How to Sell a House That Needs Work |
Posted: June 5, 2023 |
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Selling a home means making it appealing to potential buyers. However, you might feel discouraged if your property's neglected lawn and peeling paint don't look as good as the attractive walkway lights and well-maintained landscaping nearby.
So, how can you effectively market your house, stage it, take impressive real estate photos, or improve its curb appeal?
For homeowners wondering how to sell a property that needs work, we've collected helpful tips from industry experts who have dealt with various home conditions to ensure a successful closing.
"Many times, sellers believe their home is in worse condition than it actually is, because they live there and see it every day," says John Lemon.
"What they need is reassurance that their home can be sold and that someone will be willing to buy it in its current state."
By following the insights of seasoned professionals, you can successfully showcase your house, execute an effective staging process, and take eye-catching real estate photos, all while boosting its overall curb appeal.
With the right guidance and expertise, selling a house that needs work becomes more manageable, empowering homeowners to navigate these challenges confidently.
Sell Your Home As Is TodayIs your house in need of some work?
Let’s take a look at the sale of fixer-uppers or older homes, before getting into the details about what appeals to buyers looking for these properties.
Insights About Potential BuyersOne may ponder how a house needing care can rival ready-to-move-in properties, particularly as median existing-home sales prices have skyrocketed in recent years.
Perhaps you haven't been consistent with home maintenance, or you've inherited a property you wish to sell. Regardless, your house need not be flawless.
What's key is its ability to demonstrate potential for buyers–in which they can generate profit, accumulate equity, or attain the lifestyle they desire within their monetary means.
Potential Buyer Profile #1: The Real Estate InvestorDemystifying the Real Estate Investor: A Comprehensive Overview
The term "real estate investor" encompasses a variety of people and entities, each with distinct approaches to purchasing and managing property assets.
Characterized by their different buying strategies, real estate investors range from small-scale house flippers to prominent landlords and innovative house-buying corporations (The Balance).
One notable example of a burgeoning real estate investment sector is the emergence of tech-enabled cash buyers, who have harnessed the power of technology to revolutionize the property acquisition process.
Companies like Opendoor and Offerpad have developed sophisticated algorithms to quickly determine property values, allowing them to provide sellers with near-instant offers (Forbes).
Another noteworthy example of innovative real estate investors includes platforms like Easy Sale Solutions, which connects sellers with competitive cash offers in an increasingly streamlined manner (Easy Sale Solutions).
As the real estate market continues to evolve, driven by technological advancements and changing market dynamics, real estate investors will undoubtedly play an essential role in shaping the future of residential property ownership and management.
Unraveling the Strategies of Real Estate Investors: How Do They Operate?
In residential property investment, an interesting category of buyers has emerged. Armed with all-cash offers and a preference for off-market deals, these real estate investors have set their sights on properties with potential profitable returns, regardless of their current conditions.
Many investors are willing to purchase homes "as is," relieving sellers of any responsibility to renovate or improve the property before the sale (NerdWallet).
Driven by financial analyses rather than personal preference, these investors eschew emotion in their buying decisions, focusing exclusively on the bottom line. Their primary concern is whether the acquisition and subsequent rehabilitation costs will yield a sufficient profit upon resale or, alternatively, if renting the property will generate adequate cash flow to cover expenses (Investopedia).
With a keen eye for market potential and a reliance on hard numbers, real estate investors navigate the world of residential property with a unique perspective that sets them apart from the typical home buyer. Their approach, rooted in financial strategy, continues to shape the industry as they pursue profits and redefine notions of property investment success.
Real Estate Investors' Home Selection Criteria: A Glimpse into Their Thought Process
For real estate investors in search of their next profitable venture, determining the right property to invest in requires a myriad of considerations, as exemplified by John Lemon, a seasoned Los Angeles investor with seven years of experience.
The crux of Lemon's strategy lies in calculating a home's potential value after accounting for necessary repairs.
In Los Angeles, where the average starter home is priced around $685,000, Lemon targets properties with an after-repair value (ARV) of approximately 80%.
As a general rule, real estate investors often offer about 70% of a property's ARV when planning to flip a home (Forbes).
In addition to financial factors, Lemon pays close attention to the property's potential appeal to future buyers. This approach involves assessing the surrounding neighborhood, anticipating changes in the area over the next five to ten years, and determining whether it is trending positively or negatively.
