FIX IT UP OR LEAVE IT “AS IS”
There is almost always at least a little sprucing up you’ll want to do, prior to listing your home for sale, to increase your total profit. If you are wondering if cleaning and staging your home professionally makes a difference – it does. Big time. Here, we aren’t going to be talking about the final stages of preparing your home but rather the decision to sell your home “as is” vs. a standard sale, where buyers can elect to ask you (the seller) to complete work orders before the sale is final. Homes that are sold “as is” usually target real estate investors who are purchasing with cash or hard money and are sold at a discount because of the work that needs to be done.
Perhaps you’ve inherited a home that needs some tender love and care. Let’s assume the furnace doesn’t work, the roof is failing and the siding needs to be replaced or at least painted.. Your funds and time are limited and the payments are too much to hold onto the house. This would be a situation where you need to sell “as is” to avoid foreclosure or further deterioration of the home. There are instances (like this) where you know selling “as is” is the route you need to go, but other times, it is unclear.
Here I’ll provide insight on what needs to happen to a home in distress, to broaden the prospective buyer pool and increase the value of your home. This does not mean that you have to do a full blown remodel! More specifically, the primary systems of the home have to be functioning and the overall integrity of the home is satisfactory. Here we go…
CAN THE BUYER OBTAIN FINANCING
Determine if the home is lendable aka Can the homebuyer finance the home?
This is the first question asked when evaluating the sale of a home in distress. In order to determine if the home is lendable, I ask these questions:
– Are all of the systems of the home in working order?
- Furnace
- Electrical
- Roof
- Siding
- Appliances
- Interior Paint (no chipping or peeling paint)
When the answer is no….
If the answer is “no” to any of these, we will evaluate the cost of repair in combination with how much more we would be able to sell it for, once the repair(s) are complete.
If the home is not lendable, our buyer pool is only those who have cash or hard money to purchase. Buyers who are obtaining a loan to purchase, will not be eligible. Why? Each loan type has guidelines as to what condition the property is in. These are in place to protect the buyer. The lenders intent is to also minimize their risk, so they get their money back from the buyer! If the property needs a significant amount of work, lenders will not authorize a buyers loan.
When the answer is Yes…
When the buyer is able to obtain financing to purchase your home, the number of qualified applicants will be much broader and we will be able to sell your home for more money.
Now that we know the house is financeable, we will evaluate if there would be any underlying inspection issues that should be repaired before listing your home for sale. For example: Many older homes in Tacoma have a centrally located fireplace that buyers have their heart set on using. If the fireplace is inoperable, or hasn’t been used in many years, we might want to consider getting it serviced. We do this so it isn’t something that the buyer later negotiates during the Inspection period of the purchase and sale contract. You might be thinking “I haven’t hired a chimney contractor EVER! This might take me months!” Having renovated several homes and assisted a large number of home sellers prepare their home for sale, I have many trusted contractors who I work with regularly that I can refer to you.
Resources for professionals who are qualified to do the work are provided. And a frank conversation around the fix-up costs are had. We’ll discuss any potential roadblocks and how we would address new discoveries (because there are always items that are uncovered) and ultimately find the best route for you that fits your budget, timeline, risk tolerance, profit and any other goals you have.
