Selling an Undesirable Home
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Selling an Undesirable Home
My Husband and I are looking to relocate and are currently living in a home that is less than appealing to the average buyer. We live in an area where houses sit on the market for literally years and there are at least ten houses for sale in about a one-block radius of our home. There are some big repairs that would have to be made if we tried to sell it the conventional way or if we tried to rent it out. We really don't have the time or the money to spend on costly repairs.
I have seen a lot of these ads for "we buy houses." Is it legit? Or is there a catch? They mention foreclosure on these types of sites a lot. My husband and I are not behind on our payments and there is no threat of foreclosure on our house. We just want to sell it for enough to cover the mortgage. We really don't even care to turn a profit. We just don't want two mortgages to worry about. Does anyone have any suggestions? Thank you!
Find Cheap Ways to Fix Up Home
Check out TV shows on TLC, HGTV and A & E. "Sell this House," "Curb Appeal," "Design on a Dime," "Flip this House," etc. show creative and often cheap ways to fix up and stage your home for a quicker sale. Often, just eliminating clutter, updating paint colors and things like cabinet hardware and light fixtures, and rearranging (and eliminating unnecessary) furnishings can make a huge difference in how your home shows to potential buyers.
Angie in San Diego
Assumable Home Loan
Have you talked to your bank to see if your home loan is an assumable home loan? If you list it, can you list it as a "house for sale assume loan"? In some cases, if this is allowed, first time homebuyers get a payment they can live with, and you get out of a mortgage you don't want. This is how I was able to get my house 15 years ago. We assumed a loan on a $50,000 home, and today, it is worth $195,000. Not too shabby! We did have to pay $2000 to the first owners as a buy out, and they covered all paperwork costs.
Strategies Make a Difference
People looking at homes in an undesirable area have looked at some terribly dirty ones for sure. This will be to your advantage if your home is very clean, picked up and tidy. It will be a great relief to the buyer and just might be enough to get you a sale. Make sure it smells good too. Burn a candle or two of a very mild scent like lemon or vanilla to make the place smell fresh. Fresh fragrant flowers in a vase are even better.
If you have pets, remove all evidence of them. Many people do not consider pets clean and will not buy a house that has had one. If you cannot remove the pets, confine them to a limited area and make sure that they are freshly bathed and well behaved. Better yet, take them out somewhere when you are showing the house.
Weed your garden, sweep your driveway and sidewalk and pick up anything that does not belong or look good. Live plants in a couple of pots and a couple of outside chairs with a table give a nice impression of a garden if you don't have one.
No one wants to buy someone else's dirt or mess. Make sure your storage areas have some empty space to give the illusion that there is more storage space than you need. People don't want to buy a place where storage is inadequate. These are very inexpensive or free strategies that can make the difference between a sale and no sale.
Erin from Ontario
Have a Good Realtor on Your Side
The signs that say, "we buy houses" are legit. People posting these are looking to buy a house at a discount, fix it up and sell it in as short a period of time as possible to maximize their profits. Depending on how much you owe and what repairs are needed, you may find these people that "buy houses" a feasible route for what you are interested in doing.
Another option is to find a realtor that can list the house for you and give you sound advice on discounting the sales price, inexpensive curb appeal items and so forth. About eight years ago, we were in a similar situation as you and we choose the second route because we had too many needed repairs, the neighborhood was old and the house was old and small at only 780 square feet. It was certainly not desirable enough for the people that post those signs. When we tried to sell the home without a realtor, perspective buyers were leery and our advertising fees were expensive. Hiring a realtor to help us sell made all the difference in the world. The house sold in two months and much to our surprise we walked away from the closing office with a check.
Consider Renting Property
My husband and I were in the same situation. We moved out of state and our previous home was in Texas. We were shocked to realize just how undesirable our home. It was very pretty, but it was 18 years old. With all the new construction that had occurred around our city, all the "old custom" homes were treated like second rate homes. As a decorator, I was sure that I could put a spin on the house, and with neutral colors and proper furniture placement, it would sell. It still did not because the air conditioner needed to be replaced. It worked, but it was old.