The home's layout is also essential to Lemon, who carefully evaluates the floor plan's flow, potential renovations such as wall removal or bathroom updates, and the costs of relocating major spaces such as kitchens or bathrooms (Realtor.com).
Choosing the right property for investment requires a nuanced understanding of the house's financial potential and its capacity to attract future buyers - a delicate balance that can make or break their success in the ever-evolving market.
Prospective Home Buyer #2: The Bargain Hunter
Who Are They?
Bargain hunters look to reside in particular locations but often find themselves facing obstacles, such as high property values or fierce competition with cash buyers.(Money Crashers).
Frequently, bargain hunters might be first-time homebuyers who lack the advantage of existing equity to leverage while purchasing a new property.
Alternatively, they could be do-it-yourself enthusiasts unafraid to tackle properties needing a little tender loving care (DIY Network).
Regardless of their background, one thing is certain: These buyers are determined to find hidden gems within their desired locations, demonstrating patience, persistence, and an affinity for transforming homes into their dream sanctuaries.
Bargain Hunters: A Unique Approach to Homebuying
Unlike most homebuyers who gravitate toward move-in-ready properties to avoid the hassle of renovations, bargain hunters adopt a contrasting perspective. Keen on uncovering potential treasure troves, these intrepid buyers are more than willing to transform houses into dream homes (HGTV).
To ensure their success, bargain hunters often enlist the assistance of real estate agents, requesting they share listings at lower price points for their target areas, even if the properties may need some renovations (Realtor.com).
This unconventional approach enables them to seize opportunities, allowing them to acquire homes in desirable locations while embracing the potential challenges of property rehabilitation.
The Bargain Hunter’s Property Wishlist: Identifying the Perfect Home
For the bargain hunter, the ideal home presents an opportunity to transform a diamond in the rough into their dream abode within a limited budget. A house requiring cosmetic updates and some diligent effort to become move-in ready is entirely acceptable to these individuals, provided it boasts a solid foundation and is situated in a highly coveted location (The Balance).
In recent times, an estimated 80% of homes listed on the market surpassed the average buyer's budget, creating a landscape where increased numbers of aspiring homeowners must adjust their expectations regarding a property's condition in order to achieve their home-owning dreams (The National Association of Realtors).
Bargain hunters need the capacity to envision the potential of a space and the determination to transform that vision into reality.
This unique mindset empowers them to seize attractive opportunities and breathe new life into once-neglected properties, ultimately achieving their financial and homeownership goals.
The Art of Selling a Fixer-Upper to an Investor: A Homeowner's Guide
When it comes to selling a home needing improvements to a real estate investor, homeowners can expect the process to differ from that of a traditional transaction. A major factor guiding an investor's decision is the property's price, making concerns about paint, flooring, and other cosmetic details less pertinent (NerdWallet).
Nevertheless, it remains essential for homeowners to present their property in an appealing manner. Ensuring a clean, presentable living space not only showcases the property's potential to the investor but also allows the seller to approach the transaction with confidence and pride (HomeLight).
1. Invest Time in Essential Cleanup
Selling a home to an investor eliminates the need for staging and showing the property; however, it's crucial to ensure the space is well-organized and remains presentable. Investors typically prefer to conduct digital or in-person walkthroughs, sometimes sending a representative to assess the property (Redfin).
Dedicate a few hours to tidying the house to create a positive impression. Complete tasks such as washing dishes, vacuuming floors, making beds, clearing countertops, and thoroughly cleaning bathrooms. Remember that even when selling your home "as is," a little sprucing up can make a significant difference.
If there's an abundance of clutter, consider renting a dumpster to quickly dispose of excess items. John Lemon, a seasoned property investor, recommends enlisting the services of a professional cleaning company, which often charges around $500 per week, including drop-off and removal fees.
In addition to the property's visual presentation, it's essential to pay attention to its odor. Performing a "smell test" can help identify any issues that may deter potential investors from purchasing the home, as an unpleasant smell could be the factor that sways their decision (Forbes). Prioritizing cleanliness and addressing any lingering odors before listing the property will ultimately lead to a smoother and more successful sale.
By understanding the priorities of real estate investors and thoughtfully preparing their property for sale, homeowners can successfully navigate the process of selling a house that requires work, ultimately maximizing the returns on their investment.
2. Obtain a Home Value Estimate
Before accepting an offer from an investor, it's essential to have a solid understanding of your home's value. Utilize tools like Valley Cash Home Buyers' Home Value Estimator, which offers a free estimate, as a starting point (Valley Cash Home Buyers).
