How to Sell a House that Needs Work

Home sales are rarely simple, and noticeable issues with a property can cause complications that make the whole process even more difficult. Not only are homes harder to sell the more work they need; even the few buyers who do show interest will likely not offer you nearly as much as you would like to sell for. Even house flippers, one of the groups most likely to want a damaged home, typically follow the “70% rule”. That is, they're only willing to pay up to 70% of a home's after-repair value.

With all the obstacles in the way of selling for a reasonable price, it's understandable to be nervous about selling a problematic house. Still, there are ways to close on this type of home that will leave both the buyer and the seller satisfied. Here’s what you should know about selling a house that needs work.

What types of “work” might a house need?

Houses that need work tend to fall into one of the following three categories, depending on the severity of their issues:

Category 1:

First are homes that are unappealing from a cosmetic standpoint. Common problems for this type of home include:

● Peeling paint (Average cost to replace: $1,985 in Houston, $1,903 nationwide)
● Damaged floors or carpets (Average cost to replace: $3,494 in Houston, $2,991 nationwide)
● Outdated or nonfunctional appliances (Average cost to replace: $515–7,625 for stove, $400–2,150 for dishwasher, $515–11,100 for refrigerator)
● A poorly maintained yard (Average cost to landscape: $4–40 per square foot)
● Unattractive décor or furniture (Average cost to remove: $75–200)
● A general state of uncleanliness (Average cost to deep clean: $25–50 per hour of service)
● An outdated electrical panel (We recommend Texas Panel Pros for electrical panel upgrades – they charge a flat fee of $1350 for replacement panels up to 125-amps)

While these homes may be undesirable to buyers, their issues are usually relatively easy to fix, as there is no major damage to the building itself. The troublesome parts can be removed and/or replaced without any construction work.

Category 2:

Next are homes with more serious flaws, known among real estate professionals as “the big five”:

● Damaged foundation (Average cost to replace: $10,457 in Houston, $8,423 nationwide)
● Damaged roof (Average cost to replace: $8,398 in Houston, $8,528 nationwide)
● Faulty or nonfunctional HVAC system (Average cost to replace: $3,100–7,150 in Houston, $7,000 nationwide)
● Electrical issues (Average cost to rewire: $1,373 in Houston, $1,405 nationwide)
● Bad plumbing (Average cost to replace: $1,241 in Houston, $1,105 nationwide)

These issues usually require more time and money to fix than those in the previous category. Any smart buyer will know that investing in a property with one or more of these red flags is a big risk.

Category 3:

Finally, we have the most challenging type of home to sell: homes with significant problems in both the first and second categories. These homes, many of which have been damaged in natural disasters such as flooding or fires or were previously owned by hoarders, are in dire straits and are very hard to sell without being fixed up.

What steps should a homeowner take to sell a house that needs work?

If you’re looking to sell a house that has any of the issues described above, you have three options: You can put the work in to fix the house on your own, sell it on the market, or sell it to a cash home buyer.

Fix the house yourself.

If you’re looking to make the highest possible profit selling your home, it’s best to fix any problems before selling. If the steps necessary to improve the house are simple and inexpensive, such as repainting or clearing out furniture, getting ready to sell should be fairly easy, and your efforts will likely result in the home selling for a higher price than it would otherwise.

Of course, as the old adage goes, “You need to spend money to make money,” and often, the money that needs to be spent upfront for repairs is simply too much.

If the problems with a home are expensive to fix, as “the big five” tend to be, dealing with them on your own may not be a realistic option. If that's the case, you may need to sell the property “as is,” either on the real estate market or to a cash buyer.

List the home on the real estate market “as is.”

If you cannot fix the home yourself, you can still sell it on the market with the “as is” label. However, the number of buyers who express interest in the home may be minimal. Those who do express interest may only want to buy if you lower the price. In some cases, buyers will also want you to pay their closing costs, which is about 2% of the home's sale price.

Also, remember that the home sale may take a long time to sell due to the small pool of potential buyers, especially if your asking price is viewed as too high. During this period, you'll still need to pay property taxes and other home maintenance costs.

While selling on the market “as is” saves you money on repair costs, you will still need to put in the effort to get your home as clean as possible for photos and showings.

Sell the home to a cash buyer.

If neither of the above options appeal to you, consider selling to the audience who is most attracted to houses that need work: cash buyers. This option is especially wise when a home has significant damage, as seasoned property investors are the most likely to express interest in taking on the challenge of repairing a fixer-upper.

Selling to a cash buyer allows you to close quickly, with no need for repairs, showings, photos, or having to pay realtor commissions. Also, you can usually skip inspections and appraisals. Cash sales can save you money in addition to time, and most cash buyers are willing to cover your closing costs too.

If you’re looking for a cash buyer for a home in the greater Houston area that needs work, or anywhere else nationwide, look no further than AMI House Buyers. We buy homes in all conditions, regardless of damage, and we usually close in 7 days or less. Contact us today for a no-obligation cash offer.