Well, I have to say the best thing we did was to rent our home. We rented the home to a couple who was looking to buy a bigger home. They had previously sold their home for a substantial loss and were renting and saving. We had them rent for a year and then they agreed to buy the house. And yes, we did take a large loss. However, the upside was because it was rental property, we were able to claim the loss on our tax return. We found out that if you lost money on investment property, it was deductible.
Sell at Auction
Find a reputable Auctioneer in your area and sell your real estate at auction. You set the date. You set a reasonable floor price. You do not have to do any repairs because your property will be sold as is. You can contact the National Auctioneers Association for a list of members in your area or your State Auctioneers Association for members that specialize in this type of auction.
Auctioneers in our area sell everything from rentals to commercial property to condos. Most auctioneers require a deposit from the purchaser the day of the auction that is non-refundable as well. This will keep the buyers serious and on the "hook" to complete the transaction in 30 days or sooner from the date you sell.
The best part is that you do not set the upper price on your property. The market will do that for you. One auction company in our area averages well over appraised values on most of the properties they sell.
Consider 'Lease with Option'
When things are slow in the real estate market, my daughter (a very successful realtor) always suggests offering a "lease with option to buy." There are a lot of folks out there that would love to own a home, but don't have the money for a down payment or perhaps their credit isn't squeaky-clean. A two year "lease with option" allows them to put a portion of the rent toward the down payment, to clean up their credit report and a place that they will call their own one day. Your realtor or agent will usually help with the paperwork in exchange for a finder's fee.
When you move away, ask the realtor or a friend to keep an eye on the place. You can engage a rental company to look after it, too. An occupied rental with a lease will not hurt your efforts to buy when you move.
Susan in North Idaho
Leave No Stone Unturned
Contact various real estate agents in your area and check if they have anyone on their files such as young couples, low-income people, etc. that are looking for deals. Also, make flyers and post in places where people congregate to get the word out. Tell your bank manager too as they might have a client looking for a good deal. Post ads on free sites like Craig's List to get the word out as well. There must be at least one redeeming feature of your home that will sell it.
Also, there are a lot of low cost things that can be done to ready it for resale. Just cleaning and tidying will go a long way. Make it stand out from the other houses that are for sale. I know from experience that even homes on the bottom end of the market appear better just by the virtue of being clean. They might need a new paint job, but the new owner will want to do that anyway. It costs nothing but sweat equity. The other option is to use a small amount of your equity for a loan to do needed repairs but talk to agents first to see what is the most important item that is holding back a sale and then talk to the bank manager and get his advice.
House Flipping Explanation
To answer one of your questions, some of the "We Buy Houses" signs are legit and some are not. Like anything else, you need to do your due diligence.
Now to the good stuff. The options depend on several things:
- How much equity is there in its current condition?
- What have the surrounding properties sold for?
- How long did they sit on the market to bring in those prices?
You need to find someone who is looking for a "fixer upper." There are investors who "flip" properties (flipping has come to get a lot of bad publicity because of some unscrupulous scam artists, but not all flipping is bad). I'm going to make up some numbers to illustrate, but you can fill in your own numbers. Let's say that:
- You owe 110k on your home
- Homes in good condition in your area (of similar size) sell for 240k (this is called After Repair Value), but sit on the market for six months to bring that in. Similar homes have also sold for 200k in an effort to get them sold quickly.
- Your home needs 30k in repairs.
In this example, you might find a flipper who will pay off the mortgage for 110k. The flipper would go in, make the repairs and bring the home up to the standards of the neighborhood or much better. And then turn around and sell it for 240k. You might say, "That's a lot of equity that I'm giving up." Well, the fact is that the investor is taking on a lot of risk and, in doing so, alleviating you of a lot of risk, which is deserving of compensation. Of course, you could take care of the repairs yourself and pocket the extra cash.
Take the Next Step
- If you haven't looked for a lower mortgage rate in the past year you could be wasting money each month. Use our simple tool that compares different lenders to see what your monthly mortgage payment could be. It's private, only takes a minute and could show you how to save thousands!
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