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Selling a House in Bad Condition
Foundation cracks. Leaking roofs. Dangerous plumbing or wiring. Outdated HVAC systems. Lead or asbestos materials. If your house has substantial problems—whether aesthetic or structural—selling it on the open market is going to be a long, expensive, and possibly impossible process. Most buyers on the traditional market today are not willing to invest additional time, money, and frustration in a house requiring a prolonged repair process just to make it habitable.
In addition, buyers’ agents will actively attempt to undercut your asking price if they perceive such problems. This is particularly true in Southern California, where the real estate market is especially competitive and the standards for most home-buyers are above the national average.
For these reasons, one of the simplest solutions to sell a house that is in bad condition and still get the best value for it is to work with an experienced, accredited as-is buyer, like Seller’s Advantage. But if you do want to first consider trying to sell it on the traditional market, here are some important points to keep in mind.
If you have decided to sell your house and you know that it has some problems that go beyond mere cosmetic fixes and cleaning, make sure that you take the time to get several competitive quotes from contractors so you can work up a cost-benefit analysis to determine whether or not it is a good idea to go head with repairs. Make sure that the contractors fully inspect the property and try to work with a range of different sized companies.
Be aware that selling a house that requires work to bring it up to code or make it livable can often require a significant investment of time, money, and frustration. It will also likely require obtaining additional local permits and undergoing additional inspections. Renovation loans can help cover the costs of these added expenses, but they have a major negative impact on the final bottom-line value that you end up getting for the house.
Research your local real estate market and make certain that you are comparing your property to others that are in an equivalent state of disrepair. Do not make the mistake of trying to assess the value of your home based on comparisons with properties that are in significantly better condition. This can give you a skewed and potentially misleading understanding of the house’s real value. Bear in mind, also, that if there are comparable homes in your area that do not require additional work, you will have a much harder time selling your house for a satisfactory price.
Keep in mind your own objectives as a seller. Are you looking to get the most money possible? To get the house off your hands as soon as possible? Be cognizant, though, that buyers will have their own objectives, and buying a house in as-is condition might not be one of them. Familiarize yourself fully with the problems from which the property suffers and the cost and nature of the repairs those problems require. This will allow you to anticipate potential objections from buyers.
Selling a house in bad shape come with inherent problems
Selling a house is never easy, and selling a house that is in poor shape increases exponentially the number of problems and challenges that you will face. Be prepared to encounter some of the following problems that are particular to selling properties in disrepair:
• Depreciated Value: Probably the most important and difficult problem accompanying selling a house in poor shape is accepting the fact that you are going to end up in a weaker bargaining position with buyers and their agents. If your property is of low quality, it is going to earn fewer bids—perhaps even just one offer, if any at all—which means that your hands might be tied when it comes to deciding on the price.
• Realtor Reluctance: Real estate agents earn their income as a percentage commission from the sale of properties that they represent. For this reason, most realtors are incentivized to sell properties that are in good condition or that can realize a price that best rewards them for their time marketing it. If you are selling a house that needs major work, be prepared for real estate agents to show hesitancy about taking on your sale or to devote a bare minimum of time in helping you through the process of selling.
• Delay After Delay: If you have ever had work done on your house, you probably know the old adage that you should expect it to take twice as long and cost twice as much as you originally expected. The additional cost is bad enough, but the increased amount of time before you can sell the property is also especially risky. The real estate market moves fast—particularly in Southern California—which means that buyers are not going to wait around for you to finish work that needs to be done.
When it comes to selling a house in bad shape, spending time means likely losing (more) money. Unfortunately, if you choose not to have work done and simply sell the house “as-is”, you are also going to have to be prepared for delays: properties that are listed “as-is” take, on average, six months to a year longer to sell than comparable properties that are in good condition.
What determines that a house is in bad condition?
There are some repairs that can be done to a house to help it sell and that are relatively quick, cheap, and easy. Often these are fixes that owners can make themselves, or even simply cleaning, replacing broken windows, repainting, changing carpets, and so forth. But other problems go beyond mere do-it-yourself projects and require contracting with licensed, insured professionals. The following are some of the more substantial problems that indicate that a house is suffering from poor conditions:
- Roof replacement or repair. An old or damaged roof, including underlayment and flashing, can lead to water damage, which itself can lead to additional structural damage.
- Electrical wiring. Old or bad wiring is a major safety hazard and can also be a fire hazard.
- Visible structural damage. Events such as flooding, fire, earthquakes, etc. can produce visible cracks, holes, and other forms of damage to load-bearing walls, floors, foundations, and roofs.
- Plumbing. Pipes that are made of lead or other toxic materials must be remove, and older pipes are at risk of bursting and introducing water damage and mold growth into the property.
- Foundation damage. If the foundation needs repairs, a house may need jacking and piering—a costly and major process.
Evaluating the condition of the property
Often you can tell from a simple visual inspection if your house is in need of a major repair. Some problems, however, might not be immediately visible; this includes some problems that can be particularly dangerous, and costly. Seek out the services of two or three experienced, licensed inspection professionals and arrange to have them tour your property at different times. Make sure that they check the basement or crawl space, the attic and roof, any chimneys, and any structures that are part of the property but not the house itself.
You can then use these inspection reports to get competing quotes from contractors for the cost of the work that needs to be done. Your goal is to get as complete a picture as possible so you can be in a good position to draw up your cost-benefit analysis.
Be ready for buyer objections
If, after going through the inspection process and getting quotes from contractors, you decide to sell your house “as-is”, use the inspection reports to prepare for the specific complaints that buyers may have about the property. Use the contractors’ quotes to prepare for the monetary value that those complaints will cost you.
All in all, then, selling a house that suffers from poor conditions is expensive, risky, and slow. Fortunately, if you want to get the best possible price for your house, there is an excellent option. Seller’s Advantage can provide a quick, hassle-free cash offer for your house, without prolonged and costly negotiations for repairs, and you can close in just ten to fourteen days in Los Angeles, Ventura, Costa Mesa and Riverside. The process is simple and starts by just filling out the Seller’s Advantage online form for a free, no-obligation quote. You’ll hear back with the next steps to get your estimate, and eventually your offer, within 24 hours.