A Practical Guide On How to Sell a Fixer-Upper House
What You Will Read In This Article
Do you have a fixer-upper that you’d like to sell? Perhaps it’s your own home and it just needs some work, or maybe you’ve found a good deal on a fixer-upper and you’d like to flip it.
Regardless of your situation, selling fixer-uppers isn’t as simple as it may sound. You have many factors to consider first, from whether certain repairs are worth it to how much those repairs will add to the value of the house.
It can all seem confusing, especially if you’re just dipping your toes into the waters of fixer-uppers. How do you sell one of these houses? We’ve created a guide to help you make the right decisions and determine whether your fixer-upper is worth it.We can buy your fixer upper house as-is. Get your fair cash offer here.
Should You Make Repairs Before Selling?
That’s one of the first questions pretty much everyone with a fixer-upper house to sell asks themselves. If you decide to make repairs, what kinds of repairs and upgrades are worth the cost, and what should you leave for the next owner?
You have a few options here, which we go into detail below. You can address everything that needs improvement. However, unless you’re looking to flip a fixer-upper, you need to understand how much time and money you should put into it.
For instance, if the general sale price for houses like yours is $200,000, and you bought one for $100,000, putting $130,000 into repairs doesn’t mean you’re going to get $230,000. You might only get, say, $180,000, meaning you lose money on your investment.
Your second option is doing only the essential home improvements, including potential safety hazards and things that have fallen beneath current building codes. Depending on your area’s laws, you may have to fix these things before putting your house on the market.
Finally, you can choose to sell your house in “as is” condition. That means you make no repairs and note it in the listing. What the buyer sees is what they’ll get when you close. The entire burden for all repairs is on them.
Selling a house “as is” means selling it cheap, and buyers will consider the house’s poor condition and what it will cost to fix significant problems when they make their offers. If houses in your area are selling for $200,000, you might have to list yours for $100,000, depending on its problems. You might not even get that, so you’re taking a major risk when you sell your house in “as is” condition.
Complete All Home Improvements
Completing all home improvements means spending money on both major and minor repairs. If you want to sell to a potential homeowner, you probably don’t want to go in this direction because you’ll spend too much time and money on it.
However, if you’ve bought a fixer-upper you’re looking to flip, then you should consider making as many improvements as possible before you sell it again. You bought it for a low price, and the right repairs enable you to sell it for a much higher price.
Consider time and money before you decide which repairs to make. Completing all repairs doesn’t mean fixing every last little problem with the house. Remember, flipping houses means earning a profit on each house you buy and sell. The last thing you want is to spend more money buying and fixing up the house than you’ll get selling it.
Complete the Most Important Home Improvements
Most potential buyers are willing to overlook cosmetic issues as long as you don’t have too many of them. They’re looking for a good house without significant issues, and they’re probably going to redecorate anyway. They know that their redecorating will address most cosmetic problems.
How do you know what the most important home improvements are? If you don’t already know, you could hire a home inspector to help you out. A good inspector will go over your house and flag problems that deal with safety and building codes.
For instance, many home inspectors carry a carbon monoxide detector. If you have an old furnace, chances are it puts out some level of carbon monoxide. The inspector will be able to tell you if those levels are dangerous. Even if they aren’t, you’ll know that you should probably replace the furnace before putting the house on the market.
You also need to know about foundation problems, water damage, mold, whether you need a new roof, electrical problems, and plumbing issues. As you find these issues, you should make a list of them to disclose to buyers.
Remember, prospective buyers will have an inspector of their own to go over your house, and that inspector may find problems yours didn’t.
Best Home Improvements to Make Before Selling
What are the best improvements to make before putting your house on the market with these things in mind?
The most important major improvements include:
- Updating your electrical system to modern standards if it is out of date. Including updating or replacing the breaker box, rewiring switches, sockets, and light fixtures as necessary, and ensuring its safety
- Addressing problems like mold, water damage, and termite damage
- Fixing any foundation problems
- Addressing problems with the plumbing, including the septic system if your house has one
- Updating your HVAC system, meaning a new furnace and a new air conditioning unit, and repairing problems with vents and ductwork
- Replacing the water heater if it’s old
There are also some essential cosmetic issues you should address, including:
- New caulking in the kitchen and bathrooms
- Consider new kitchen cabinets or painting them if they are ugly but still in good shape
- A new coat of paint, preferably in a neutral color, gray is very popular right now
- Having all carpets professionally cleaned or even replaced if they are really worn
- Installing new light fixtures with energy-efficient bulbs
- Improving curb appeal with attractive plants, along with repainting or pressure-washing the exterior and replacing anything rusty or dingy
Regardless of any repairs you decide to make; you need to disclose all existing problems and repairs to your potential buyers.
