## Does it make sense to sell a house without repairs?

 

Selling a house in poor condition may seem counterintuitive. You might be thinking but I want to maximize my sale price, shouldn't I spend money repairing the property? Or don't homebuyers want to buy a turnkey property?

 

Across multiple recent surveys, a majority of prospective homebuyers are interested in saving money by buying fixer uppers. Perhaps this doesn't come as a surprise, but mainstream television has glorified the DIY fixer upper approach to home remodeling. Millennials, with more energy and student debt than other generations are most interested in this approach.

 

The objective, therefore, is not to maximize the sale price in gross terms. The objective is to maximize the sale price while minimizing the capital (i.e. cash) needed to achieve that sale price. That is to say, you need to carefully evaluate the return on invested capital when considering repairing a home or investment property before selling. If you do this properly, you will find that it often makes financial sense to sell a home in poor condition.

 

Let's take a look at an example. If you have a $100,000 property in poor condition and you can invest $100,000 to bring the ARV (after repair value) to $250,000, it might be tempting to move forward with the rehab project in pursuit of that $50,000 in forced equity. Before you do, here are the things you should be considering:​

 

## Market condition

Is it a seller's market where demand from buyers is outpacing the supply of housing inventory? Or is it a buyer's market where homes are selling below list price and sitting for long periods of time?

 

## Neighborhood

Do homes often sell for $250,000 in this neighborhood, or is $250,000 a stretch and unlikely to achieve no matter how much patience you have leaving the home on the market?

 

## Project requirements

Do you have the right team to successfully complete the project in a timely and cost effective manner? How sure are you that you can conduct the renovation quickly and within your budget?

 

## Which improvements pay off?

Most home improvements deliver less in added home value than their cost. That is to say for every $1 you spend, you are likely to get less than $1 in added home value. It's important to choose your repairs wisely.

 

We would love to provide you with a table of estimated home improvement payback percentages but the truth is that home repairs and renovations are incredibly subjective to the local market, cost of labor, cost of material, and home specifications. For example, adding a second bathroom to a 4 bedroom house is going to have significantly higher payoff than re-doing the single bathroom in said house. Are you following us?

 

## What should you do before selling your house? 

 

Selling a home in poor condition and avoiding expensive projects doesn't mean you should not do anything before selling your home.

 

## Roof leaks

Make sure your roof is not leaking. Patch the leaks, prime and paint water stains. Buyers don't want to deal with active leaks. It raises concerns about immediate cash needed beyond down payment and closing costs. Notice we are not saying you need to replace your entire roof.

 

## Bathrooms

Re-caulk the tub and clean the tiles. Give buyers a clean slate. No one wants to inherit your mildew, moldy caulking.

 

## Plumbing and HVAC

Make sure these systems are in working order, again avoid replacement.

 

## Professional cleaning and photography

Before going on a date you dress up and make an effort to look your best, but you don't necessarily go out and spend thousands on clothing, jewelry and plastic surgery. The same holds true for intelligent, effective home selling.

 

## To give your property the best chance of finding love, we recommend the following:

 

- "deep clean" the interior
- power wash the exterior
- 25 professional photos
- Matterport 3D walkthrough
- virtual staging

 

All of the above should run you less than $2,000.

 

## Make it clear you are selling the property as-is

This means you are not making any representations or warranties about the condition of the property and you are not going to fix things that are discovered during the inspection.

 

## How does selling AS IS compare to fixing up before selling?

 

| Comparison | As Is | Traditional |
|:-------------------------------------:|:-------------------------:|:-------------------------:|
| Listing price point | More attractive to buyers | Less attractive to buyers |
| Investment required (% of home value) | 0 - 2% | 1% - 10%+ |
| Time to sell | Fast | Slow |
| Hassle | Low | High |

 

* Comparison data presented in the above table is based on national averages and estimates. 

 

## Sell AS IS with OfferMarket

 

OfferMarket is an AS IS real estate marketplace. We believe you should be able to sell your home AS IS and receive competitive offers. Our streamlined transaction flow and proprietary listing distribution technology targets thousands of qualified buyers and makes them compete for your home. 

## How it works:

**1. Create free listing.**
Set your terms, launch your campaign.

**2. Make buyers compete.**
Once we have a critical mass of interested and pre-qualified buyers (typically within 2 weeks), we will coordinate a Safe Showing. You will typically receive multiple competitive offers within 24 hours of your Safe Showing.

**3. Review offers: accept or reject**
If you accept an offer, we send our contract to you and the buyer and introduce you to our title company for closing.

**4. Close your sale.**
Buyers on OfferMarket are carefully qualified and expected to close within 30 days of offer acceptance.

Selling a house in poor condition? This guide shows how to do it fast and profitably, considering value and ROI.

Selling A House In Poor Condition

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Wholesale properties are properties where the owner (seller) is under contract with a wholesaler (buyer) who is selling the contract to another buyer.

Learn about wholesale properties and how buyers and sellers can benefit from the OfferMarket wholesale real estate marketplace.

Wholesale Properties - Real Estate Glossary - OfferMarket

What is Wholesale Properties in real estate?

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket also provides DSCR rental loans, bridge loans, hard money, fix & flip, rehab, ground up construction loans.

Rental Loans

#### What is an assignment of contract?

 

An assignment of contract is when the Buyer in a real estate transaction assigns their role to another Buyer in exchange for a fee.

 

The act of one buyer selling a contract to another buyer is commonly referred to as real estate "wholesaling".

 

#### Let's review an example of an assignment of contract

 

Joe is a real estate wholesaler and he notices 123 Main St is badly in need of landscaping and renovation. He does some research and finds that the property was inherited by Greg who lives out of state and has no interest in dealing with the property. 

 

Joe knows several local [fix and flip](https://www.offermarket.us/real-estate-glossary/fix-and-flip) and rental property investors who would buy this property for the right price. He tours the property and conservatively estimates the rehab budget necessary to get 123 Main St to an [after-repair value (ARV)](https://www.offermarket.us/real-estate-glossary/arv-after-repair-value) of similar houses in good condition in the neighborhood. Joe runs some numbers to determine the range that his investors would be willing to pay and makes an offer to Greg for $25,000. 

 

Greg accepts the offer and Joe markets the contract to his buyer's list at $30,000 which is the $25,000 purchase price plus a $5,000 assignment fee. Sure enough Stan, one of Joe's most reliable buyers, offers to pay Joe's asking price. Stan signs Joe's Assignment Agreement where he promises to take over the role as Buyer of 123 Main St and pay Joe $5,000 at closing.

An assignment of contract in real estate is when the buyer assigns their role to another in exchange for a fee. Learn more about assignable contracts.

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What is Assignment Of Contract in real estate?

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What is an assignment of contract?

Let's review an example of an assignment of contract

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