The Home Value Estimator relies on public records, tax data, and recent sales records of properties in your neighborhood to provide an accurate valuation. By incorporating specific details about your home, such as its type and condition, through a brief questionnaire, the tool can generate a more precise estimate.
Once you provide your address, you'll receive a preliminary home value estimate in under two minutes. While it's important to note that an online estimate isn't a substitute for a real estate agent's comparative market analysis (CMA), it serves as a valuable benchmark to gauge whether the offers you receive align with your property's true market value (Zillow).
3. Get Some Contractor Bids
Gathering contractor estimates can be instrumental in setting and negotiating an optimal selling price. Investors like John Lemon recognize the value of readily available precise figures, even for relatively low-cost projects such as repainting (Forbes).
If an investor employs a team of in-house contractors, they may pay less for repairs and renovations compared to hiring individual contractors as needed. Either way, John believes that having concrete estimates enables sellers to better understand their property's condition and prepares them for negotiations.
As John Lemon notes, the repair costs for a dated house may sometimes be similar to those required for a home in significant disrepair. Even in dated homes, extensive renovations may be necessary, including updating kitchens, countertops, cabinets, flooring, and removing wallpaper. In contrast, a home in severe disrepair would also require similar updates (Realtor.com).
The primary difference, according to John Lemon, lies in the mechanical systems; a severely damaged house might require extensive repairs or replacements of electrical, heating, ventilation, and air conditioning systems. Ultimately, a dated home and one in disrepair could incur comparable rehabilitation costs, illustrating the importance of obtaining accurate contractor estimates when selling a property to an investor.
4. Request a Cash Offer and Sell 'As Is'
With a clear understanding of your home's value and potential repair costs, you can proceed to explore cash offers from investors.
Consider leveraging Valley Cash Home Buyers Simple Sale. Sellers to close home sales in as few as 10 days and accommodates cash offers for homes in virtually any condition.
John Lemon, who collaborates with Easy Sale Solutions sellers, emphasizes the convenience of cash offers for sellers: "You close in as little as two weeks; there won't be an inspection, just me walking through."
He has encountered a diverse range of properties, from well-maintained long-term residences to abandoned homes in dire need of repairs. "It's a pretty big variety," John Lemon observes.
How to Sell a Fixer-Upper to a Investor
Your fixer-upper may very well be the ideal option for a buyer looking for a blank canvas and the opportunity to design their dream home – particularly in a sought-after location. John Lemon explains, "The competition can work in your favor.”
bargain hunters often face months-long waits for a property to become available in specific subdivisions. By stepping outside of that conventional box, they gain the ability to shape their own destiny.
When targeting these buyers, emphasize the potential they're acquiring while saving on the purchase price (and while maximizing your own selling profit, naturally).
Experienced real estate agents bring a wealth of expertise, assisting clients in determining the most crucial renovations and improvements. With their guidance, clients can confidently sell fixer-uppers faster and for higher returns than with the help of an average agent.
1. Assemble a Team of Experts
As you begin the journey of selling your home, it's crucial to enlist the assistance of professionals. Here are some key experts to consider engaging in the process.
Real Estate Agent
Navigating the sale of a fixer-upper can be daunting. To alleviate the stress, consider partnering with a leading real estate agent who has experience selling homes in need of work.
Valley Cash Home Buyers offers an agent-matching platform to help you find such a professional, streamlining the process of connecting with the right expert (Valley Cash Home Buyers).
To establish your home's value, the real estate agent will perform a comparative market analysis (CMA), thoroughly evaluating local comparable sales or "comps."
Comps refer to properties similar to yours in terms of size, amenities, structure, and age that have recently sold in your area. Real estate professionals and home appraisers utilize comps as benchmarks, adjusting their assessments based on competitive differences.
An agent's pricing expertise is an indispensable asset when selling your fixer-upper.
Home Inspector
Engaging a home inspector can be highly beneficial, even if you harbor concerns about the results. Being fully informed of potential issues can help you better navigate the sale process.
You may choose to conduct a pre-listing inspection to identify significant problems that could narrow your buyer pool. For example, extensive repairs might preclude buyers with FHA loans from purchasing the property.
A home inspection typically costs around $340 on average, but it can save you valuable time and prevent future headaches (HomeAdvisor).
While you might not possess the financial means to address every repair, collaborate with your agent to ensure necessary disclosures are made and to explore options for bridging negotiation gaps. One possible solution includes offering a home warranty to provide additional peace of mind for the buyer.
