When your house requires extensive repair, it can be intimidating to bring it on the market without investing in a slew of expensive improvements. When it comes time to sell your home, it's easy to feel like the ugly duckling on the block — the old house with the outdated kitchen, the bad yard, the broken this and broken that. But, let's be honest, not everyone has the time or resources to fix up their fixer-upper.
The good news is that it's not difficult to sell a fixer-upper for a reasonable price — and you don't have to make drastic changes to do it. In reality, doing a lot of renovation work on a property isn't always a good idea. Most of the time you might now even need to install new flooring or replace countertops and cabinets.
It is not necessary to make a fixer-upper look flawless while selling it.
It's all about highlighting the features that it does have, the floor plan, and the future dream home concealed behind the flaws. You're in fine shape as long as there are no structural or safety problems to be concerned about.
People who purchase fixer-upper houses, as opposed to buyers who just want something turnkey, value opportunity over perfection. They are willing to put effort into a property in order to make money, create equity, or to design just what they want. We're not going to try to trick you by saying that everybody likes a fixer-upper. They are not suitable for everybody. However, there are three groups of buyers who are able to take the risk and dig their heels in to upgrade and renovate their homes.
The most common potential buyer are those who flip houses or invest in real estate. They buy houses for low prices (usually at auctions), renovate them, and then sell them for a profit. The best thing is that they will look at your house's shortcomings in terms of opportunity.
If a flipper is interested in your home, make sure to first check in with a real estate agent to determine the value of your house. For accurate pricing, an agent would be able to run a comparative market analysis (CMA) of recently sold properties similar to yours in size, place, and condition. That way, you'll know if you're being taken advantage of and can pull out of the deal before it’s too late.
Flippers love to find a good deal, but that doesn't mean you have to accept if they don't make a bid at the true value. Remember that your house needs maintenance, but that doesn't mean you're desperate.
The buyer who wants to live in a particular place, neighborhood, or part of town but cannot afford the average list prices in those areas comes next. Buying a fixer-upper is their way into those desirable communities. They are able to invest in a property that requires renovation simply because of its location on a map.
Although some people just want turn-key houses, the bargain hunter is able to purchase the ugly duckling for two reasons. First and foremost, they are relieved to have found something affordable in the desired place. Second, they realize that by buying a fixer-upper, they can make improvements over time and accumulate equity along the way.
The third form of homebuyer has the money but hasn't been able to find a home in the area they want with the features they want. And it's not because they haven't discovered it. They've most likely found their dream home several times, only to have it snatched from under them each time with this extremely competitive market.
There is a lot of rivalry in desirable neighborhoods. It is common for homes in these areas to receive dozens of offers within hours of being listed. Buying a fixer-upper provides homeowners with a blank slate and an opportunity to build the home they haven't been able to find, or have found but have been outbid on.
Now that you know a little bit more about your prospective customers, there are a few easy tactics you can use to make your property more appealing to them. If you can figure out what attracts them and what scares them off, you'll be well on your way to selling your home.
Begin with a few basic projects that are also inexpensive.
Landscaping is one of the best things you can do to make a strong first impression. You don't have to spend a fortune on costly landscape design; simply removing weeds, mowing the lawn, and planting a few flower pots will do wonders.
According to a 2012 study conducted by Texas Tech University, landscaping and curb appeal may have a direct effect on the value of your home by up to 12%.
So, a day's worth of yard work will result in more money in your pocket before you even get started on the inside. If your front yard is all grass, adding gravel is a low-cost way to improve curb appeal. You'll spend between $250-$700 on gravel landscaping, but if it helps you add another 1% to 12% to the value of your house, it'll be well worth it.
Clutter in your home has a similar impact. Make sure the home is free of excess knick-knacks, unwashed dishes and dirty laundry strewn about. Additionally, dirty windows and window sills can give buyers a negative first impression.
So, while your home does not need brand new facilities, it does need to be clean. Buyers can be deterred from making a bid by dirt and clutter long before they are deterred by flaws in the flooring or obsolete countertops. A clean home sells much quicker than a home covered in dust and grime.
It’s unnecessary to make major renovations with a saturated market, especially since you may not have the time. But what about the smaller fixes? It can be worthwhile for sellers to put in the time and effort for specific small updates.
Consider this: the less you fix, the more equity you will have to give up in order to make the house worthwhile. Small repairs can include, but are not limited to, the following:
When it comes to selling your fixer-upper, renovation loans may be one of the most valuable tools. If a buyer takes this path, the estimated renovation costs are factored into the overall loan sum. Rather than purchasing a fixer-upper and then paying for repairs individually, borrowers may be approved for a greater loan sum and receive the money in stages to pay for larger improvements.
The FHA 203(k) loan and the Fannie Mae HomeStyle Renovation loan are two examples of this.
However, there are several caveats. A buyer's credit score must be checked, and depending on the program, they may be required to put down a certain amount of money. Their renovations are usually approved by a mortgage company specialist who ensures that they make financial sense based on the expected valuation of the home (i.e., they will not loan $450,000 for a house that will only be priced at $400,000). Buyers would also be required to provide evidence that the renovations have been completed.
But how exactly does this favor the seller? Work with your Realtor to include language about renovation loans in your listing. This way, prospective buyers are aware to discuss it with their Realtor, and other Realtors are aware to inform their buyers.
Throwing clutter into closets and cupboards isn't the solution when it comes to cleaning out clutter since storage space is a selling feature. According to the same Vileda survey, 80 percent of buyers look in these storage spaces, while the National Association of Home Builders estimates that 85 percent of homebuyers want adequate garage storage in a home.
They are unlikely to be interested in the trinkets you have amassed over the years. But what about a decently sized hallway closet? That is something they will get behind.
The truth is that buyers will alter the flooring and other stylistic information later on. They're more likely to take the plunge if they like the floor plan and the house for what it is.
As a result, market your home based on its best features. That means your listing should include information such as closet size, master bedroom, fireplace, patio, storage, an open floor plan, great views, a home office, large windows for natural light, and garage space. Make a point of mentioning local amenities such as parks and strong school districts.
Again, selling a fixer-upper does not entail making the house look flawless and selling it as something it is not. So, even though you've cleaned it up and are able to list it, don't overprice it.
Calculate the worth of your house if it is remodeled with the assistance of your Realtor. Your agent will look at nearby comps to help you find this out. Then, make a list of and estimate the cost of the improvements needed to get your house in that shape. Which upgrades are required? Which of those are you able to do on your own? Which of these would you leave to the buyer? Everything the buyer would have to absorb should be deducted from the home's worth.
So don't write off your fixer-upper just yet. Even if it requires a little extra work, your house will probably sell quicker than you think with a little TLC, some cleaning supplies, and a fantastic real estate agent who will make sure buyers know their choices.