When the time comes to sell your home, if you’re like most homeowners, the goal is to list the house, sell it and move on to the next stage of your life as quickly and simply as possible. But what if your home is a real fixer-upper? When selling a house that needs repairs, you may come across various matters that need to be resolved first. Selling an old house that likely needs home repair and renovation may be less appealing to families.
Still, if you look in the right places and have the right information to influence a smooth sale, you can find the perfect buyer and reduce expenses. This guide explores everything you need to consider, including what you might need to repair, who would buy homes that need serious repair and what your various sale options are.
Major Repairs vs. Quick Fixes and Upgrades
Major repairs are typically those that are more severe and require help from professionals to fix. They can also include fixes that the law believes are essential before a sale. In contrast, minor damages like a leaking faucet or old cabinet hardware are quick fixes that you might be able to do yourself.
It’s important to inspect your property to understand which repairs you require most before beginning the home-selling process. This will help you establish whether they are worth it financially or if you’ll benefit more from selling the home as-is.
Begin by performing a realistic assessment of your home’s condition. A great place to start is by comparing your home to similar properties in the local market. Tour other homes for sale in your area at “open house” events. While you’re there, note the houses’ condition, amenities and price.
Once you have an idea of what kind of competition is out there, consider the state of the local market. Is it cold (a “buyers market” with more inventory) or hot (a “seller’s market” with less inventory)? In a buyer’s market, house hunters have more homes to choose from and that means they can afford to be choosy.
For home sellers with a property that needs repairs, a buyer’s market may mean more discerning house hunters. When there are choices available, many home buyers won’t consider a house that needs work, simply because there are many other options that don’t need work.
In a seller’s market, there aren’t as many homes for sale, so home buyers have to compete for what’s available. This is a better scenario for home sellers, as buyers may not be as picky and may accept a property that isn’t in perfect condition.
Gauging the competition and market conditions will help you decide if you need to invest the time and money into major repairs, focus on just a few upgrades or skip the repairs and attempt to sell your home as-is.
What Needs to Be Done Before Selling a House?
When selling a home in the traditional way, certain repairs must be completed. Generally, these big-ticket repairs go beyond cosmetics: Rather, they are considered safety issues. In many cases, a home inspection will flag such repairs.
In some states, the law even requires some problems to be disclosed to potential buyers, such as:
- Pests such as termites or rodents
- Mold
- Lead paint
- Asbestos
- Property drainage problems
Before putting your house on the market for a traditional sale, you’ll need to repair any damage caused by termites or mold and eliminate the cause at the source. These issues are “red flags” that inspectors and (sometimes) appraisers will note when they assess your property.
Most traditional buyers will insist on professional termite treatment. Getting rid of these pests is a process that depends on the severity of the infestation and may cost several hundred to over $1,000. Repairing damage can take longer and cost more, as you may have to fix both cosmetic and structural problems.
Mold can cause health problems, so you’ll want to take care of it before putting your house on the market for a traditional sale. Professional mold remediation can cost up to $6,000 and you’ll also need to hire a mold inspector. Aside from these regulated issues, other common repairs may fall into the “must-fix” category. Let’s take a look at some of these important fixes.
What Are the Most Important Repairs Needed Before Selling?
There are various important repairs that need your attention if you’ve noticed any of these issues in your property.
Roof Damages
We’ll start at the top: The roof. In most cases, roof problems must be addressed, as a sound roof is an integral part of a home’s structure. Roof repair is among the more expensive home repairs and usually requires professional assistance. Expect a roof replacement to cost around $5,849-$12,935 and take a few days to complete.
Hot Water Heater Damage
Another fix that you just can’t avoid? Repairing or replacing that leaky hot water heater. Water damage can cause serious problems in your home, so this is one repair you can’t just put off for the next owner. A new hot water heater, installation and disposal of the old unit usually cost between $880 and $1,777. If you have advanced electrical and plumbing skills, you may be able to handle this common repair on your own.
