Selling your home is a great way to gain liquidity, but it’s not always as easy as it sounds. The most recent data available from the National Association of Realtors shows that the volume of pending home sales is on an upward trend, with an index of 107.3 as of August 2019. This means pending homes sales are higher than in 2001, representing a 2.5% annual growth.
With a higher index, this indicates a consistent sellers market. That, in theory, sounds great for homeowners in Southern California looking to sell their home needing repairs, but it can actually be a detriment. Selling a house that needs repairs simply makes it harder to compete.
New inventory hits the market every day in SoCal, so traditional buyers will likely never view a home needing repairs unless that is specifically what they are in the market for. Homes in need of repair often go unseen because they are at the bottom of an ever-growing list of homes to view.
Of course, selling a house that needs major repair work is different than selling a house in poor condition. Each has challenges to overcome, but one is more likely to sell on the MLS vs. the other.
So let’s break down the differences between them and figure out where you stand and what your options are to sell your house in need of repair work.
Does Your House Need Repairs or a Total Overhaul?
Anybody selling any house on the market needs to prepare it for sale, and that includes performing any routine repairs, cosmetic work, and staging the home to increase its sale chances and price. It’ll cost you $300-$500 to have a certified home inspection done prior to the sale.
This is important because the home inspector will check the foundation, plumbing, electrical work, appliances, roofing, etc., to document any faults or repairs needed. If you don’t perform this step, you can be sure your buyer will, and they’ll deduct the high-end of these repairs from your houses resale value.
Some of the most common minor and cosmetic repairs made to a house prior to the sale include:
Painting and patching cracks or holes in the walls is one of the most important cosmetic repairs you’ll make to your house. A new coat of paint makes the house look and smell new, and analysis from Zillow found homes with charcoal, smoky, or jet black doors sell for $6,271 more than expected.
Zillow also reports homes with blue bathrooms sell for $5,400 more, while a white or off-white bathroom lowers the price by over $4,000. Keep these issues in mind when choosing what color to paint a house you’re selling, which can cost $1,800-$3,200 just for the exterior.
Plumbing is a major concern for potential home buyers, especially in older houses that used hazardous material like lead or polybutylene. Replacing these pipes is an absolute necessity to sell, and you’ll constantly see houses listed on the MLS stating, “No poly pipes.”
The cost of repiping your house’s plumbing can cost from $2,000-$15,000, with another $450-$1800 or more to replace each fixture, like a bathtub, toilet, or sink.
After the walls, the floor can have a massive impact on the price and ability to sell your house. Stained, burned, ripped, and otherwise ruined flooring can cause your house not to sell, while brand-new, clean flooring has the opposite effect.
Carpeting costs an average of $880-$2,315 to replace in your home, while wood flooring jumps up to $2,500-$6732, although that cost may be worth it. Realtor.com points out that wood has the highest ROI of any flooring options at 70-80%, versus 70% for ceramic tile, less than 50% for marble, and 25%-40% for carpet.
Your house is more than just a house – it’s also the yard and surrounding landscape, which is your first impression with any potential buyer. Experts assert that spending on landscaping during a home’s listing can have an ROI as high as 150% in the combination of the increased sale price and decreased time on market.
Regular watering, mowing, trimming, and other landscaping work needs to be done regularly, so the longer a house stays on the market, the higher this cost will get, especially if you’re not living in the house while selling it.
Some repairs go far beyond these basics though – air conditioning and electric wiring may have deteriorated over time. The roof and plumbing may be leaking, causing water damage in other parts of the house leading to mold problems.
Foundations that weren’t properly laid can crack, and natural disasters like floods and earthquakes cause damage as well. Then there are homes devastated by fires, accidents, squatters and vandalism, much less the cost to remove a ton of garbage someone’s been hoarding.
Homes that need major repairs like these need a total overhaul that typically requires a crew of professional workers.
Here are a few of the associated costs:
• Roofing: $5,000-$30,000, depending on the roof size and materials used.
• Electricity Rewiring: $8,000-15,000, depending on the size and age of the house and how easy it is to access the wiring.
• Water Damage: $1,144-$4,423, depending on the cause. Faulty plumbing and bathroom fixtures (toilet bathtub) are the most expensive repairs/replacements.
• Fire and Smoke Damage: $3,177-$27,863, assuming the structure isn’t fully burned to the ground.
• Broken Windows/Locks/Doors: $200-$2,000 per window/door, depending on style and build.
• Bulk Trash Removal/Cleaning: ~$80 per hour, plus the costs of cleaning supplies. In the case of the one hoarder, the estimate was $15,000 for a mobile home.
These costs can quickly add up, and by the time you’re done, all the profits will be gone from the sale of your home. However, if you don’t make the repairs, you’re left with an important question to answer:
Who Will Buy a House in Need of Major Repairs?
