Nearly 45 percent of American housing stock was built prior to 1970. As these homes age, they become increasingly more difficult to maintain. As a result, a large portion of these homes has fallen into disrepair.
The housing bubble, a stagnating economy, and numerous severe weather events have left many newer houses in poor condition, as well. When you are the owner of one of these homes, the problem is much more than just a depressing statistic. It is a very real drain on your limited resources.
But what options do you have? Here’s what you need to know about selling a house in poor condition.
What to do with a house in poor condition
There are many ways to find yourself responsible for a home in a state of disrepair. You may:
- Live in it
- Have rented it out and seen the renters treat it badly
- Inherited it
- Have acquired it in a divorce or through other legal proceedings
Regardless of how it came into your possession, having a home in poor condition can be an unwelcome strain on your time, energy, and finances. In most cases, if you find yourself in this position, you have two options.
The first is to keep the house. If you keep it, you will need to invest money to fix it up in order to make it livable or rentable. You will also need to ensure that you have the time, income, and other resources to:
- Handle future maintenance and upkeep
- Pay property taxes on it
- Pay for homeowners insurance and other standard property costs
The alternative is to sell the house. There are many benefits to selling, including:
- Freedom to change your living situation or location, if desired
- Freedom from property taxes, homeowners insurance, and other costs
- An influx of cash to use for your own purposes
Selling is not without its drawbacks, however. To sell your home using the traditional real estate model, you would need to invest potentially large sums of money to bring it up to par. Selling a house as is can work better for some sellers but the process can be less familiar.
Fortunately, if you are struggling with the questions of whether and how to sell a house in bad condition, there a few easy steps you can take to clear up the picture of what choice is right for you.
How to sell a house in poor condition
The first step to selling a house in poor condition is to assess how bad things really are. This is important because looks can be deceiving.
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Cosmetic damage can look bad but be easy to fix. On the other hand, seemingly minor damage can indicate serious and expensive issues. Small cracks in basement walls that are the result of severe foundation problems are a prime example.
You can’t make informed decisions until you know what you’re dealing with.
The second step is to look at your local real estate market and see how your home compares. This will help you determine how much work you would need to put in to make your home competitive at the time of sale.
The third step is determining your home’s value. Knowing what your home is worth puts the cost of the repairs and upgrades it needs in context. It is a key step to understanding whether or not it is worthwhile to improve your house.
That, in turn, will make it clear whether you should pursue a traditional real estate sale or work with a direct buyer.
Finally, once you’ve decided how to sell, you can decide when to sell.
Assessing your house: how bad is it really?
Some houses in poor condition suffer mostly from minor disrepair and cosmetic issues. Examples include:
- Worn interiors in need of a good scrubbing
- Outdated decor and fixtures
- Overgrown or unruly landscaping
- Aged utilities such as HVAC systems, electrical wiring, or plumbing
- Spots of wood rot or roof damage
- Small leaks in or damage to foundations
While these common home problems can cost money to fix and may be unsightly, they do not preclude anyone from living in the home. Other homes have more serious problems that can directly impede your ability to sell them on the traditional real estate market. These include:
- Severe roof damage
- The presence of lead, mold, or asbestos
- Serious foundation damage
- Insect or animal infestation or unrepaired damage from the same
- Damage to electrical, plumbing, or HVAC systems that presents a danger to occupation
If your home has any of these issues, you will almost certainly need to sell to an investor rather than on the open market. This is because mortgage lenders generally will not issue a mortgage to buyers for properties with these kinds of problems.
If your home has extensive damage, you may already know that you fall in the latter category. If you aren’t sure, the fastest and easiest way to find out is to hire a home inspector.
The inspector can conduct the same inspection that they would if you were preparing to sell. The finished inspection will clearly state anywhere that you have serious damage, enabling you to properly categorize your home and evaluate your options.
Should you improve your house?
For most owners, the short answer to this question is no. Renovating a home is expensive and stressful. In fact, 35 percent of homeowners report that they would rather move than deal with a remodeling project in their home.
