The Difficulty of Selling a 'Fixer Upper'
Updated: Dec 18, 2018
What should you do when you are looking to sell your home in need of improvements?
I was personally made aware of the difficulty that comes with attempting to sell a home in need of improvements the traditional way. A year ago, my grandmother was looking to sell her only rental property, which needed a cool $50,000 in renovations to bring it to market standard. I remember speaking with her over the phone and hearing the frustrations in her voice.
She had the property listed with an agent for the entire year an didn't receive a single offer. How could this be? Perhaps the agent was looking for a traditional buyer, a family looking to move into a renovated home to begin their next chapter in life. It's possible the agent wasn't familiar with the real estate investment side of things, but we'll never know. My grandmother ended up selling the place to my cousin who was a contractor. That process should've taken two weeks at most, not a full year accompanied with endless aggravation.
What should you do if you want to sell your home that's in need of repairs?
Step 1: Get an idea of how much work your home needs to be sold for top dollar. If it only needs some new carpet and paint, then it may be worth it to incur that expense to sell for top dollar. If your home needs a greater amount of work, then come to grips with the fact that you will have to sell at a discount.
Step 2: Tap into the real estate investment world; move away from the realty side of the industry. Educate yourself on the basics as to how real estate investors think and value properties. Biggerpockets.com is a great place to start.
Step 3: Enlist an investor friendly realtor to do the job for you. This is an effective strategy, but keep in mind, it means less money in your pocket at the end due to their commissions and more hassle for you (additional paperwork, the cost of emptying your entire home, frequent showings, ect.)
Step 4: Contact the real estate investors directly. As interest into the real estate world has grown exponentially, everyone wants to become an investor. It's the new hot thing. This has led to investors searching for deals left and right. They are looking for motivated sellers such as yourself. Odds are you've received a handful of letters in the mail or phone calls from some investors. If that's the case, I recommend that you start calling them back. However, most of those investors are newbies, meaning they have little to no experience.
It becomes your burden to find out if they're the real deal or not. This is why it's crucial that you have some basic knowledge concerning real estate. That knowledge only serves to benefit you.
Some of these investors may be 'wholesalers'. A wholesaler is essentially the deal finder for the investor that will actually buy the property. They do the digging, marketing, and deal with the sellers. Then they provide the deal to their network of serious investors. Wholesalers are great to work with as long as they can produce results. The more seasoned wholesalers have massive networks of investors starving for deals, which is great news for you. If you need to sell your house fast, wholesalers are a great route to pursue. There are many benefits to working with investors and wholesalers directly. Keep an eye out for a future blog post for these benefits.
Step 5: Review your options and accept an offer. If you've reached out to the investors yourself and provided them with information on your home, chances are you've received at least one offer. It's now up to you to decide if you want to proceed. Keep in mind that the offers you're likely to get won't excite you as much as you'd think. These investors and wholesalers are in the business to make a profit. When making their offer, they consider the repair costs, the values of the properties surrounding your home, the closing costs and other related fees, as well as their desired profit.
Once again, if you can learn the basics on how an investor thinks, this will help you in the process of selling your home or property that needs improvements.
Take action. Get out there and start connecting with real estate professionals even if you aren't in the market to sell your home. Someday you might be, and you'll wish you had started growing a network today instead of waiting.
Michael and Smarty
ProEdge Investors, LLC
(215) - 595-1212