Who Will Buy My House if It Needs Repairs?

 

Theoretically, anyone could buy your house, even if it does need major repairs. Sellers are under no particular obligation to return their home to “like new” condition, and buyers do purchase “fixer uppers.”

In fact, you’ve probably seen the (largely unconvincing) real estate ads for yourself:

  • Charming fixer-upper, perfect for first time home buyer!
  • Handyman special, sold as is!
  • Great home with lots of potential.

All of these phrases are code for: this home has problems. And sometimes, buyers will bite.

However, the more repairs your home needs, the harder to sell it on the traditional real estate market. Attempts to pass repair costs on to buyers can stall negotiations, according to Bankrate.com.

“Home sellers naturally don’t want to make repairs to a home they’re about to vacate. But homebuyers, equally naturally, want their dwelling to be perfect. So, who’s right?

Usually, buyers and sellers negotiate a compromise that allows their transaction to move forward.

But not always, says Kent Temple, broker and owner of Keller Williams Realty – The Temple Team in Mooresville, N.C.

“Buyers think every house should be a new house, and sellers say, ‘Why should I fix anything?’ At that point, it’s one more thing we have to negotiate, and not only does it get contentious, but we lose deals because of it,” Temple says.

Of course, repairing a home you don’t plan to live in is expensive, and it’s tough to recoup the costs. About Home points out that even if you do recoup the monetary value of the repair such a return doesn’t account for the hours spent managing the process.

“Some home sellers consider it a success to spend $7,500 on a bathroom remodel if they recoup $7,500 from the sale. Think about it, though: you’ve lost out. All of that time, pain, dust, effort, forgotten costs (faxes, time spent on the phone with the contractor and leaving work early, cutting certified checks, etc.)? Why?”

Sometimes you can mitigate these issues by refurbishing instead of replacing. A fast paint job and a carpet cleaning may be all that you need to get the home ready to go. But if the roof is 20 years old and in need of replacement, or if your electrical system has fallen out of date and needs to be updated before it can be brought up to code, there are few ways to fake it.

And all of this assumes you have the money to make repairs in the first place. If you don’t have the cash on hand to bring the home up to a seller’s standards then you’ll severely weaken your own negotiating position while vastly increasing your stress.

Sometimes you can also get around these issues by offering a credit for repairs instead of making the repairs directly. This will lower your profits, but might allow the deal to move forward.

However, whether or not you can eventually sell the home, with or without heavy concessions, isn’t really the issue. The question is how fast you can sell it, and whether you’ll come out ahead in either the negotiations or your attempts to restore the home to something closer to a market-ready state.

If their inventory of local available homes is high you might be waiting a long time before you sell an as-is home to a potential homeowner. And you might have to keep dropping the price to generate any interest.

As Business Insider notes, the first hurdle is getting enough qualified buyers through the door.

“Our experience tells us that it will take approximately 20 QUALIFIED buyers through the door before you receive an offer, and two to three offers before a deal is done.

If your home is priced right, and has all the features, space, layout, renovations, condition, light, views, amenities and location that most people want, you will have dozens of buyers to your listing within the first month of being on the market.

Sheer volume through the door in a well-priced home should lead to a quick sale, generally a month or less depending on how heavy your buyer traffic is. However, with each of these items that your listing falls below average, you reduce your buyer pool, thus increasing the amount of time it’s going to take to sell, even at the “right” price for the market.”

If you need to move quickly, selling to a home investor may be a way to speed the process, avoid all of the headache-inducing work and eliminate dodgy negotiations. When you work with reputable investors you get:

  • Someone who will help you run the numbers in a straight forward fashion. For example, we put together a spreadsheet that will show you whether our offer is more advantageous to you than trying to pay for repairs or offer credits to potential homeowners.
  • An offer that is delivered to you within 24 hours.
  • The ability to close in as little as three days if you wish.
  • A cash sale that puts guaranteed money into your hands.

The whole process is straightforward and to the point, and you don’t have to do another thing to your house if you don’t want to. Instead, you can focus all of your negotiating skill on the next home that you plan to inhabit. Depending on the status of your mortgage and several other factors, selling your home to an investor as-is could be one of the smartest, most stress-free moves you ever make.

Sources:

http://www.bankrate.com/finance/real-estate/who-repairs-home-buyer-or-seller.aspx#ixzz4FAn3n5Gx

http://homerenovations.about.com/od/legalsafetyissues/ss/renovatetosell.htm

http://www.businessinsider.com/how-long-will-it-take-to-sell-my-home-2011-11