Homeowners that do renovate hoping to improve their homes for sale often recoup only 50 percent of the money they invest in upgrades at the time of sale. This means that improving your house in hopes of selling it rarely yields a worthwhile return on investment (ROI).
The poorer the condition of your home, the less worthwhile it is to renovate.
Look at your local real estate market
What if your house needs only minor improvements? Are you an exception to the low-ROI rule?
If you think it may be worthwhile to renovate your home so that you can sell it traditionally, your next step is to look at your local real estate market. Search for homes that are:
- Located near yours, ideally in the same neighborhood
- About the same age and size
- Located on about the same size lot
- In the same state of disrepair as yours
- In the state of repair that you think your home could reach with a modest investment
Unless homes in the same condition as yours are selling fast and for very good prices, improving your house will not be a good choice.
Determining how much your house is worth
The next step in selling a house in poor condition is determining what your house is worth. In the past, this has been a tedious and time-consuming process involving realtors, scheduling, property walk-throughs.
Today, you can get an instant valuation online for free. The only thing you need to provide is the address of the house in question. Simply plug it in and let the system calculate your home value using:
- Big data
- Industry insights
- Market trends
- Advanced algorithms
- Local and national home sale information
Instant valuation is ideal for owners selling a house in poor condition because it is:
It also does not require you to work with a realtor, which is perfect for owners interested in selling a house as is. There is also great convenience in finding out the value of your home hassle-free whenever is most convenient for you.
Deciding when to sell
Homeowners selling their homes on the traditional market face very real limitations. For a variety of reasons, they often get pigeon-holed into selling during the late spring or early summer. Selling outside of those times takes longer and results in lower sale prices.
If you decide to try iBuying, however, timing is not a concern. iBuyers purchase homes in poor condition for cash year-round. The process, speed, and sale prices remain the same regardless of the season.
Thus, the only factor you need to consider when selling your home is when it is most convenient for you to do so. This is particularly important if you are:
- Looking to sell fast
- Trying to close an estate, finalize a divorce, or handle other legal proceedings
- Attempting to maximize tax benefits from the sale
- In need of cash quickly
Many sellers choose to time their sales around key events in their lives, such as the end of a school year or the start of a new job.
iBuyers help you sell faster
Many homeowners looking to sell are not aware of how much faster selling to an iBuyer can be. Traditional home sales routinely take as long as three months to complete. If you accept a cash offer from an iBuyer, you can close in as little as two weeks.
This opens up tremendous new opportunities for sellers.
It makes selling your home an option any time of year. It enables you to respond quickly to changes in your life, health, or family composition. It can help you handle changes to your finances as soon as they occur, preventing you from sliding into debt or damaging your credit score.
When it comes to selling your house, iBuyers put the power and control in your hands.
Tips for selling a house in poor condition
Now that you know the general process, here are some expert tips for selling a home in poor condition.
First, and perhaps most importantly, don’t wait to get started. While many of the costs are hidden, owning a home can be expensive.
Every day that you own your home, you pay for taxes, insurance, and upkeep costs. You also increase the chance that existing small problems will turn into bigger problems that negatively impact the value of your home. Once you determine that investing in improving your home is not worthwhile, it is in your best interest to begin exploring sale options as soon as possible.
Second, make good use of the tools and resources available to you. Don’t guess at:
- How serious your home’s problems are
- How expensive specific problems are to fix
- How much your home is worth
Guessing or making assumptions about these things never works in your favor. It can lead to:
- Costly and ill-fated renovation projects
- Loss of money
- Further reduction in home quality and value
- More difficulty selling
- Getting less than your home is worth at sale
You can take advantage of home inspectors, instant valuation tools, and other resources to give yourself a clear picture of your situation before you make decisions.
Third, remember that selling to an iBuyer is not the expensive, drawn-out process you probably expect. Unlike traditional sales, there are:
- No delays
- No parades of people marching through your house
- No reams of paperwork to fill out, submit, and get processed
- No hefty closing costs and lists of people you owe commissions to
Selling your home does not have to be overwhelming. It can be quick and clean and give you a new lease on your life and housing choices.
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