A Judgement-Free Guide to Selling a House in Poor Condition
Ageing, storm damage, and careless renters can all damage a house. Many homeowners lacked the funds to properly maintain their homes, resulting in deterioration and damage.
This makes selling the house difficult. But there’s still hope. This guide will help you sell a poor-condition house in today’s market.
Assess the Condition
The first step is to evaluate the home’s condition. This assessment should be as detailed as possible, with damage and condition organized by:
- Home Systems (i.e. electrical, plumbing, heating/cooling, and so on).
- Significant structures (i.e. roof, foundation, flooring, siding, etc.)
- Structures that are connected (i.e. garages, storage, attics, etc.)
After you’ve considered everything above, you’ll want to grade the condition on three levels:
- Is the house “uninhabitable” because of the condition?
- Are major renovations required, but the house is habitable?
- Can you make do with only finish and cosmetic repairs?
Hiring a local contractor or home inspector to provide you with a detailed assessment may be required for accurate diagnosis of the condition.
1. Unlivable Conditions
By yours or the market’s standards, or by local laws and building code regulations, a house may be deemed “uninhabitable.” The reasons for a home’s uninhabitability range from structural issues to pest infestations and mold.
Physical damage or poor condition of major structural components of a home are referred to as structural issues.
In most jurisdictions, this includes both physical building structures like the foundation and roofing, as well as home systems like plumbing and electrical.
“Structural” issues are frequently deemed safety hazards and, in most jurisdictions, must be repaired prior to someone living there.
Heating and cooling
Most jurisdictions in the United States have separate building code regulations pertaining to a house’s habitability based on the working condition of its heating and cooling systems. A broken heating system, for example, can be dangerous to those who live in cold climates.
Mold, Mildew, and Water Leaks
The severity and scope of these issues will determine whether they are severe enough to render the home uninhabitable according to local building codes. Many of these issues are classified as “environmental” or “health” hazards.
2. Significant Renovations
Simple remodels and updates can produce the best results in some cases. In other cases, major renovations may be required. Structural damage, building codes, and other factors may all necessitate significant house updates. As you might expect, major renovations are typically costly and can take weeks to months to complete.
3. Cosmetic / Finishing / Repairs
In other cases, an investigation may reveal that simple repairs and cosmetic approaches provide the most bang for the buck. This category includes re-carpeting, stripping and painting walls, refinishing flooring, updating kitchen cabinet hardware, and so on.
Evaluate the Current Real Estate Market
Next, evaluate the local real estate market. Although markets tend to be cyclical, each zip code and neighborhood has its own distinct set of characteristics, trends, and market demands.
Is it a buyer’s or a seller’s market?
Knowing whether you are in a “buyer’s” or “seller’s” market can help you better position your home for a quick sale that nets you the most money at closing.
What exactly is a Buyer’s Market?
A buyer’s market is a real estate term that describes a real estate market in which the supply of homes (those listed for sale) exceeds the current demand by prospective homebuyers in the market.
What exactly is a seller’s market?
A seller’s market exists when the number of people who want to buy homes is higher than the number of homes that are currently for sale.
Examine “Recently Sold” Data on Distressed Homes and Comparable Sales in Your Neighborhood
Homes that are similar to yours and that are listed or sold on the market are referred to as “comps” or “comparables” in the real estate world. It’s important to first figure out how much a house is worth before putting it on the market, especially if it’s in poor condition.
If you list it too high, you could be stuck with it, wasting time, energy, and resources marketing an “overpriced” property that turns people off.
If you list the property too low, people may be wary of a “too good to be true” deal, and you may miss out on a potential ROI at closing.
These comps also provide unique insight into what is in demand and what buyers are willing to pay a premium for or are not willing to pay a premium for.
This can help you decide what types of repairs, renovations, or remodeling to consider before listing the house, as well as how much is actually worth investing in the house.
Establishing a Pricing Strategy
Now that you’ve done your research and evaluation, it’s time to come up with a pricing plan that will help you reach your goals.
When developing a strategy, keeping the end goal in mind and knowing what goals are most important to you can help you formulate the best plan.
Is it important to you to sell quickly, or are you content to wait for the “right” buyer to come along?
Is it more important to get top dollar for your home?
Should you sell your home as-is?
This is a question that almost every seller of a house in less-than-perfect condition faces. The answer depends on a number of things about your home and the market in your area.
Reasons You Should Consider Selling “As Is”
You Can’t Afford Expensive Repairs
In many cases, you may find that you can’t make needed repairs because you don’t have enough money. Listing “as is” may be the only option in such cases.
You want to avoid the stress that comes with a traditional home sale.
Selling a house isn’t always a pleasant experience. It can be a time-consuming process fraught with red tape that necessitates dealing with agents, lawyers, filing deadlines, inspections, negotiations, and more. When you sell your home “as is,” you typically get investors and cash buyers who want to close quickly and with no fuss. This lets you get a fair market price for your home and move on with your life.
It happens to the best of us, and it often goes unnoticed. Medical bills, accidents, layoffs, and other factors can all put homeowners in a panic, leaving them wondering where their next paycheck will come from and how they will make mortgage payments. Selling “as is” can be a source of hope and relief because it can lead to quick cash deals that don’t have to wait months for bank approval.
Job transfers or family crises
Life occasionally throws us a curveball. And when time is of the essence, such as during a job transfer, a family emergency, or other major life events, selling your house “as is” can quickly put cash in your hand, allowing you to move quickly when necessary.
Don’t Forget About Disclosure Requirements
Before selling a home, sellers in almost every state in the U.S. are required to tell potential buyers about certain things. This is called “disclosure.” Usually, these disclosures and the rules that govern them require the seller to tell the potential buyer about any “material defects” in the home, its structure, or its systems.
Disclosure laws differ from state to state, but sellers must comply with federal laws regardless of where the home is located. Failure to make the required disclosures under local and federal laws can expose a seller to civil and potentially criminal liability.
It can be hard to sell a house that is in poor condition, but with the right information and planning, you can get rid of your house. Knowing how to list, market, and prepare your home for sale, as well as what repairs are necessary and what can wait, will help you achieve success. If you follow the advice in this guide, your home will be well-positioned to attract the right buyers in your local market, allowing you to close the deal and move on to the next stage of your life.