Your house needs more than a little TLC, and now something like a job transfer, family emergency, or financial rough patch has created urgency to unload it. You need to figure out how to sell a fixer-upper house — and do it fast — to avoid additional strain.
“We’ve learned that in order to sell a fix-and-flip property fast, the key is to find the balance between doing too much — spending excessive money or time that we won’t get a return on — and still making the house attractive enough in order to sell fast,” says Richard Latimer, the owner of a homebuying business in Huntsville, Alabama, where he helps people improve and sell unwanted or neglected properties.
If your house needs work and you don’t have the time, money, or inclination to make a full transformation, follow these 9 expert tips and tricks to sell it quickly, flaws and all, while recouping as much of your investment as possible.
Source: (Rasanoa vz / Unsplash)1. Create a clean canvas
No matter how rough or outdated your house may be, a deep cleaning makes a big difference in how it shows to potential buyers. According to HomeLight’s data, a deep clean can add more than $1,700 to a home’s sale price, and is likely to speed up the sale process.
Eva Cedillo, a top-performing agent in San Joaquin County, California, says a deep clean is by far the most important step in fast-tracking a fixer-upper sale. “90% of the time, the buyer is going to do a full rehab anyway, so they’re just looking for a clean slate,” she notes.
When going after the grime, focus on these key areas:
Declutter all counters, open areas, closets, and built-in storage areas:
Not only will this make the house appear more spacious and appealing to buyers, it will also make it easier to tackle the deep cleaning tasks.
Get the kitchen spic-and-span by scrubbing down all surfaces:
Empty the cabinets and wipe out any crumbs or dirt from the inside, purging contents as you go. Then, clean out and wipe down the inside and outside of the refrigerator, dishwasher, and oven. Finally, scrub down the stovetop and all countertops. Finally, sweep and mop the floors.
Clean all bathroom surfaces, including sinks, toilets, showers, bathtubs, and mirrors:
Freshen up bathroom tile with your preferred cleaning product or a natural mix of hot soapy water. Stanley Steemer recommends soaking grout in a mixture of one-fourth cup hydrogen peroxide, one-half cup baking soda, and one teaspoon of dish soap for 5-10 minutes and then scrubbing grout lines with a brush.
Wash the inside and outside of all windows, including windowsills, window tracks, and blinds:
Use a vacuum brush attachment to remove dust, debris, and bugs from the windowsills, recommends Molly Maid, a professional home cleaning service since 1984. Get rid of any mold with bleach water or a white vinegar solution. Apply a baking soda-vinegar mix to the remaining gunk. Let it soak and scrub it off with an old toothbrush.
Top it off with these cleaning tips:
Dust the fixtures and furniture in each room from the top up, starting with ceiling fans and higher furniture like bookcases and working your way down.
Wipe down all baseboards, doors, door frames, and window frames. Use a Mr. Clean Eraser to remove any scuffs.
Sweep and mop all hard flooring surfaces. Vacuum all carpets and then have them professionally cleaned. Even if the buyer ends up replacing the flooring, the freshly cleaned carpet will give the impression that the home has been well-maintained.
2. Knock out the low-hanging repairs
When time is of the essence, it’s probably not realistic to start tearing out kitchens and knocking out walls. And in most cases, an investor or flipper who purchases the home will want to make those bigger renovations themselves, as they have the expertise and resources to tackle them faster and less expensively.
That said, there are some minor repairs and upgrades you can do to make the house safe and comfortable in case the buyer wants to live there while making the bigger improvements.
Consult this list for guidance:
Give the walls a fresh coat of neutral paint. This will instantly make the house look and smell cleaner and fresher. Some of the most popular fixer-upper paint colors include Sherwin Williams Alabaster, Benjamin Moore Pale Oak, SW Repose Gray, Valspar Honeymilk, and SW Accessible Beige.
Replace all outlet covers and switchplates. This might seem like a minor detail, but you don’t want to put the dingy covers back on after applying that fresh coat of paint.
Replace any non-functioning or very outdated faucets and light fixtures.
Patch and paint any damaged drywall.
Recaulk around bathtubs and showers as needed.
Patch any active roof leaks, and then prime and paint any water damage on walls and ceilings.
Fix any leaky faucets.
Replace any broken or rusted drawer and cabinet pulls.
Put new hinges on any doors that don’t open and shut properly.
Source: (Vincent Erhart / Unsplash)3. Disclose any potential “deal-killers”
In an ideal investing scenario, a fixer-upper would have only cosmetic issues, where the renovations would be low-cost and straightforward. That’s not to say you won’t be able to find a buyer who’s willing to take on a property with more baggage — you’ll just have to be prepared to adjust your pricing expectations.
If you know (or suspect) that your fixer-upper might have pricey problems, some experts recommend getting a pre-listing inspection so you know exactly what you’re dealing with. If you wait until the buyer’s inspection to uncover any potential pitfalls, you could face delays later in the process or the contract could fall through, sending you back to square one.
“A pre-inspection report negates the ability for potential buyers to haggle over non-functional systems or degraded house parts that they see,” says seasoned real estate investor Andy Kolodgie. “We’ve also found that pre-inspection reports actually create a more competitive environment for bidding, as all sides understand exactly what is available.”
Below are some of the major issues that inspectors will look for, especially with a home that needs work:
Faulty HVAC system
Damaged or old roof
4. Improve drive-by impressions with quick curb appeal boosters
While you may not have the time for a full-scale landscaping project, a few quick spruce-ups can help project the image of a clean, well-maintained home and help speed up the sale:
Declutter the porch, yard, and driveway. Store or purge any bicycles, toys, trash cans, empty planters, shoes, and other odds and ends.
