I’ve been selling real estate for nearly 20 years, in my time I’ve witnessed all sorts of situations, what’s right for each Seller depends on the induvial and their ability to manage stress, contractors and design.
I love watching HGTV rehabs. They take a home and make it look fabulous, they make it look so easy but that can be a trap…..there is a lot of skill that goes into rehabbing a home, from picking the right contractors, managing the contractors, design layout, and selecting the finishings so the home flows together.
If you rehab your home, here’s some things to consider:
Picking the right contractor – get multiple bids, ask to see the contractors contract. I once bid out a bathroom, bids were $28k, $21k, $7500, same bathroom….Some contractors charge a lot, and I’m sure do fantastic work but that’s a huge difference in costs!
Review the contractors work contract – make sure it has deadlines, when they will get paid, who will pay for materials and pick them up, pull permits, lien releases, permits closed. As a general rule, I try to never get ahead of paying a contractor for work performed, meaning if I pay them in full for a bathroom, they might drag their feet in finishing the job, so I might pay 30%, then another 30% when they are 75% done and the remaining when completed. I’ve found many contractors want to push and get paid ahead on the project and you have to push back. You can’t be the nice person or you might get walked on.
Research your contractor – Do they have insurance, active license? Do they have a website, do they have reviews? Ask to see previous work they’ve done, ask to talk to previous clients. In your research if they have a bad reputation online, run, it will most likely be an unpleasant experience for you. Take your time selecting your team, this is critical to staying in control, on time and budget for your house rehab.
The X factor –Be mindful when you go into a rehab that you will most likely encounter something unknown. I always put a miscellaneous budget in my rehabs, something I didn’t think of…. always comes up, or when a wall is opened up a problem is found, this happens a lot and if you don’t have a miscellaneous budget, you’ll be unpleasantly surprised. It’s better to have a budget and not need it than be unpleasantly surprised.
Supply chain issues – Do some research about the supplies you’ll need, windows, doors, cabinets extra, make sure they can be ordered and delivered in a timely manner, or they may drag your project out a long time. This post Covid era back log of supplies has been tough for rehabs.
What if I sell my house As-IS and not do any repairs:
If you’re feeling overwhelmed from reading about rehabbing your home, don’t worry, there are more options to explore. I’ve found many people don’t rehab their home before selling, it’s not a requirement. Many agents will push to have you get work done but it’s not always financially feasible and isn’t always profitable…sometimes you will go backwards fixing your home up to sell, sometimes selling As-Is is a better option, how to sell your home As-Is. I recommend finding an agent who has sells homes As-Is, many times Foreclosure real estate agents are a good fit to work with selling your home As-Is, they do if for bank foreclosures all the time. It’s the same process to sell doing repairs, the only difference is you don’t do any repairs. Some buyers prefer buying a home and using a 203k Rehab Loan A buyer can buy the home, get bids from contractors and roll the repairs into the end loan, it’s pretty slick and very under used product.
What if I sell my house to cash home buyer:
Now let’s explore the last option – selling your home to a Cash Home Buyer. I’ve personally bought a lot of homes as a cash home buyer. When people sell to a Cash Home Buyer they are usually trading equity for an easy low stress transaction, meaning you’ll get less money than if you sell through an agent. I’ll give you some examples of homes I’ve bought.
A Seller was living in assisted living, she owned a home and needed to sell and close extremely fast or would be evicted from the assisted living home. The home was in poor condition and likely would of taken months to sell through traditional ways. Given this situation it was more important to sell and close fast than hold out for the most money possible. We closed in a few days, it was a highly stressful circumstance for the Sellers daughter who was handling the Sellers affairs, we provided a low stress transaction and immediate stress relief. Here is her testimony:
We purchased a home that was about 1500 square feet and had about 55 cats, sadly…not all of them were alive. The smells coming out of the home cause complaints by the neighbors, you could smell the home from the road. It needed to be gutted and handled like a fire house to rid the home of all the smells. This home needed someone like us to buy As-Is with cash and close quickly. The mayor was involved due to so many complaints, this was not a home that would have sold the traditional way.
We purchased many hoarded homes. The Sellers can’t get financing because the homes are typically in such poor property condition, we buy As-Is using our own cash, close and the seller can leave everything they don’t want to move behind, they don’t fix anything. It’s a super easy sale for the seller.
We purchased probate homes inherited by family members who live out of state. We did everything remotely, the purchase agreement and closing so they never needed to come back and deal with the home.
Weve purchased homes from sellers who’ve had job transfers.
Sometimes Sellers getting divorce are riddled with emotional pain and would rather sell fast than go through the process of a traditional listing that drag out the process, so they exchange convenience for equity for a quick sale.
I think you’re getting a picture of the type of homes that sell to a cash home buyer, most don’t fit in this category and will be listed either through some rehabbing or listed As-Is. There is usually something wrong with the home, or the Seller wants an easy quick solution if they sell to a cash home buyer.
Thanks for reading