Selling a home can be a daunting process for the average homeowner. It’s even worse if your house needs repairs. You might not want to or you simply can’t afford to make those repairs. If so you may be wondering “how do I sell my house without making repairs?” Keep reading because we tell you how you can successfully sell a house without making repairs.
Are you interested in selling your house in Cleveland Ohio as-is for cash? If so then visit our page on selling your home as is in Ohio. Get an absolutely free consultation and a no-obligation cash offer. We’ll buy your house completely as is, quick and easy regardless of the condition.
Selling a house in general is very stressful.
If you are selling your house with a real estate agent the process involves:
- Interviewing and hiring a reputable realtor
- Agreeing on a listing price
- Getting the house ready with cleaning, repairing things that need to be fixed, updating things, and painting
- Having open houses and showing
- Reviewing offers
- Having potential buyers inspect your home for possible defects
- Negotiating concessions to address issues found in the inspection
- Closing
Let’s look at two home seller situations. The sellers of these situations have very different levels of leverage when selling their house. The first seller is one that has a house that needs repairs or extensive repairs. The second seller is one that has a ready for market, immaculate house.
Selling a House that Needs Repairs or Extensive Repairs
Know that you might run into some issues if you want to sell your home but it needs extensive repairs. These issues will limit your buyer pool for the house.
First, most home buyers are looking for a home that they can move into to enjoy. Some may be okay with doing minor repairs and updates. But the majority of buyers aren’t looking for houses that need a lot of work.
Second, depending on the extent of the repairs many conventional mortgage lenders might not lend on it. This is especially true for FHA loans, but also true for non-FHA loans.
It Might Also Be Hard to Find An Agent to List it For You
Because of the two factors above a lot of real estate agents might not want to list your house. The reason is that they don’t want to put the time and effort into selling an as-is house. This is because it has a very limited buyer pool (cash buyers and/or investors with alternative funding sources).
This is not the end of the world. You can list it on the market and try to find the right buyer. But these facts do reduce your leverage and increase the difficulty a lot.
Selling a House in Market Ready Condition
If you are a seller with a pristine home you’re in a different position. You have probably spent money to maintain and update your home during your ownership and in preparation for selling. If you are sitting in this spot you have plenty of leverage. If the house is priced right and the market is strong the level of difficulty might be lower. So if you have the time you can certainly afford to wait to attract buyers.
You Should Determine if the ROI of Repairs and Updates Makes Sense
If you need to sell a house that needs repairs/updates then it is a good idea to weigh your options. Unless you are a fortune tell it is hard to know the future. Will there be a buyer willing to purchase your home in its as-is condition at a good price? Will that buyer purchase it by the timeline you need it sold?
Even though you aren’t a fortune teller you should be able to look at the numbers. The goal is to determine the most economical solution (selling as-is for a lower price or spending money upfront on repairs). We recommend you compare the cost of needed improvements to your home’s market value after you make the necessary repairs. In other words, you want to determine if you will get back the money you used to make the repairs with a higher sales price.
Process For Determining if Making Repairs or Selling Your House Without Making Repairs is Better
Where to start?
Calculate the Cost of the Big Repairs
First, start with the big items. Major repairs are the ones that will determine your costs. If you want to understand the cost of getting your house to market ready look at the cost of the big items. Furnaces, windows, roofs, foundations, hot water heaters, plumbing, etc. are the big ones. They also carry a big price tag.
As you can imagine furnaces and foundations don’t sell houses. Why? They are not attractive and they don’t look pretty in photos. Buyers just expect them to work. If they don’t they will find out in the inspection. Unfortunately, they are also much more expensive compared vs. the cosmetic updates that do attract buyers. These items are critical to selling a house. But a new hot water heater, furnace, structural repairs, roof, etc. probably won’t provide a worthwhile return on investment.
Add up the estimated cost of the big ticket repairs that your house needs. Remember to add a little bit of a cushion. Costs usually run over in rehab work (5-10% should be a good estimate).
Add Up the Cost of the Smaller (Cosmetic) Repairs
Next, painting, cleaning and cosmetic improvements are lower cost things that should be done. These WILL look good in photos and WILL attract more buyers. Most buyers don’t want to do ANY work, not even paint.
If your bathrooms and kitchen are in total disrepair you will need to renovate these…these are major selling points. Once you determine what needs to be done you can calculate the cost.
Calculate the ROI of the Repairs
Determine your total cost of repairs and determine how much those repairs will increase the sales price you can get for your house. This exercise will determine if the ROI is worthwhile to make the repairs. Again, the big ticket items and any major updates like baths and kitchen are what will most likely determine this.
After looking at the ROI you may decide to sell the house as an “as-is” or “fixer-upper” at a discounted price. This strategy allows you to skip making repairs altogether. Although the price you receive will be lower you have effectively saved a lot of money to make repairs before listing the house and also after the buyer’s inspection happens.
If you are looking to sell your house quickly without making repairs then selling it as-is (selling it without making repairs) might be your best or only option.
Pitfalls of Making Repairs
While some minor repairs can be made without much effort, major repairs can require ample time and money before closing. Many sellers are faced with addressing major HVAC, plumbing and electrical repairs or outdated safety code violations. Also roofs can be past their useful life and foundations may have issues.
