When it is time to sell your home, you basically have two options. You can try to list on the Multiple Listing Service platform (MLS) and use a realtor to represent you. Your second option is to sell to an investor who will buy your house at a discount, invest in repairs and then sell it for a profit. If you need major repairs, or if your property is dated, likely the MLS is not a great option unless you have significant resources and know-how to invest in updating the home prior to sale. Home buyers prefer modern bathrooms and kitchens, and are put off by old heating and water systems, as well as damage and impending maintenance costs such as roof upgrades. Houses in this condition can sit on the MLS for months.
So, why not beat the investor at their game and repair the house yourself? Unless you’re a construction professional, this can be more challenging that you expect. Home renovation projects are expensive and complicated endeavors that take a long time. Inexperienced remodelers often spend more time and money on the renovation than the value added to the final selling price.
Beware the Unexpected
When you pull down the wall or rip up a floor, unexpected surprises may await you. Here are just some things to watch out for.
Electrical wiring and plumbing problems are common in older homes. Old electrical wiring can be a safety hazard and will need to be brought up to code. Expect to pay at least $1,300 to $3,000 to upgrade to 200amp service; between $200 and $750 to change ungrounded 2-prong outlets to 3-prong outlets; and $4,000 or more to rewire the house to get rid of old knob-and-tube wiring that can start a fire.
If your house was built several decades ago, there’s a good chance there is lead in the paint and asbestos in the flooring, ductwork, popcorn ceilings, roofing, and HVAC system. Left undisturbed they aren’t harmful, but if the project calls for scraping or cutting these materials, the powder or dust can be very hazardous. You will need a professional to detect and abate the asbestos.
Older homes were constructed to different building standards and codes than today, and often with completely different materials. Bathtubs were smaller, doors narrower, and rooms less spacious. If you want to maintain your home’s old character, it can be tricky finding materials that will match the rest of your house. Architectural salvage stores or other reuse centers can help but be ready to pay more if you really want matching, original materials.
Many features and floor plans that today’s homebuyers want differ significantly from those found in older homes. A master bedroom with a walk-in closet and an attached bath? An open floor plan layout between the kitchen, dining and living room? If you want to modernize your home layout, you’ll need to consult an architect or an engineer. Tearing down load-bearing walls can be both expensive and dangerous.
The Problem with Permits
Getting permits is a hassle. It is time-consuming, expensive, and often a frustratingly bureaucratic process. Not getting permits is potentially worse. It can result in costly rework and make selling difficult. Unpermitted work typically means it’s not done to current codes, particularly with electrical work. An injury due to such an issue may cause legal and financial problems for the seller. Once you discover work that is not up to code or permitted, you are required to disclose that to potential buyers.
In addition, some planning departments won’t allow you to take out a permit to do renovations if there are outstanding or expired permits that never received final approval from a city building inspector. You may have to clean up a lot of the previous owner’s poorly done work before you can proceed with your planned changes.
A Different Way to Sell
When it comes time to sell your home you have a few choices:
- If your house is in market-ready condition, selling can make a lot of sense. However, if your house does not have a modern, up-to-date feel, or if it needs repairs, it can take a long time to sell. Houses that sit on the market for a long time are typically sold at a steep discount. Also, be careful with a realtor. The majority of real estate agents have very little actual experience (tip: ask how many homes they have sold personally in the last year, not their company) and all charge high fees, typically 6%.
- For homes that are not market-ready, an option is to sell to a property developer, or what is know as a “cash buyer.” There are many, and you may have received their postcards in the mail. The first instinct is to be wary of these guys, and for good reason. They make a living by negotiating deep discounts on homes. Your discount is their profit margin.
- A new option, Sundae, is a marketplace for homes that are not market-ready. We have seen too many people not get all the value out of their home when they sell, and we want to change that. We are committed to paying you the highest price, and that commitment comes with ae guarantee. We can pay more because we operate on a large scale, so we don’t need to make a lot per transaction and we don’t charge realtor fees. We offer assistance, like providing a $10,000 cash advance to help with moving costs. We also provide a lot of advice to people trying to think through their options. If you get an offer, we can almost certainly beat it. Feel free to call us and ask.
One last thing to remember: Whatever situation you are facing, you should focus on what you can control. Get the most money when you need it most — always seek the best offer. Look for transaction partners who are open, honest and are not just good at selling you on their offer.