Traditional buyers who are looking for a “fixer-upper” typically fit into one of two categories:
- People with low income or other financial constraints.
- People looking to repair and “flip” a house.
These buyers are typically looking for a house with minor repairs, mostly like those described above. Repainting a wall, replacing a few roof shingles, laying some carpet, and redoing the landscaping is relatively easy when compared to knocking out an entire wall or rewiring a house.
Many of these repairs require special certifications, much less construction approval from the city council and any possible homeowner’s associations.
Private buyers aren’t prepared for the work it takes to completely remodel a house, but institutional investors are. They often employ teams of contractors capable of demolishing a house and rebuilding it if necessary.
These investors have large pools of cash and often operate in multiple cities and states, so they have a lot of available options on how to best utilize the property.
5 Ways to Sell a House that Needs Major Repairs
If you’re looking for advice on how to sell a house that needs major repairs, you’ve come to the right place. Selling a house in poor condition is tricky, but it can be done if you’re willing to do the research and put in the work.
Here’s how to go about selling a house that needs repairs:
1. Remodel Your House Before Listing
Completely remodeling the house is the full overhaul solution, if you can afford it. This can involve adding/removing rooms by constructing/removing walls, refinishing the counters and cabinets, replacing the appliances, or even demolishing the entire house and foundation and starting over.
This option mostly depends on how much money you have available and are willing to put into the home. If it’s a house you inherited from someone or couldn’t afford the necessary repairs in the first place, it may not be a financially viable option.
2. Repair Only Major Problems
If you’re unable to afford all the repairs on a house, focus on the repairs potential buyers and their home inspectors will be looking for the most, including replacing the roof, removing any piping made of the hazardous materials listed above, updating the fuse box, fixing mold, termites, or other potential damage, and refreshing the HVAC system.
You can also do cosmetic repairs and a bit of staging through replacing all the window dressing, repainting, caulking, replacing light bulbs, and professionally cleaning your floors and yard. These touches will go a long way in improving your house’s marketability and lessening the impact of remaining repairs needed. While focusing on the positive, be sure not to purposefully deceive or mislead buyers about potential issues like a crack in the foundation.
3. Selling a House “As Is”
Sometimes even these repairs can be too expensive or time-consuming. The structure could have more smoke and fire damage than is worth it for you to clean. There are plenty of legitimate reasons honest, hard-working families need to sell a house fast, without making these repairs. These houses are listed on the market “as is.”
An “as is” real estate listing means you’re selling the house exactly as it is, with no implied or expressed warranties, repairs, or other assurances.
Just because the house itself may be in disarray, that doesn’t mean you’re not sitting on an in-demand lot size, location, or floor plan. Location is everything in real estate – just ask the guy buried in the $4.6 million crypt above Marilyn Monroe. Do keep in mind, listing your home “as-is” will take longer than your average listing time which can be anywhere from 3-6 months.
4. Working with Real Estate Agents
If you’re going to list your home on the market, “as is” or not, don’t underestimate the power of a real estate agent. These professionals list your home, stage it, take pictures, negotiate deals with the buyer, do all your marketing, and so much more.
Of course, they also keep ~6% commission on the home’s sale price. In order to get your home to sell, an agent will make their recommendations on what needs to be fixed and repaired anyways. And in the case of a home in need of major repairs, they may not take the listing at all.
Working as your own agent can save you that commission and hassle though, but you’re still likely to pay for your buyer’s agent’s fees just to get your home to sell. Being a real estate expert, that agent will know how to get paid from the closing costs, and you’ll be better off with a professional on your side too.
5. SoCal Home Buyers Saves You the Trouble
SoCal Home Buyers skips all of the above hassle. When you sell your house in need of repairs you won’t have to pay for expensive repairs, agent closing costs, commissions or even list your house on the market.
There are no staging worries or open houses with buyers taking all your time, and it’s the fastest way to sell your house in any condition; cutting down the sales time to as little as 7 days.
SoCal Home Buyers can afford to pay cash upfront for your home and deal with all the rest of the operational hassles in the background (you would have to deal with) so you can move on with your life with cash in hand – worry free from any major repair work you would have to do.
It’s an easy process that gets you the most value in selling a house that needs major repairs without the hassle and headache of listing your house with a Realtor.
Weigh Your Options When Selling a House That Needs Repairs
Selling a house that needs work isn’t uncommon. As a matter of fact, every house that’s listed on the market needs work in order to sell, but some houses need major repairs. Selling a house in poor condition can be a hassle. Generally, the decision will come down to a few choices.
You’ll need to choose between either scheduling and paying for dozens of costly repairs or simply selling the house “as is” and sell for a much lower price than you would get if your home was in pristine condition.
Contact our professionals today: 951-331-3844 to learn how we can help you sell a house that needs major repairs today!
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