2. Clean up the House and Yard
Spend the time to thoroughly clean your home to capture potential buyers' interest and obtain the highest possible price.
Research from top agents at Valley Cash Home Buyers affirms that a deep clean can increase resale value by $5,500 or more, owing to the lasting impression a spotless home creates.
"Cleanliness adds great value!" states John Lemon.
Ensure that your home appears presentable in listing photos, as a staggering 96% of buyers browse real estate properties online. "Even on my complete renovations, I employ a professional photographer to capture the perfect images," notes Lemon. "High-quality pictures truly sell a property."
Additionally, don't neglect the importance of curb appeal. While it's unnecessary to break the bank, take time to remove weeds, mow the lawn, plant flower pots, and distribute mulch to create a welcoming entrance.
For those whose front yard consists primarily of dirt, consider enhancing curb appeal by incorporating gravel landscaping – a relatively affordable option averaging around $250 to $700.
3. Prioritize Small and Cost-Effective Repairs
Real estate expert John Lemon urges sellers to invest their time and resources in making minor updates to their homes. "It's certainly worth the seller's effort and money to tackle the smaller improvements if they can," he says.
"I've always advised my clients that it costs a buyer twice as much to execute the same repairs the seller could complete."
Consider this: neglecting minor repairs may lead to giving up more equity to make the home an attractive purchase.
Examples of small repairs comprise:
•Enhancing landscaping •Filling nail holes in drywall •Thoroughly cleaning soiled tubs and toilets •Mending broken or squeaky hinges and doors •Repairing leaky pipes •Applying fresh caulk around bathtub and sink •Scrubbing grout •Updating cabinet knobs or handles •Addressing stains on carpets
Lemon highlights the importance of addressing FHA issues, such as paint, before listing the property. "Paint works wonders. It can make anything appear brand-new. A fresh coat of paint, and its accompanying aroma, evokes a sense of newness that some buyers find appealing."
4. Introduce Renovation Loans in Listings and Showings
Incorporating renovation loans in your listing or during showings can be a valuable strategy when selling a fixer-upper property.
By choosing a renovation loan, buyers can include the anticipated costs of home improvements in their overall loan amount instead of financing the purchase and upgrades separately.
Notable renovation loans include the FHA 203(k) loan and the Fannie Mae HomeStyle Renovation loan.
A knowledgeable agent who can emphasize this financing option in the listing or at a showing can assist buyers in exploring the property's potential.
Most people are not aware of the various types of funding available to execute a deal. You don't need all the necessary cash to purchase that fixer-upper.
Lemon further explains that if buyers know "they could leverage $60,000 from a renovation loan to address flooring and paint, update fixtures, and achieve a great deal," these loans can be instrumental in successfully closing the transaction.
5. Emphasize Location Advantages and Top-Quality Features
The surrounding area's appeal and proximity to loved ones play significant roles in a buyer's decision-making process.
Real estate agents can underscore the property's positive aspects:
When it comes to the house itself, consider highlighting the features most sought-after by buyers:
•Ample storage space •Neutral color schemes •Sheltered back patio, porch, or deck •Outdoor entertainment amenities •Energy-efficient elements •Modernized kitchen •Open floor plan •Entertainment or game room
For All Potential Buyers: Be Transparent About Necessary Home Repairs
While some homeowners may feel unduly embarrassed about their property's condition, others residing in a home in need of improvement may underestimate the extent of the required work.
John Lemon explains that he always inquires about clients' perspectives on their homes and then seeks permission to share his own assessment.
Although he approaches the situation delicately when dealing with emotional homeowners, he remains truthful about the property's strengths and necessary improvements.
"Many cherished memories are associated with these homes, and it might be the most valuable asset these individuals own," he says. "However, it is crucial to always remain as transparent as possible."
Even If Your Home Isn't Move-In Ready, It Can Still Be Sold
Worried about potential buyers' opinions on your home's worn-out carpeting or the durability of your roof during the listing process? Rest assured, selling a house in need of work remains possible with options tailored to your circumstances.
Your main choices consist of procuring cash offers from platforms like Valley Cash Home Buyers' Easy Sale Solutions and sell your home as-is, minimizing the fuss.
You could invest effort in cleaning and executing light repairs, then set an appealing price to attract value-conscious buyers.
When in doubt, consider consulting a top local real estate agent for expert guidance.
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