Sell “As Is”
You can, of course, sell your house in “as is” condition. If you want to sell quickly, this may be the best way to go.
When you decide to sell your house “as is,” you make it clear to the buyer that you won’t make any repairs. You’ll need to include that in your listing, and prospective buyers may still request an inspection. However, you can have your agent ensure that potential buyers know what they’re getting.
You’re far more likely to get home investors this way than you are a potential homeowner because investors are looking for cheap houses to fix up and flip. When you sell your house in “as is” condition, you’re not going to get the price you might get if you perform repairs and upgrades before listing it.
However, if you’re looking to sell your house quickly, and you’re okay with selling to an investor, try selling your house “as is.” Again, though, it’s necessary to make a full disclosure of all problems with the house.We can buy your fixer upper house as-is. Get your fair cash offer here.
Consider All Selling Options
Selling your house doesn’t have to be hard. Pricing is the largest (by far) part of the equation when you want to sell a fixer-upper quickly. If you price it low enough it will attract A LOT of attention, probably receive multiple offers and create a bidding war to get the highest price possible!
Traditional Sale with an Agent
Most sellers list their house with a real estate agent. They find this an easy way to go because the agent handles everything from listings to showings, inspections, and paperwork.
Real estate agents can also run comparative prices to give you a solid idea of what you should ask for your house. They can also advise you on what to fix up and what to leave alone, depending on your ultimate goals. A good Realtor is a professional and you should get white glove concierge service from them.
However, a real estate agent takes a commission (which is negotiable), and there are other costs with using an agent as well. Some people may not like this, while others believe it’s a fair trade-off for reducing the hassles involved with selling their house. If you are looking to sell your house with an agent and want to save on commissions, there are discount broker options available for sellers that are rapidly gaining in popularity such as low commission, flat fee or 1% agents.
For Sale by Owner
For those sellers who don’t like the idea of working with a real estate agent, you have the option of selling your house yourself, there are many FSBO websites available for you to choose from. You avoid paying those high real estate agent commissions and other costs associated with hiring an agent, and you find buyers entirely on your own. Unless you choose a flat fee MLS listing, which is a perfect solution for home sellers that want to sell on their own and save money but understand the value in listing their home on the MLS.
Selling your own home is hard and there are disadvantages with taking this route that you should clearly understand. You need to know how to price your house, show it, and understand and handle all the necessary paperwork. You’ll also have to determine, on your own, what repairs you need to make and how to get your house ready to sell. Many states require you to have a lawyer or title agent involved, too.
Sell to a Local Investor
Investors are always looking for a deal. If your house needs work and you’re willing to sell it cheap, you can look for local investors who want a fixer-upper deal to flip.
There are two main advantages to this. One, you’ll probably sell your house very quickly, particularly if you have a lot of investors looking for fixer-uppers in your area.
And two, you most likely won’t have to make any repairs at all or deal with the other hassles of selling such as staging your home and showing to buyers, etc.
Furthermore, many investors can and will pay cash and close quickly. If your house has certain problems, potential buyers may not be able to get a loan for it. An investor with cash helps you get around that.
Sell to an iBuyer Company
If you don’t know what an iBuyer company is, you’re not alone. A lot of homeowners don’t because iBuyers are relatively new in the real estate market.
iBuyers such as Opendoor or Zillow Instant Offers, use specific technology algorithms to make an instant offer on your house, making selling your house easy because, if you accept their offer, they pay you and then take on the full burden of finding a buyer for your house. Depending on what service you choose, you might also get cash for your house, and you get more control over when you move.
However, unlike investors, iBuyers focus on houses that are in better condition than houses that need a lot of major renovations. If your house needs considerable work, iBuyers may not be for you.
Sell to a “We Buy Houses for Cash” Company
If you’re looking for a quick sale and quick cash for it, you might want to consider finding a company or an investor that buys ugly houses in any condition for cash.
You should understand what you’re getting into, though. You sell your house quickly and easily, sure, but you might find it too tempting to accept the first offer just so you can unload, and that makes you a target for scammers. It’s important to work with established and reputable “Buy My House” companies.
If you choose to go this route, do some research and don’t accept the first offer that comes your way. Look around and find a “We Buy Houses” company that will treat you honestly.We can buy your fixer upper house as-is. Get your fair cash offer here.