It’s still important to be careful — a botched job can end up costing you way more than it would to simply hire a professional in the first place.
Electrical Issues
Electrical issues also require your attention before selling. Outdated wiring and panels pose safety issues and fire risk, so they must be repaired. As most electrical work isn’t exactly DIY-friendly, you’ll want to bring in professionals for this common repair. On average, replacing an electrical panel costs from $1,000 to 1,600 for 100 amps and may cost $1,600 to 4,000 for 200 amps. This repair takes four to eight hours to complete.
Sewer and Septic Issues
Damaged pipes, sewer connections and septic tanks will require repair. Not only can these problems lead to health risks, but they may also cause serious property damage if not repaired. Depending on the situation, sewer and septic issues may cost you thousands of dollars. For instance, replacing a septic tank averages about $7,000, while a sewer line replacement may run over $5,000. These repairs generally take several days to complete.
Plumbing
Plumbing concerns are another common issue that should be done before a sale. Many older homes experience tree roots growing into the system or have cast iron or copper lines that need to be replaced. Pipe repairs can cost thousands of dollars, depending on the amount of work that’s required.
House Foundation
Some inspections may reveal foundation issues. Unfortunately, these are among the most expensive home repairs, but they’re often necessary for a traditional home sale. Foundation damage may cause problems such as doors and windows that won’t shut, sloping floors, cracks in walls and water that gathers in basements of low spots. Expect foundation repair to run into the thousands of dollars.
Common Minor Repairs Before Selling
Now, let’s look at other common repairs that many homeowners complete before selling. These may be cosmetic or structural, but they tend to cost less while helping your home attract more buyers. Painting walls and patching holes and cracks is a relatively low-cost project that has the potential to pay off. A fresh coat of paint makes your house feel and smell clean. Choose neutral colors to appeal to the most buyers.
Replace the caulking in bathrooms and kitchens. Over time, caulk can shrink and become discolored. For an investment of just a few dollars and a couple of hours of time, you can remove old, stained caulk and replace it with a fresh seam. If you have a few more dollars to spend, you can replace old lighting fixtures. Upgraded fixtures help give your home an updated style. For a budget-friendly option, replace bulbs to brighten your home.
While updating flooring isn’t a cheap upgrade, it can go a long way toward improving your home’s appeal. If a new carpet or tile isn’t in the cards, consider having the carpets or grout professionally cleaned for a cared-for appearance.
How to Pay for Home Repairs Before Selling
When selling a house that needs repairs, the big question boils down to this: Does it make financial sense to invest money and time into making repairs and upgrades? Before you make this decision, you need to know if the potential to make more money on the sale is worth the cost, time and effort those renovations require.
You’ll also need to consider how you’ll pay for home repairs before selling. If you use cash, you’ll avoid running up credit debt. You’ll also avoid changing your debt-to-income ratio or impacting your credit score right before a home sale.
But repairs are expensive — especially major repairs such as roof and foundation issues, septic system replacements and plumbing problems, not to mention new appliances, countertops, flooring… the list goes on. Coming up with thousands of dollars out of pocket is an insurmountable challenge for most homeowners. Plus, that’s cash you won’t have when it comes time to pay for moving expenses or put a down payment on your next home.
You could take out a personal loan or a home equity line of credit. In most cases, these types of loans have lower interest rates than credit cards. However, both can negatively impact your credit score, a risk you may not want to take right before attempting to get a mortgage loan for your next home.
Putting repairs on a credit card may be an option. However, interest rates can be high. Your credit score could be impacted, which may interfere with your ability to secure a mortgage loan on a new home after your current home sells. Each payment option comes with its own pros and cons. Your unique financial circumstances, selling timeline and current market conditions will help you decide if it’s worth it to pay for home repairs before you sell.
Who Will Buy a House in Need of Major Repairs?
Spend some time learning about your buyer pool before making decisions about selling a house that needs repairs. What types of buyers look for homes that need major repairs?
