5 Things to Know About Selling a House in Poor Condition
Some people believe the myth perpetuated by shows on HGTV that says if you’re going to sell your house, it must be in perfect, show-ready condition. If it doesn’t have granite countertops, stainless steel appliances, and “Honey, stop the car” curb appeal, then don’t bother. However, like many things on TV, this is simply not the reality we all live in.
There are plenty of reasons to sell a house in poor condition. People all across Little Rock sell their houses as-is, without investing thousands of dollars to first remodel or upgrade them. You might not want to invest the time and money in repairs, or if you’re like most people, you simply don’t have the funds to do so.
Maybe you’re facing foreclosure, going through a difficult divorce, or want to pay off debt. You might have inherited a house and simply can’t afford the additional property taxes in Little Rock. Everyone’s situation is different, but listing your home for showings on the traditional market doesn’t always make sense for sellers.
Regardless of the reason you want to sell a house in poor condition, there are some things you need to know before you start the process. We receive calls to buy houses that need repairs every week. So let’s cover the most frequent issues and most often asked questions we typically encounter. These tips help you understand your options for this type of home sale.
What Is A House In Poor Condition?
“Poor condition” is a catch-all term in real estate. To someone, it might mean a home doesn’t have new appliances, flooring, or nice countertops. The term can range from needing cosmetic repairs, having obvious storm or pet damage, but also be considered uninhabitable. A house in “poor condition” can mean different things to different people in Little Rock. Let’s take a deeper look.
Selling A House That Needs Cosmetic Repairs
A house that needs minor repairs to bring it to modern standards might be structurally sound but look like an “ugly house” compared to those nearby. After all, an overgrown yard, potholed driveway, missing shingles, and chipped paint are likely to negatively impact a home’s curb appeal and may scare off a potential buyer.
Inside the house, worn-down carpeting can also make the property look old. On the practical side, sink faucets might be out of date or the kitchen might feature stained wallpaper from the 70’s. All of these things do turn off traditional buyers from the MLS expecting perfection, but they don’t mean the house isn’t solid underneath. However, it takes a special type of buyer to see past these things.
If you’re going to sell a house that needs cosmetic updates, work with a pool of buyers used to looking past cosmetic issues. This will not be a first-time home buyer, or family with kids relocating. Your best option is to find a real esate investor or company that buys houses for cash. Buying homes that need work is in their wheelhouse.
A cash home buyer like this is used to making needed repairs on older homes, and doesn’t expect the latest and greatest condition at the time of purchase. They will be able to evaluate the structure of the home and make you the best possible offer while knowing they will update all of the cosmetics.
Selling A Home With Obvious Damage
Obvious damage to a house may include foundation issues, a leaky roof, water damage, outdated HVAC systems, and more. These aren’t superficial issues like the previously mentioned cosmetic issues. Instead, larger problems like these bring an “unknown factor” that the home seller must disclose to potential buyers. Even in a seller’s market, these items have the potential to scare off buyers and drastically reduce the sale price.
Pet Damage: Dogs, Cats, and More
Sometimes pets cause obvious damage to the home as well. We understand that homeowners love their dogs and cats, and sometimes overlook issues because they don’t know how to stop certain incidents from happening. Over time, a lot of little accidents can add up to big damages. This can be more than some people can manage to fix on their own.
Unfortunately, a house in poor condition with larger problems like these will require a hefty investment to get it up to a sellable standard. This is what causes a home seller in Little Rock to feel stuck between a big rock and a hard place. While not having money to remedy these problems, they can also have a hard time finding a real estate agent to list their unwanted property in its present state. Doing so goes against their training and industry norms.
If you’re facing this dilemma, don’t fret. We solve this problem for homeowners all the time. They are often amazed that more people don’t talk about the option of selling a house in poor condition while also receiving a lump sum cash payment that often exceeds their expectations. We are here to tell you it’s not only possible but routine.
Get in touch today if your home has problems you can’t afford to fix, but you would also like to sell it for top dollar. We would love to help.
Can You Sell a House In Little Rock That Is Uninhabitable?
An uninhabitable house is unsafe for people to live in, and may lack what is called a CO-or certificate of occupancy. In Little Rock, the city will “red tag” the house if it is determined unsafe for people to live in. For instance, there could be mold or asbestos in the walls. A termite infestation or extensive roof damage would also make such a house an undesirable property for many buyers.
This can happen after years of deferred maintenance on a rental property, or even falling way behind on repairs and being reported by neighbors. Burdensome houses like this run the risk of falling behind on unpaid property taxes, and eventual foreclosure to be sold at auction.
However, you don’t have to cut your losses with an uninhabitable property. While you may not be able to hold an open house, there are companies that will buy houses in this condition as well. Experienced investors will fix the house, re-establish code compliance for occupancy, and pay you in the process.
Our company buys uninhabited houses in Little Rock and the surrounding areas, so if you would like an offer on yours please give us a call.
So far we have covered how you can solve your problem as fast as possible without the added time or effort of a traditional real estate sale. However, let’s address what is involved should you choose to go a traditional route.
What To Expect on A Traditional Real Estate Sale
A prospective buyer or real estate agent often passes over houses in poor condition because they can’t get financing. Most homebuyers need a mortgage to finance the sale, and this requires an appraisal. Some types of financing such as FHA will come with extra stipulations that require repairs in order to close the sale. (For example, the peeling paint problem.)
Therefore, finding a cash buyer as previously described will help you bypass issues like this altogether because they won’t be getting a mortgage appraisal.
Make Minor Repairs Yourself
It might be unrealistic for homeowners to sink a lot of money into a house that’s in very bad condition in order to sell it. However, identifying some manageable and minor repairs can make a big difference in improving the saleability and overall curb appeal of your house.