Remove any weeds, leaves, branches and other lawn debris.
Cut the grass and trim the bushes.
Add some fresh mulch.
Give the shutters, front door, and exterior trim a fresh coat of paint if needed.
Power wash the outside of the house.
Source: (Aubrey Odom / Unsplash)5. Partner with a fixer-upper-friendly real estate agent
A great real estate agent is a valuable tool for any seller, but particularly for a seller looking to quickly unload a fixer-upper on a tight timeline. That’s because when a house needs TLC, the agent will be better equipped to:
Help you calculate how much the required repairs will cost
Set a realistic price that reflects the work that is required and ensures a profit for the investor while still meeting your financial needs
Recommend when it makes sense to list at market value and offer a credit
Potentially assist with the cost of basic repairs (Cedillo says she usually fronts the money for paint and carpet before listing a fixer-upper)
Target a network of investors and house flippers who are seeking properties to renovate
Shift the emphasis away from the property’s flaws and highlight its selling points
6. Set a fair and realistic price
Every seller wants to get the best possible price for their property. For an updated, well-maintained house in a desirable location, you can easily fetch the top of your price range. But a fixer-upper that’s selling as-is won’t command as high of a sale price.
Start with neighborhood comps.
Just as he would for a turnkey property, Kolodgie always looks at neighborhood comps to get an idea of what properties of similar sizes are selling for in the area.
“Looking at comps to price a fixer-upper can be beneficial to help you figure out what price you should be under,” he explains. “In faster-paced markets, starting with the comps and reducing the price by 110%-120% of the repair cost will typically lead to eager home buyers. However, in slower markets with less demand or inventory, the cost may need to be substantially reduced, or it could be sitting for several months to a year or more.”
Calculate the ARV.
When investors are considering buying a fixer-upper, the most important number is the after repair value (ARV), which is what the property would fetch on the open market after any necessary repairs and updates have been made. Most flippers prefer to keep their total investment at 70% of ARV or less, which will ensure that they still earn a healthy profit after deducting any commissions, closing costs, and capital gains taxes.
“If you’re selling the fixer-upper in a high-end market, the renovation budget will be higher. If you are in a lower market, new paint and replacing the countertops may be enough,” explains Nick Ron, founder and CEO of House Buyers of America.
“Study the market, analyze the homes selling at the top of that market, and think about what it will cost for the buyer to get your property up to that amount.”
Once you’ve determined the ARV, Ron recommends using this formula to calculate the maximum offer price:
65-85% of the ARV – the repair costs = maximum offer price
For example, if your fixer-upper’s ARV is $305,000 and needs around $50,000 in repairs, the minimum price would be $148,250 and the maximum price would be $209,250. Pinpointing these numbers early on will help minimize negotiation delays and ultimately get you to closing faster.
7. Play up the home’s potential in the listing
You may not be able to boast about quartz countertops, brand-new hardwood floors, or professional landscaping, but even the roughest property will have some selling points for the right buyers. Emphasizing those features is key to attracting more interest — and more offers — early on.
When crafting your fixer-upper’s listing, your agent should highlight some of the key elements that investors are looking for:
Potential resale value after repair. “Price point is key,” Cedillo says. “Investors want a deal. They want to make money on a flip.”
Any competitive differentiators. Does the property have any “sizzle features” that make it unique? Glen Gallucci, a veteran real estate investor and founder of Peak Properties LLC, recalls an older fixer-upper where it was difficult to add central air conditioning, so he installed AC units in almost every room of the house. It was a feature that really stood out when showing the house on hot, humid days.
Prime location and lot. Even if your property needs some serious TLC, if it’s situated in a desirable neighborhood or on a large, private lot, your agent should play up those selling points.
Floor plan: A fixer-upper may need a serious facelift, but an appealing layout will be more likely to attract interested buyers.
Source: (Sigmund / Unsplash)8. Consider going the ‘wholetailing’ route
Zach Kolman, a wholesale property investor in Tampa Bay, Florida, often uses the “wholetailing” strategy to unload fixer-uppers quickly. The idea is to fix up the house enough that an end buyer who is looking for a project can get traditional financing, since the property isn’t distressed and doesn’t call for major, time-consuming updates that would keep a bank from lending on it.
“For example, you might make the major repairs like electrical, mold remediation, septic, or plumbing issues, without updating the kitchens, floors, or bathrooms,” Kolman explains. “The house will no longer be in such rough shape that a bank wouldn’t lend on it, but not in such good shape it would demand top dollar for a buyer who wants a turnkey property.”
By using the wholetail method, you can widen the pool of potential buyers to include not only investors looking for a project, but also people who are looking to do their own work to make the house exactly what they want.
9. Prioritize cash buyers
While there may be bargain hunters who will opt to buy a fixer-upper on the open market, when it comes to really fast-tracking a sale, cash is king. Cash sales can close in as little as two weeks, compared to an average of 48 days for a buyer who is getting a mortgage.
Beyond those signs on the side of the road proclaiming “we buy ugly houses,” the iBuyer trend has made it even easier to find cash buyers online. HomeLight’s Simple Sale allows you to tap into the country’s biggest network of iBuyers — just enter your address and then answer a few questions about your property, and we’ll recommend the best matches for cash buyers seeking homes in your area.
Selling your fixer-upper as-is doesn’t have to mean sacrificing all of your profits, but it does mean thinking carefully about picking and choosing which improvements to make, setting the right price, highlighting hidden selling points, and being open to cash buyers. Partnering with an agent who has a track record for selling homes that need TLC can give you a step up toward achieving those goals.
Header Image Source: (Phil Hearing / Unsplash)