In reality, most buyers want a turnkey home. But in a hot market when inventory is low, some sellers will be more open to buying a house that needs repairs. Further, there are some buyers who actively seek out “fixer-uppers”:
- Real estate investors: House flippers, or real estate investors, often seek out homes that need repair. They purchase homes for a low price, renovate the property and then “flip” the house in an attempt to make a profit.
- Bargain hunter: This home buyer wants to live in a specific area or in a certain type of house, but can’t necessarily afford the market list price. This type of buyer is looking for a deal, so they’re more likely to buy a home that needs work if it’s in the right location or has the features they seek.
- Remodeler: In most cases, this type of home buyer has the means to buy the house they want, where they want it. However, they enjoy the transformation process, so they seek out houses that need work. Turning a fixer-upper into a dream home allows the remodeler to start with a blank slate and design their own custom creation.
Weigh Your Options When Selling a Home That Needs Repairs
When it’s time to sell your home, take the time to weigh your options carefully, because even if you’re selling a home that needs a lot of work, you do have options.
After all, plenty of homes for sale need repairs of some kind and it is possible to sell fixer-uppers. When making a decision, just keep in mind the number of repairs your home needs, the current market conditions, and your unique financial circumstances.
Let’s explore three options when selling a house that needs repairs.
Repair Option 1: Don’t Make Any Repairs and Sell As-Is
There are a hundred reasons why a homeowner may choose to simply put their home up for sale without making any repairs or upgrades. Maybe the damage is too extensive. Maybe they need to move immediately. Maybe they simply don’t have the funds or time to make the necessary repairs.
Selling a house as-is means that the home is essentially “what you see is what you get.” For a buyer, that means no warranties, no guarantees, no assurances and no repairs. For the seller, an as-is listing is often the quickest option to get out of a tough situation. However, selling a home as-is does limit your selling options, so you should expect to receive a significantly lower selling price.
Repair Option 2: Just Enough to Make the Home Desirable
If you have the time and the budget, you may choose to do only the easiest, quickest or least expensive repairs. In many cases, this may mean projects such as:
- Painting
- Landscaping
- Updating light fixtures
- Cleaning or replacing carpets
- Replacing window coverings
- Updating cabinet hardware
Completing home improvements before selling will increase your home’s curb appeal, making it more attractive to buyers. And because the house looks good on the surface, this approach may make the larger fixes that are still needed seem less daunting to potential buyers.
Just keep in mind that you’ll still need to price the home to reflect the repairs that are still necessary.
Repair Option 3: Fully Repair the Home
Those homeowners with money and time to spare may choose to complete the full list of repairs. However, it goes without saying that this option will be both expensive and time-consuming. Homeowners may be able to save some money by tackling some projects themselves. DIY-friendly home repairs may include:
- Interior painting
- Replacing a kitchen or bathroom faucet
- Patching holes in drywall
- Cleaning rain gutters
- Caulking a tub, shower or sink
- Re-grouting tile
- Laminate flooring
Of course, without specialized skills, many home repair projects are best left to the professionals. From roof and foundation repair to wiring and plumbing projects, bringing in a pro may cost more upfront, but can save you in the long run.
But how do you know which contractor to hire? Start by asking friends, family and co-workers for recommendations. Once you’ve gathered a list of potentials, make sure each is experienced in similar projects and can provide referrals. Also, ask for recommendations on neighborhood applications like NextDoor.
You’ll also want to ask how long they’ve worked with their subcontractors and how many other projects they’ll be working on at the same time as yours. When you’ve narrowed your contractors down to a shortlist, ask for bids. As a general rule, materials should be about 40% of costs with a profit margin of no more than 20%.
