Most of my dealings with families involve estates or houses that have been the long-time family home for 30-50 years. Houses, just like all of us, are constantly in need of repair and nurturing. If that attention has not been paid to the upkeep of a property, the result can be negatively impacted when it is time to sell.
Many of my clients are children whose parents who grew up affected by the depression. In those cases money was not spent but saved. If a new roof was needed, or siding painted those repairs were avoided. The interior became frozen in time and now is in need of complete remodel. Add to that condition a home filled with treasures saved over the last 50 years. You get the picture.
Let’s take a common example of families dealing with a move from a home that has been in the family for 30-50 years. The call comes in and goes something like this;” My mother and father are moving to a senior apartment. They just signed up at the senior community, and the home must be sold. We don’t want to do anything and are selling as is. We understand that a buyer will have to do the work but that is just the way it is going to be! We have our plate full and don’t have the time or money to fix it up. We don’t want to give it away and mom and dad need all they can get from the sale to live out the rest of their lives without running out of money.”
It is understandable when families are scrambling to sell a long-time home, downsize a lifetime of treasures, plan the move, decide what to leave and what to take and on and on. If children are helping parents, they have their families to run, still working and have their own homes to maintain! That is a full plate with not much time to spare. So therefore it is understandable to want to sell the home with as little repair as possible.
It is important to understand what ‘as is’ means and what it does not mean. Legally, when selling in ‘as is’ condition, the seller is stating that they are not warranting the property structurally or mechanically and a buyer must rely on their inspections. This type of sale is most often achieved when a seller is not living in the home or may have diminished capacity to confidently state the condition of the home on a report. Estates commonly are sold this way. It does not mean that a buyer is agreeing to purchase the home in its present condition no matter what problems exist (unless the buyer specifically forgoes a home inspection and states they will purchase no matter what defects exist). Most buyers will want to have a home inspection and at that time they will usually re-negotiate based on the findings from their inspector. The ‘as is’ statement means no recourse after the sale as to problems with the home.
Now let’s examine the outcomes of homes sold in need of substantial repair. The buyers in most cases are just starting out with very little disposable cash. They barely have enough for the down payment and closing costs. Therefore purchasing a home in need of several thousand dollars in updates is near impossible. So who is left to buy those homes needing major structural and cosmetic repair? You guessed it; rehabbers, flippers and investors looking to do the bare minimum and rent the home to tenants. On the average, they will pay 40%-50% of the value of the property if it were in good repair. After facing that reality, most sellers decide to go in a different direction. That alternative is to have contractors view the home and give estimates for major updates such as basement, roof, furnace, electric and plumbing. My advice has always been to not sell any home with major defects such as a bad basement or roof. Buyers will double and triple the cost of anticipated repair just to cover themselves in case the cost is worse than quoted by a contractor.
There are basically three ways to sell your property. The first is to sell in the home’s present condition, doing no repair whatsoever. This includes any major defects and cosmetic condition. If the home is in need of substantial upgrade you can expect a $200,000 home to sell for $100,000-$120,000 depending on repairs needed.
The second way is to repair defects and pay no attention to the cosmetic (interior paint, carpet, etc) appearance. A $200,000 home could sell for about 80% of top value or about $160,000.
Lastly to obtain top dollar, you basically flip your own home and you the seller become the investor! That would mean doing all repairs needed, upgrading the interior with new flooring, paint, counter tops, etc. Then having a stager put in some furniture and accents. This is the staged home which could sell for over asking in our current market. So the same $200,000 home could sell for $195,000-$210,000.
No matter how you choose to sell your property, the good news is that the current market is strong. Interest rates are low (3.5% for a 30 year mortgage). Inventory is low and buyer activity is high. This is a perfect environment for a seller’s market. As you all know the real estate market can change just like Wisconsin weather. Seasons change on a dime and so does the real estate market. So if you are thinking about selling, I would suggest doing it soon as the market typically slows down drastically after Thanksgiving. If you are selling next year try to put your home on the market in early March to capitalize on the most prolific time of year for selling your home. Improving your home is always a good idea. Just like the vitamins we take to maintain our health, your home needs a good coat of paint and some repairs to maintain its integrity!