Perhaps you're looking to sell a property that you inherited, or one that you’ve been renting out for a while, and is looking a little tired. There are a number of reasons why you might want to sell a house that's not in peak condition.
However, selling a house that needs work can be much harder than selling your average home. How do you market a property that needs work? Is there a way to encourage buyers to see the charms and not the flaws?
In this article, we share our tips on how to make selling a 'fixer upper' a little bit easier:
A house that needs major repairs - particularly anything structural - is always going to have a lower market value than similar properties in a good condition.
This is partly because the demand for homes that require a large amount of work is not as high as for properties that are ready to move into. And, partly because those who are interested in the property are likely to factor in the potential cost of getting repairs done into their offer.
You'll also need to consider whether the condition of the property will impact a buyer’s ability to get a mortgage. For example, if your property has problems with subsidence, or couldn’t be used to live in until major repairs are done (eg. it doesn’t have a bathroom), it’s unlikely that a lender will approve a mortgage against it.
This will make it harder to sell as you'll be limited to those buyers who can make a cash offer. Sometimes, sellers end up having to lower their asking price in order to attract these types of buyers.
If you're selling a house that needs repairs, knowing the potential value of your home is therefore incredibly important. Online valuations are unlikely to be accurate for a fixer upper. These types of valuations tend to just compare the average sale price of properties nearby - regardless of condition.
An estate agent valuation is the best way to figure out your home's true market value. They will be able to assess the condition more accurately than a virtual calculator, and will know what sort of demand there is amongst buyers for property like yours. The more in demand a property is, the more people will be willing to pay for it.
So, once you have an idea of what your house would be worth, you can use this to set a competitive asking price.
Because fixer upper homes are harder to sell, it’s even more vital that you (and your estate agent) target the right sort of buyers.
There are two main categories of house buyer you’ll need to interest:
Cash or investment buyers
Those willing to get repairs done in order to get a larger home than they might otherwise be able to afford
Whether you try and target one or both of these groups will depend largely on the type of property you’re trying to sell, and where in the UK it’s located.
For example, an apartment in London (or another large city) - even if it needs repairs - is likely to appeal to investment buyers, who will trade off the time and money needed to do repairs with a potential future rental yield.
Similarly, houses on large plots of land often appeal to investment buyers who could develop the land.
On the other hand, larger properties in commuter towns or suburban areas will to appeal to those buyers looking for a cost effective way to upsize, or families who want more control over the final design of their home.
Working with an estate agent with the correct expertise is vital for connecting you to the right types of buyers. For example, they will know exactly what types of photos, keywords, and information to include in your online marketing to make the best first impression to potential buyers. Some estate agents also have direct links with developers and property investors too.
Before you appoint an estate agent, we recommend meeting with at least three agencies. See this as your chance to interview the estate agents before you make your final decision on who to work with. Ask for examples of other 'harder to sell' properties they've worked on, and how they'd market your home to attract the right people.
It’s fairly common for sellers of fixer upper properties to want to make lots of changes, or overcompensate with a range of expensive renovations. They hope that by doing lots of major repairs they’ll be able to sell the house quicker and for more money.
And, whilst attractive, well-maintained properties do sell quickly and for the best price, getting a home that needs repairs to this standard will likely cost more than the amount of value it would add.
Large scale renovations, like a new kitchen or loft conversion, cost thousands of pounds, and take a significant amount of time. In the long run, you’re unlikely to make back all the money you spend on these types of upgrades.
However, there are some home improvements that are worth doing before selling a house:
Structural issues are one of the most likely reasons that a mortgage provider will refuse a potential buyer a loan (other than affordability). Tackling structural issues, like: subsidence, roof issues, or wall cracks, may cost a lot, but it will make your property accessible to those that need a mortgage. This increases the pool of potential buyers dramatically, making it easier to sell.
Making sure your property is cleaned thoroughly throughout can make it more appealing, for very little money. A well-cleaned property creates a nicer environment for viewers, and suggests care - even if there are problems with the property’s condition. This will create a much more favourable impression for potential buyers than a house that’s a fixer upper and unclean.
As with cleaning, ensuring any outdoor space is well-maintained can create a more favourable impression for a buyer. Gardens are also a big selling point for many buyers. Having a nicely kept garden can encourage buyers who would normally avoid project properties to take a look round.
If you know there is something wrong with the property’s condition it is vital that you are upfront with any potential buyers.
Most people will order at least one survey on your property before they sign the sale contract. If these surveys come back with indications of issues that you’ve tried to cover up (for example, painting over wall cracks), much of the good will you may have built up with the buyer will be lost. And, if they decide they no longer want to move ahead with buying your house, they can choose to sell on the survey results to any other interested buyers.
However, if you’re upfront you may have an opportunity to negotiate the cost of repair with them. You may decide to market your property at a lower price to cover the cost, or you may choose to negotiate with a potential buyer individually. Either way, honesty is likely to produce a much better result financially - and reduce the risk of buyers dropping out of the sale after discovering hidden issues.
Read more about what to do if your survey comes back showing significant issues here.
If you're unsure of the best route forward in your negotiations, your conveyancer will be on hand to provide guidance and support. They are experts in these sorts of situations, and will know how to approach your specific sale.
If the condition of your property means that it’s unmortgageable, you could also consider an alternative method of selling, such as a cash property buying company, or auctions.
While neither of these options is likely to see you walking away with the full value of the property, they will help you sell the property quickly. They might also reduce the hassle and cost of making repairs and hosting viewings.
If you decide to go down this route, make sure to thoroughly research any company you might work with. Because property buying companies are not regulated like estate agents, there are a large number of scams run by fraudulent companies hoping to exploit those who need to sell quickly.
For more information about how to find a reputable property company, head here.
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