Sell the house as is or fix it?
A home in subpar condition may leave you with little leverage in a buyers market.
Q: Is it better to do the repairs and sell at market price or to sell "as is" at below the market price? Our home needs new siding, new windows and some interior improvements. The neighborhood is stable with mostly middle-class homes. (Bing: What's the best replacement siding for your home?)
— D. Pattkin
A: You can certainly roll the cost of necessary repairs into your home's sale price, but you likely must offer buyers an extra discount for the time and trouble needed to address the necessary fix-it work. Otherwise, that same buyer could simply drive down the block and buy another home with newer siding and windows, a better interior, etc., for the same cost as yours and not have to pound a nail.
You are caught in a modern-day real-estate Catch-22 — that dreaded "darned if you do and darned if you don't" scenario. Tattered homes often will not sell conventionally — at least for a reasonable price — in this predominantly buyers market. Only in rare sellers markets would you have leverage despite your home's condition.
So you may have to bite the bullet and do the work. Unfortunately, statistics suggest you will recoup less than 75% of your remodeling investment when you sell. According to Remodeling magazine's "2010-2011 Remodeling Cost vs. Value" report, a full window replacement in a midrange repair project returns 71.6% of investment in a home sale, while a siding replacement returns 72.4%. Both percentages are higher than most remodeling jobs. Other interior remodeling projects merit value returns of 45% to 73%, according to the survey.
- On our blog, 'Listed': Remodeling gets a dose of reality
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While those data seem to suggest that sellers should offer buyers credits and let the buyers perform their own work, the reality is that if a home is too beat up, it may generate little interest from conventional buyers. Your only customers may be contractors or would-be home-flippers, who will likely lowball you because they can already get cheap fixer-uppers in the vast foreclosure arena. Unless would-be owner occupants are especially handy and have loads of spare time on their hands, they typically don't want to wrestle with significant repairs.
Of course, all real estate is local, so these generalizations may not apply on your block. Consider attending open houses in your area to assess the condition of homes for sale, with an eye on any apparent upgrades and other amenities and their impact on sale prices and buyer interest. A seasoned agent can also tell you about buyer priorities in an area.
- MSN Money: Are you crazy to buy a home now?
You might have to perform at least some repairs if you need to sell your house soon for anything close to optimal price.
Is everyone so lazy they let their home fall apart until it's time to sell it.
LOL - actually some of us know the market where we will sell. I could easily see that over-building would not be a plus in this market. I could also easily see that doing extensive upkeep on my home would not get me anymore money than if I just left it as is - and - that was correct.
There are few homes for sale in this market - if you want to buy - you take what you can get and pay what is asked. That will get you a home a decent road - which is very important in this area - many homes are on horrible roads in hard to get to places.
Did no work on my home after it was built - not for over twenty years. Did no work prior to sale. Got more out of my home than my neighbor got with a same size home. He fixed his home up prior to sell and still got less.
You have to know your market and have a sharp real estate agent who can get loans for the people who want to buy your house. I credit my real estate agent with the great price I got. My neighbor didn't use one - she and her husband sold it themselves. The fact that the local market had few homes at all for sale was a major factor. Also it helped that many homes that were for sale were not on a good highway - many on stone roads or hard to get to areas.
Sometimes only a real estate agent can get a loan to buy a house. Often a trip to the local bank is a waste of time.
It's amazing how many articles I read like this. Is everyone so lazy they let their home fall apart until it's time to sell it. Do these same people run their cars will no oil changes and no car washes?
As the article states, it is a damn if you do, damn if you don't situation. Given the glut of foreclosures on the market right now that are in very bad shape, you are competing with the banks who do want to get rid of these properties sometimes for pennies on the dollar. If you, on the other hand can get the repairs and upgrades done at a fairly modest cost, and can anticipate recouping 80 cents on every dollar spent on a higher home price and actually SELL the property, then by all means DO IT. I should note that due to the general weakness of the housing market out there, many formerly employed craft workers who used to build homes are out of work right now, and you can negotiate a better deal with these people due to the greater competition.
What I find is the best situation in terms of selling a home is to get the home up to a reasonable standard, while keeping your asking price as low as you can go. There are a LOT of people who have had to downsize their jobs (basically equating to them making less money per year) if they can find work at all. By offering a house for a lower asking price, it will be more likely that potential buyers can actually get a mortgage on your house, and the banks are willing to mortgage the property.
Now is definitely a buyers market for real estate in many areas of the country, and although there are buyers out there who are willing to pay top dollar for prime property, most houses that are sold today are based on a low price (mostly to investors). Housing, at least in the short term will never gain its luster in price appreciation that existed with double digit gains in the first five years in the last decade, but once the bottom is found in many markets, prices will probably go up with the rate of inflation, and that is all. In the long term, it has always been that way.
Hate to disappoint you.
A better home, 3 blocks away on the same street, was on the market for 10% less and is still on the market now.
We also made sure everything was painted, the sidewalks were edged, there were lots of flowers growing in the yard, etc. so the house said "Buy me!" when someone pulled up to it. We put the home on the market June 20th, had 3 offers by July 3rd, and settled at the end of July. We took an offer slightly lower than we asked because it asked little seller help at closing (a standard now) and basically accepted everything "as is," so I didn't have to worry about something popping up to cost me money.
I would never buy a house that needed a large repair (siding, roof, foundation, etc...) because the cost would then have to come out of my pocket as cash or some loan or credit card (with much higher int. rates than a mortgage). If I REALLY liked the house i would be willing to pay for the work if its rolled over into my mortgage. So if the house is priced at 300k and it needs 50k...i would be willing to pay 350K for it but the work would have to be done before I take possession. Yeah, i know 70% of 50k is 35k but i did say really like.
PS...I did buy a cosmetic fixer upper but redid the hardwood floors, painting and kitchen redo myself (except kitchen countertops)