The Importance of Disclosing Your Home’s Condition
You should prepare to give all prospective buyers a full disclosure of your home’s condition, even if you’re selling it “as is.” You have two reasons to inform buyers of your home’s condition. The first reason is that most states require you to inform prospective buyers of specific problems and repairs, including:
- Toxic materials including lead-based paint, asbestos, urea-formaldehyde, mold, carbon monoxide, and radon
- Pest problems, including termites, mice or rats, bats, and other infestations
- Drainage problems, particularly those that have damaged your house
- Property line issues, whether it’s a dispute with a neighbor or an easement on your lot
- Deaths on the property, including murders (most states require the buyer to request this information in writing)
- Roof and foundation problems
The second reason is that it relieves a lot of stress on you and the buyer. It’s better to be honest than to try and hide things.
If you’ve successfully addressed the issues you can, you need to disclose the repairs as well. Talk to your agent or a real estate lawyer to find out what your state’s laws require.We can buy your fixer upper house as-is. Get your fair cash offer here.
Tips for Marketing a Fixer-Upper
Selling a fixer-upper house means knowing how to market it. Merely putting it up for sale the way you would a house in excellent condition isn’t enough. And if you don’t know how to market your home online, you’ll make things far more difficult for yourself than they need to be. A perfect example of a classic mistake is by not understanding the value of the Realtors MLS.
Have Renovation Loan Information Available
Prospective buyers will probably need a loan that exceeds the sale price of the house. Banks offer home renovations loans that allow you to include the cost of renovations into a buyer’s mortgage loan to finance both the purchase of the house and renovation costs.
Banks often appraise houses needing renovations at up to 110 percent of their value after you complete the planned renovation. These loans can cover costs of things like replacing the water heater and furnace, improving energy efficiency, removing mold and pests, putting on a new roof, and more. They may also cover the costs associated with remodeling kitchens and bathrooms.
When you put your house on the market, you should have as much loan information available for prospective buyers, including what lenders believe the house will be worth once renovations are complete. It’ll help give people a better idea of whether they can afford to buy your fixer-upper.
Highlight the Home’s Best Features
The last thing you want to do when trying to sell anything is to focus on its problems. If you’re listing a house as a fixer-upper, everyone who sees your listing knows it has problems.
What buyers want to see are all the good things your house has. Maybe it’s got large windows that let in lots of natural light. Perhaps it has an extra bedroom that would work well as a nursery, or a bonus room or finished basement that would work well for everything from an office to a studio or game room.
Does your house have hidden treasures, like hardwood flooring under the carpet? Advertise that, especially if it’s in good condition. With hardwood floors gaining popularity, buyers might like the idea of merely pulling out the carpet to have beautiful hardwood floors.
Highlight these kinds of things even though your house probably has some serious problems. Remember that buyers know that, but they’ll also want to know the good things about your house.
Price Correctly to Attract Deal-Hunter and Remodeler Buyers
Determining the correct pricing strategy for a fixer-upper is hard, and you may want to consider pricing your house in a way that will attract people hunting for deals and remodeling opportunities.
Get some estimates for things like wiring, plumbing, roofing, and other major repairs. Start by using online home estimation websites to get an idea of the value but not a final listing price. Then, find a real estate agent with experience in pricing fixer-uppers and work with them to determine a fair but attractive price for your house. Or if you are selling FSBO, consider calling an appraiser to give you an opinion of value on your property for a nominal fee.
Then decide how low you’re willing to go. Depending on your house’s overall condition, you may not get any offers for your asking price. Be willing to negotiate a sale price with potential buyers because they may have a very different idea of how much your house is worth.
Other things you can do to attract these two types of buyers include some easy sprucing up, like clearing away outdoor clutter and improving curb appeal so when people drive by and see the house for sale.
Need To Sell Your Home But Want To Save On Commissions?
Did you know that we can help you save a lot of money when selling your house? Money that you can put towards moving, buying a new house, paying off debt, a much needed vacation or anything else you want. ISoldMyHouse.com has 3 ways for you to sell your house and NOT pay high commissions.
- Sell It Yourself With Our Flat Fee MLS Listings
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- Sell To A Pre-Qualified Cash Buyer
The bottom line is that you have different considerations when selling a fixer-upper than you do when selling a move-in ready house. But if you know what you’re getting into, you can get the home sold on terms that align with your goals. Just follow the advice in the guide and put it into action!
About the Author: Kris Lippi is the owner of ISoldMyHouse.com, the broker of Get LISTED Realty and an official member of the Forbes Real Estate Council. He actively writes about real estate related topics such as buying and selling homes, how-to guides for around the house and home product recommendations. He has been featured in Inman, Readers Digest, Fox News, American Express, Fit Small Business, Policy Genius, Lending Tree, GoDaddy, Manta as well as other major websites. Read more about us here.