually a small price to pay compared to dealing with legal issues for not disclosing house defects.
A home inspection also proves to potential buyers that you, as the seller, have nothing to hide about the house. This can lead to a faster sale.
Get Cost Estimates for Repairs
Even if you have decided not to make any repairs when you sell your home, it is still suggested to find out how much it would cost. This can help you gain more negotiating power with buyers.
To illustrate, if you do not know how much roof replacement costs, the buyer could quote you an inflated amount. Having cost estimates removes the uncertainty from your home's value.
Also, when you know how much each repair may cost, you might find that there are repairs that you can actually do because they are within your budget. This may help you net more money at the closing table.
Set a Realistic Price
One of the most common mistakes when selling a home as-is is setting a very high asking price as if the property doesn't have any defects.
When setting the sale price of your house that needs repairs, make sure it is realistic. This should be based on both the good and bad features of the home.
If you've hired a quality real estate agent to sell your home, this shouldn't be a problem because they have the proper tools to use in pricing a fixer upper.
Meanwhile, if you're selling FSBO, this can be quite a challenge unless you're selling your home to an investor or a cash buyer who will make you a flat offer on your house.
List Your Home and Disclose Defects
Once the inspection is done and you have set a realistic price, you can list your home on the local real estate market.
When listing to sell your home, focus on its selling points like its unique features and location. You may have a home that needs repairs, but if you made any upgrades, list them. Does it have new windows? A new front door?
Even though your home needs work, location is everything. Your house may still have some features that are worth mentioning. Is it near a transportation hub or a good school? What about a hospital or family friendly park?
It is important to note, however, that you should still disclose the defects of the fixer upper to the potential buyers. They have every right to know what they're getting into, but these defects can be disclosed with the purchase agreement contract rather than the online listing.
Keep in mind that most states require the seller to give the buyer a disclosure report before the deal closes. This is especially needed if the fixer upper has issues regarding its foundation, roofing, plumbing, mold, and others. Failing to do this could mean facing charges.
Targeting Buyers When Selling a House As-Is
Whether you are selling your house FSBO or through a real estate agent, you should know your target buyers. This will save you time and money in marketing and help you land a buyer faster.
First Time Buyers
Buyers who don't have any experience buying a house may be more willing to fix up a home for a discounted price. Typically first time buyers are younger and have more energy to put into renovations. Further, they can renovate the way they want.
The majority of first time buyers are fine with making repairs as long as the sale price is low to compensate. Note, however, that when the repairs are structural, this can turn away even the most industrious first timers due to higher risk of expensive problems.
Bargain Hunters
Bargain hunters are buyers who want to live in a specific area but cannot afford houses that are in great condition and have expensive value. They target as-is houses, specifically those that need cosmetic, minor repairs like a fresh coat of paint, new flooring, etc.
Landlords
Landlords who enjoy fixing up properties to rent them out are always on the lookout for homes that need a lot of work. These buyers are looking for a deep deal to have enough room to make the repairs and cash flow on the rent.
Developers
Developers usually buy homes that need a lot of work on a large scale. They repair them with the intention of turning them into profit.
Depending on the location, zoning, and state of your home, they may modify it to become offices, retail spaces, or an apartment complex.
Selling As-Is to a Cash Buyer or Investor
If you haven't had any luck with the retail buyers we listed in the previous section, you still have one more option-- an off-market sale.
Investors and cash home buyers are among the most motivated buyers of as-is houses. They're accustomed to buying a house as-is compared to traditional buyers. In fact, they provide offers for houses in any state or condition.
Selling to a cash buyer or investor is also very convenient because it cuts the need for a middleman or real estate agent.
The process is made faster because cash buyers and investors don't have to apply for financing— they have enough funds so the sellers can walk away with cash in a matter of weeks.
Final Thoughts: Selling a House That Needs Repairs
Selling a house that needs repairs is only overwhelming if you do not know your options. But now that you have learned about making minor and major repairs before selling, looking for a grant to finance the repairs, and selling as-is, identifying your next steps will hopefully be less difficult.
Ultimately, selling a house that needs work to a cash buyer will make everything faster and less stressful for you. If you want to take this path, contact us here at Sell My House Fast! We won't ask you for any repairs and our cash offers come with no obligations.
Fill out the form below or reach us at (844) 207-0788 to get started selling your home as-is!