Consider updating some of these cosmetic updates yourself that stands to yield a better sale price. Here are some minor repairs the average homeowner can tackle.
1. Updating light fixtures and doorknobs from an older decade to the present can greatly change the interior appeal of the house.
2. Repainting the interior walls of the house that potential buyers first see can also make a big impact.
3. If you have siding on the house, rent a pressure washer to clean it off.
4. Do a little lawn maintenance on the front yard and bushes. This can help your property make a better first impression without spending much money at all.
Before you commit to any improvement, consider the value of what you’re doing in the eyes of potential Little Rock buyers.
Paint isn’t expensive, so applying a fresh coat can greatly pay off. In contrast, replacing your current plumbing system is expensive. While a smart idea if needed, you may not recoup this investment in the asking price to the extent that it’s worth it. Check out these top improvements that increase value before taking action.
You also need to keep your time and budget in mind. It’s worth spending $1,000 on a repair that boosts the price by $5,000 or more, but you don’t want to invest more in the property than you’ll get back, especially if the house is in very poor condition and you need to sell it fast.
Check Out Little Rock Real Estate Comps
You’re not the only person in Little Rock who needs to sell a house in poor condition. Consider similar homes with roughly the same above-ground square footage, year built, house type (brick vs. siding), and condition. Choose those homes that are within a 1-mile radius of your home, if possible. Obviously, Little Rock neighborhoods can change quite drastically within this proximity. Use your local judgment to assess comparable homes situated in a similar type of area to yours. A house in Hillcrest has a different neighborhood value to buyers than one in Capital View despite proximity. So be realistic.
Take note of comparable homes based on the above criteria that are also in great condition. Calculate the average cost per square foot for at least 3 homes, but ideally, 5 if you can. Do this for houses that sold in the last 6 months, as well as active listings.
You can now multiply this per foot price by your home’s square footage. Take note of the difference between the list price versus sold price of these houses. It will give you an idea of what to expect during the negotiation process with traditional buyers in your area.
Using this pricing info will help you define the norm or standard that home buyers will use while evaluating your house if it were in great condition, and also give you a glimpse into what appraisers will use to calculate your home’s value. You can use many online services to access this data from real estate listings in your area.
Adjusting Your Home Sale For Poor Condition
Now, you will want to be honest with yourself and subtract the estimate of what needs to be fixed. If your repairs and upgrades will cost $50,000 then you’ll need to subtract this from the “best-case scenario” price you determined above. Keep in mind that most homebuyers don’t want to take on repairs before moving in, so they will often price in their time, effort, and hassle as well. This will further stand to lower your sale price.
If all of the houses for sale in your neighborhood have upgrades and recent renovations, it might be even harder to sell a distressed property. People will see what’s available and opt to spend more for a house in good condition because they can move in immediately.
Consider the Home Inspection
When you’re selling a house in poor condition you will want to disclose any known issues to potential buyers. This is not only required by law, but can open you up to potential lawsuits if you knowingly hide problems from buyers. Despite such disclosures, you can be sure the home inspection will also raise a “to-do list” of issues and concerns for the average buyer. These will lead to further negotiation and often result in further price reductions in order to get the deal closed.
If you think your house is in bad condition and likely to result in a long list of items from a home inspection, you might consider selling your house as-is. This tells the buyer, up-front, that anything they find during the home inspection process is their responsibility.
Selling as-is gives you some leverage as it sets a financial expectation from the start. The buyer will know that you’re not making repairs. Your buyer may still request an inspection, but it won’t be used as a point of contention or a price reduction conversation. However, understand that selling a house as-is will turn away many potential buyers who might be afraid to assume responsibility for unknown issues without recourse. This is why sellers are told not to do this by agents.
Most real estate agents will be turned off by this idea because it makes their job more difficult. They may suggest a list price lower than required to encourage a faster sale, or otherwise price way too high. Remember, their commission is a percentage of the sales price.
Still, many agents can’t help themselves from recommending you replace carpet, paint walls, and more because they are so used to listing homes in show-ready condition. The bottom line is that selling a house in poor condition the traditional way is very challenging.
Net Price for Selling Your Little Rock House That Needs Work
If you’ve surveyed the area, arrived at a price per foot, and subtracted needed repairs, you’re close to finding out your “net” proceeds from selling your home. What are net proceeds? This is the money you walk away with once everything is paid. You’ll need to include real estate agent commissions which average 6%. This equals $12,000 on a $200,000 home sold in Little Rock.
You’ll also need to account for closing costs such as unpaid liens, property taxes, mortgage deed or transfer tax, and title fees. All of these can add up, and result in a lower bottom line than expected when you sell your Little Rock house.
Now you can see why people selling a house that needs work often do the smart thing. They skip the hassle, delay, and expense of listing it with an agent and instead sell it direclty a buyer experienced in buying houses like this.
Final Thoughts On Selling A House In Poor Condition
If you’re selling a house in a worse condition than other choices, consider talking to a real estate investor who understands the Little Rock real estate market. Working with an experienced company that buys houses that need work will streamline the process, often taking days vs months.
You’ll benefit from speed, and you won’t be expected to fix items at your own expense. You won’t pay Realtor commissions or closing cost fees. And we won’t be deterred by cosmetic needs or serious damage, whether it be from storms, pets, or deferred maintenance.
With us, you can get a cash offer in as little as two days, receiving a fair price based on the condition of your home while being treated with dignity and respect.
Every property has something good to offer, and we can assess the overall value of your Little Rock house while looking past repairs that turn away the average buyer.
We have looked at hundreds of homes and are known for offering top dollar so you can advance to the next chapter of your life.
Give us a call today for a free, no-risk assessment of your home. We look forward to talking with you.