When you’re about to sell your home, it’s important to assess the condition of the property. Most homes need a few repairs here and there, but some need major repairs. It’s important to take these repairs into account before you put it on the market.
If you go through the traditional process of hiring a realtor, posting the home on an MLS service, and putting a sign in the front yard, you’ll have to negotiate with buyers who will want to live in the home directly. Few homeowners want to inherit a bunch of problems from the get-go. Thus, these buyers will either use needed repairs to significantly lower the price of the home, or they will demand that you fix these items before they agree to make the purchase.
Many sellers don’t even have cash on hand to make these repairs. But assuming you do, it’s still important to decide whether or not doing so makes good financial sense.
Know the “Bank Breakers.”
One shorthand way to determine whether or not it’s going to be worth it to pay for repairs out of pocket is to note whether or not you are dealing with a major “bank breakers.”
- Foundation issues
- Mold problems
- Roofing problems
- HVAC failures
- Issues with outdoor plumbing or sewer lines
- Driveway damage
- Faulty fireplaces and chimneys
- Electrical repairs, especially if your home isn’t up to code.
Any of these repairs could cost thousands of dollars. These are also the repairs that homeowner-buyers are guaranteed to want taken care of before they move into your home.
Get a Home Inspection
You need to know about the issues that are lurking, the ones you know nothing about. Buyers are going to hire a home inspector. You should do the same. That way you’ll get a comprehensive report of everything your buyer will see.
It’s not a bad idea to work with hard numbers. Go ahead and get estimates for every item on your inspection report that you’re not capable of taking care of yourself.
Next, consider the average sales price on comparable homes in your neighborhood. You can use this tool from Trulia.
Take the amount of the repairs and subtract it from that average sales price.
For example, if the average list price is $162,540 and your home needs $18,750 in completed repairs then your maximum profit is only $143,790.
This doesn’t even take other expenses into account, such as the taxes, upkeep, homeowner’s fees, insurance and utilities you’ll need to pay while you’re waiting for the home to sell. It also doesn’t touch closing costs, realtor commissions and other expenses which you may end up paying or sharing. You can get a nice, clear picture by adding in these various costs and fees. For the ones that are recurring, like homeowner’s insurance, you should assess how much you will end up paying if it takes 30, 60, 90, or 120 days for the home to sell.
Sometimes what happens is your profit ends up being significantly lower than the outstanding balance on your mortgage. Sometimes, the amount of the continuing expenses will overextend your resources. At that point, you may begin to realize that selling your home the traditional way may not be the best solution for you.
Enter a Reputable Home Investor
If you have major repairs to make, a reputable home investor might be the way to go. You will get to keep your repair money in your pocket. You’ll get a fast cash offer that might be far more generous than the actual money you’d walk away with if you tried to handle the repairs and sell the home yourself. And you will be able to get on with finding and paying for your next home without dealing with all of the upkeep on your old one.
Fortunately, contacting a home investor doesn’t incur any obligations. You can get a quote within 24 hours so that you can see how the investor’s offer stacks up against the numbers you’ve already generated.
Now, when it comes to Big State in particular, we’ll also give you a spreadsheet with our own assessment of whether or not it’s going to be more profitable to sell your home to us than it would be to sell it to a homeowner. Thus, you will be armed with a great deal of information which will help you determine what your best option is going to be.
While you’re making your decision, be sure to consider hidden costs, such as the opportunity costs that you’ll generate for yourself while you deal with the headaches associated with seeking out major home repairs. Consider the amount of time that it will take to sell the house. Consider whether or not you have the time and energy to make the home ready for multiple home showings.
Once you consider the hidden costs of selling your home on the open market you’ll have a very clear picture of what your next move should be. Then, it’s simply a matter of making that move with a smile on your face, content that you’ve made the right decision.
Got questions? Need help determining what your next steps should be? Call our offices. We’re happy to give you advice, even if you don’t sell us your home.