Keep in mind, though, that even the projects with the highest return on investment (ROI) can rarely recoup all of your costs. When choosing where to put your money, consider the ROI home improvement projects:
- New garage door (194% cost recouped)
- New entry door (188% cost recouped)
- Stone veneer (153% cost recouped)
- Kitchen remodel (96% cost recouped)
- New siding (84% cost recouped)
- Deck addition (76% cost recouped)
- Bathroom remodel (74% cost recouped)
- HVAC conversion (66% cost recouped)
Pricing to Sell When Selling a House that Needs Repairs
When you decide to put your home on the market, determining the right sales price is key and it’s both an art and a science. Of course, the price will depend on which repair option you choose. You’ll also want to consider how long it’ll take to find buyers (a factor that’s also dependent on which repair option you select).
Not surprisingly, investing a considerable amount of time and money it takes to do all the repairs should result in a higher asking price. On the flip side, selling the house as-is will command a price on the opposite end of the spectrum. Do your research and determine if you’re selling in a buyer’s or seller’s market. Comparing your home to similar, nearby homes will help you make an informed decision.
Next, decide whether you’ll use a real estate agent or go the FSBO (for sale by owner) route. An agent will offer a number of services that you’ll otherwise have to do yourself, such as:
- Determining an appropriate price
- Listing the home on the MLS
- Marketing the home for sale
- Scheduling showings
- Negotiating the sale
- Completing the paperwork
However, real estate agents will also take a commission, usually about 6% of the home’s selling price. This means thousands of dollars less profit in your bank account.
Regardless of whether you sell with an agent or go the FSBO route, a traditional sale means there’s a high likelihood that you’ll have to put money, time and effort into making your home look more attractive to buyers. From painting to fixing leaky faucets to replacing outdated fixtures and appliances, this equals both work and money.
Plus, you need to consider how you’ll market a home that needs serious repairs. Of course, you must be honest and upfront about your home’s condition. But how do you present a realistic picture of the home without scaring away potential buyers?
It’s a difficult decision. You’ll have to consider the fees and costs associated with each path. Fortunately, there is another — easier — option: Selling as-is to a cash buyer.
Selling As-Is to a Cash Buyer or Investor
If the thought of choosing which repairs to focus on, completing those repairs, paying for the repairs, then marketing a house that could be in better shape sounds less appealing to you, consider a simpler option: Selling to a cash buyer. This is the fastest option, allowing you to avoid spending time or money on repairs and upgrades. This route also allows you to avoid home inspection and become liable for fixing aspects of your house.
FAQs for Selling a House That Needs Serious Repairs
Still have questions about repairing your house for a sale? Here are some frequently asked questions other homeowners seek answers to.
How Do You Market a Home That Needs Work?
If you’re looking for a better value for your money, it may be best to do affordable repairs yourself before putting your house on the market before appraisers do property valuation. You’ll then want to sell it on the market “as-is” and be honest with prospective buyers about the house’s condition. Quality pictures of the home and highlighting key features may also help make it more appealing.
How Do You Tell if a House Is Worth Fixing Up?
Research whether you’ll increase the home’s value by more than the cost of the repairs. You may want to get a valuation from a contractor and other relevant professionals to see how much it will cost. Work out the difference between this cost and the amount you receive from selling the property, and then compare it with the amount you would receive if you sold it as-is.
If you get more money out of selling a repaired home, the house may be worth fixing up.
What Happens When the Seller Doesn’t Do the Repairs?
If the law required you to make repairs after inspection and you sold it without making these repairs, you may be legally liable, and the new homeowners may be able to file a claim against you. Otherwise, if you had non-obligatory repairs that you omitted, you’ll most likely only sell your property for a lower value than you would have if you proceeded with the repairs.
Sell Your House As-Is With HomeGo
HomeGo specializes in buying homes that need major repairs. You’ll receive a firm offer on day one. There’s no need to market the home, and you won’t pay fees or commissions. Best of all, there’s no risk that you’ll sink money and effort into repairs… then still walk away without a buyer.
Contact HomeGo today to learn how we can help with selling a house that needs repairs.
