Owning a home is a responsibility. Over the years, you’ll have to spend money on repairs and maintenance. If you fall behind on maintenance, the value of your home will drop.
Selling a house in poor condition is possible, but you’ll have to make some concessions when it comes to the asking price. You will also have to consider the best options for attracting buyers. Here is what you need to know about how to sell a house in bad condition.
What Is a House in Poor Condition?
Before you can think about selling your home, it’s important to assess the extent of the damages. You’ll need to disclose the state of the house and word things properly when advertising the property to attract the right kind of buyers.
It’s best to be upfront about the condition of the house. Buyers will know exactly what they’re getting into and will be less likely to back out of the sale after completing an inspection of the property.
How to sell a house in bad condition depends on the extent of the damages. Your first step should be to determine if the house is habitable. You should consider the house as uninhabitable if there is a serious pest problem, issues with the foundation, or severe roof damage.
Next, you should put together a list of all visible repairs needed. Visible repairs are things the new owners will want to take care of before moving in, but they don’t prevent the house from being habitable.
Examples of visible repairs include minor roof damage, missing or warped flooring, broken appliances, or issues with plumbing and electricity as long as they’re not a safety concern.
Some houses don’t need any visible repairs but are in need of a few updates. In some cases, a house looks in poor condition due to aesthetic issues.
Can You Sell a House in Poor Condition in Burlington, VT?
Can you sell a house in poor condition? The answer is yes, but you have to keep in mind that a house in need of repairs will attract a certain type of buyer.
Who Can Buy a House in Poor Condition?
Prospective homeowners who use FHA financing won’t be able to obtain a mortgage if the property is in need of extensive repairs. Buyers who use a traditional mortgage might be able to get financing depending on their creditworthiness and ability to pay for some repairs out of pocket.
Turning an uninhabitable property into a house that is move-in ready takes a lot of time and money. Not all buyers will be willing to take care of the necessary repairs, and the ones who do will expect to get a good price on the property, which is why it’s crucial to adjust your asking price to reflect the condition of the home.
There is another alternative to consider. There are companies that buy houses in Vermont. These companies make cash offers on properties and have access to the right resources for turning fixer-uppers into habitable homes.
If you need to sell an ugly house fast, a cash home buyer can be a good option since you won’t have to go through the process of having a buyer obtain financing.
What Do You Have to Disclose?
Under Vermont law, you have to disclose material defects in writing. This disclosure will protect you from any potential legal action and will also help potential buyers get a better idea of what they’re getting into.
- Here are examples of material defects you have to disclose:
- There is water damage on the property and known flooding issues.
- You can see signs of structural defects in the foundation or walls.
- Plumbing, electrical, or HVAC systems aren’t working properly.
- There are leaks or other issues with the roof.
- You also need to disclose the legal status of the property, including foreclosures or pending zoning changes.
- If you know of any plans to build new construction near the property, you should disclose this information.
- If you’re selling a home built before 1978, you’ll have to include an additional disclosure about the potential presence of lead paint.
You should know that if you hire a realtor, your agent will have to follow a few rules regarding disclosures. They won’t be able to lie on your behalf and will have to disclose any material fact they noticed on the property.
Your best bet is to schedule an inspection to get a comprehensive list of every material fact you should disclose. It will also help you price your property accordingly.
How to Sell a House in Poor Condition in Vermont
Before selling a house in poor condition, it’s important to consider the different options available.
Selling Your Home ‘As Is’
A popular way of selling a house that needs repair is to advertise it as an ‘as is’ sale. Using the phrasing ‘as is’ will tell potential buyers that the home will need some repairs and that it’s up to them to make the home habitable.
You’ll still need to disclose material facts about the property, but the seller will be responsible for scheduling an inspection and getting a comprehensive picture of what the repairs entail.
You should know that obtaining financing for a house in need of repairs can be difficult. FHA and traditional lenders don’t issue loans for more than what the property is worth at the time of the sale, which means buyers won’t be able to obtain financing unless they have enough cash saved up to cover the repairs.
However, there are other financing options to explore. Buyers can apply for an FHA 203(k) loan or for a renovation loan to buy a fixer-upper and pay for the repairs.
Doing Some Repairs Yourself
Another option to consider is to pay for a few repairs to make the property habitable. The downside is that you’ll have to spend some cash on the repairs or open a credit line.
However, making a few repairs and upgrading your home will make the property more appealing to potential buyers. You’ll have a wider range of buyers interested in your home, and depending on what the market is like, you might get several offers for your property.
Note that you don’t necessarily have to fix everything out of pocket. Something like fixing an old roof or renovating an outdated kitchen can make a significant difference in the value of your property.
If you’re wondering how to sell a home in bad condition at a higher price, the answer is to do a few repairs yourself before you put it on the market.
Selling Your House for Cash
Obtaining financing for a house in need of repairs can be challenging. As a seller, you have to consider the possibility that financing can fall through, which would force you to list your home again.
When a house pops up again on the market, buyers can be wary and assume there are issues with the property other than what you have disclosed. You might have to lower your asking price even further if you end up relisting your property.
Besides, waiting for a buyer to get financing can be a lengthy process. It usually takes a little over two months to close on a home without any major issues. If you’re selling a property in bad shape, you should expect a longer closing process since the buyer will want to learn as much as possible about the home and any necessary repairs.
You should think about selling your home ‘as is’ and accepting a cash offer for it. Cash home buyers in Burlington often purchase uninhabitable homes and properties in need of repairs.
Because cash home buyers use their own resources to buy homes, you won’t have to wait for them to obtain financing, and there is no risk of a mortgage issuer opting against financing the sale of the property after learning more about the necessary repairs.
Plus, cash home buyers usually have employees or partners who can take care of any repairs before flipping the property. They’ll have the experience needed to assess the extent of the damages and determine what a fair price is for the property.
Instead of waiting for a few months to sell your home, you could sell your property in a matter of days. The entire process is very simple since there is no need to obtain financing.
Selling your home for cash can be a good option if you need to sell fast, don’t have any money to cover repairs, or don’t want to invest your time into fixing the property. It can also be a good option for properties that are beyond repairs since demolishing the home and building something new on the parcel can be an interesting investment opportunity for some cash buyers.
Conclusion
Can you sell a home in bad condition? The answer is yes, but you’ll have to adjust your asking price, disclose everything you know about the damages, and consider a cash offer rather than traditional financing.
You can learn more about selling a home in need of repairs for cash by checking out our case study.