Serious buyers will create a list of all defects after an initial inspection. Usually the buyer will ask you to repair them. If you are unwilling to fix them before closing to their satisfaction then buyers will demand compensation at closing so they can fix them. This, of course reduces profit out of your pocket from the sales price.
If you cannot afford to make repairs before close or can’t afford to (say there is not enough from your sale proceeds) provide compensation at closing the sale might fall through.
Before signing the final closing agreement, sellers often agree to repair contingencies. These legal and binding contracts state that no sale is final until certain home repairs are made to the buyer’s satisfaction.
Homeowners can often be blindsided by structural home repairs after a buyer’s inspection, causing the seller to fix these unexpected repairs with financial forewarning. While most real estate sales contracts include these clauses, sellers can avoid this unnecessary hassle by selling as-is, most likely for cash (dependent on the condition).
The Dreaded Inspection Report
Another common disadvantage of repairing a fixer-upper home before selling is the inspection and appraisal process. It’s common for these tools that assess one’s property to favor the buyer.
While inspections are necessary to determine the condition of a home, many inspectors hired by buyers will nit pick and list all infractions a home may have, including questionable, minor repairs. Inspectors, in fairness, are looking out for the best interest of themselves (to reduce liability) and their customer who is writing their check.
Buyers will then use this inspection report to request additional compensation at closing to fix these insignificant issues. In addition, any repairs newly discovered during a home’s appraisal must be addressed before closing.
Once a home’s issue arises during either the inspection or appraisal process, it becomes a material fact that must be disclosed to any future buyer interested in the property. For sellers seeking a quick and clean close, the home inspection process can be brutal.
Selling As-Is Without Making Repairs
There are a few key factors to consider before signing a closing contract when selling a home without making repairs. When listing your home as-is, be upfront about the home’s condition.
Buyers seeking fixer-uppers will be drawn to the home’s potential for remodel while bargain hunters will gobble up the possibility to resell for profit.
Be upfront so you don’t waste anyone’s time. If you don’t want to make repairs that is fine, but don’t try to draw buyers in by saying you will at first. There is no point in wasting your time of theirs if they are not willing to buy as-is.
The Listing Price is Important When You Sell A House As Is
It’s also important that you are mindful of the listing price when selling as-is.
While neighborhood comparable homes can give the homeowner a general ballpark about the overall value of the home, you must consider the cost of repairs when pricing your house.
Prices of fixer-uppers should reflect the amount of time and money buyers will need to put into the house to make it comparable to the other houses that sold around you. In other words, don’t expect to get market value for a house that is not market ready. You need to be realistic, understanding that you are saving money out of your pocket by not making any repairs.
To sell your home without making any major repairs, homeowners must be willing to price the property without overestimating its worth.
You Still Have a Responsibility to Disclose Known Issues
On a side note it is important to remember that selling a house as-is does not relieve the homeowner from disclosing material facts or other known issues with the property. If a buyer makes a serious offer, then you as the seller are obligated to disclose any and all pertinent information about the home, including necessary repairs.
If you are unaware of the general condition of the home – due to inheriting the property or other circumstances – they are exempt from providing a property disclosure at sale.
Cash House Buyers
When selling a house without making repairs, homeowners will most likely hear from two types of buyers: those interested in purchasing the property for themselves and those interested in making a profit at resell or buying a rental property. While the former want to mold a worn property into their perfect dream home, the latter sees a fixer-upper as an investment.
Both buyers consist of people who pay cash for houses, but buyers interested in making a profit are less likely to demand minor fixes or repair contingencies before closing. In fact, the poorer the condition of the home, the more tantalizing it is to companies that buy houses. Cash house buyers usually look for houses that need a lot of repairs or that are even in disrepair.
Real estate investors and we buy houses companies can be found in most major cities and towns nowadays. Their “we buy houses” signs are displayed across public benches and plastered on billboards to offer another option for homeowners wishing to sell fast and easy.
These cash house buyers are legitimate people invested in making fair offers based on the condition of the house to assist homeowners with the selling process. For owners wishing to sell their house without making repairs, companies that buy houses are sometimes the only viable option. Depending on the condition the house may not qualify for conventional lending and even those looking for a discounted primary home may balk at the amount of work needed.
Before outright dismissing the we buy houses companies, homeowners must consider the difficulty involved in selling a home as-is. Homes without repairs can stay on the housing market or months without a single inquiry. Without lowering the home’s price further, sellers must be willing to consider offers from buyers with the financial means to close quickly (with cash).
People who pay cash for houses are serious about speedy sales and can see potential and profitability in homes that are otherwise ignored. Homeowners wanting to sell without making major (or minor) repairs should consider contacting a cash house buyer to avoid the grueling selling process altogether.
If you want to sell your house as is quickly then selling for cash might be your best option. To find out more visit our page on selling your home as is in Ohio to learn all about the option. Get an absolutely free consultation as well as a no-obligation cash offer. Sesa Properties buys houses 100% as is, quick regardless of the condition. You will make ZERO repairs.