Selling a House in Poor Condition in San Francisco Bay Area
As you’re reading this, you may be considering selling your property. Of course, you want to fetch a good price, but what if it’s been through a lot over the years, like peeling paint, a leaky roof, or even unpaid taxes and missed mortgage payments?
Having a property in rough shape is pretty common.
In fact, according to the National Association of Home Builders (NAHB), the typical age of homes owned by individuals in the country is 39 years! Time isn’t always kind, especially to properties that haven’t been well-maintained.
Natural disasters like floods or hurricanes, or accidents like fires, can seriously mess up a house, leaving it in bad shape.
Sometimes, the damage is so severe that repairs could cost tens of thousands of dollars, and you may not have the cash for it.
So what are your options?
Well, don’t despair completely. How you handle the selling process depends on your finances, timeline, and personal goals.
In this article, we’ll guide you through selling your property in poor condition, whether you can afford major repairs or not.
Categories of a House in Poor Condition
Describing a property as ‘in poor shape’ can be subjective. Even a professional inspector may refrain from using such a term regardless of the property’s state.
Inspectors typically assess the structural integrity and offer recommendations based on their observations. However, there’s no standard checkbox labeled ‘poor condition’ in inspection reports.
Instead, your property may be categorized into one of these three groups following its evaluation:
Needs Cosmetic Repairs and Updating
Your home may simply be outdated but it’s relatively undamaged. Sure, there are some minor repairs that are needed, but fortunately, these are things you can do yourself using only a few hundred dollars. What’s more, the rate of return for these upgrades and fixes can be high.
Since they still cost money, it is important to stick to a budget.
These cosmetic repairs include the following:
- Existing cabinets and doors that are in need of updating – for instance, yellowing shaker cabinet doors that can be replaced with a more modern design
- Stained granite countertop – can be replaced with quartz or sintered stone with new and interesting patterns and colors
- Peeling paint – a fresh coat of paint could spruce up both your home’s interior and exteriors
- Messy and overgrown yard – a bit of landscaping could spruce up your yard and boost your home’s curb appeal
- Outdated light fixtures – replace outdated incandescent and fluorescent light fixtures with LED downlights and panel lights (you can save on electricity costs too!)
- Stained flooring
- Worn-out carpet
- Cluttered interiors – a little cleanup goes a long way. It can also help your prospective buyer visualize the space better
- Missing fence boards – not only for security reasons, replacing missing fence boards and repainting your fence can make your property look more attractive
Needs Major Repairs and Updating
These are houses that teeter on the edge of uninhabitability. They are considered a house in poor condition due to the following issues:
- Functioning but damaged roof – can be a terribly leaky roof that you’re better off replacing it altogether
- Minor foundation issues – such as cracks reparable by sealant or mortar
- Inefficient but still functioning heating, ventilation, and air conditioning (HVAC) systems
- Damaged and outdated kitchen and bathrooms
- Broken heaters and boilers
- Some plumbing problems and electrical issues – such as broken faucets, nonfunctioning light fixtures, or old pipes that can burst in winter
Poor Condition to the Point of Being Uninhabitable
Houses that are considered uninhabitable have issues that threaten the safety of those who may live in them. Some of these issues can be considered code violations. Major repairs must be undertaken to bring them up to standard. These include:
- Serious electrical issues – this may entail rewiring as old wirings can become a fire hazard
- Serious plumbing problems such as a nonfunctioning septic system
- Nonfunctioning heating and cooling systems
- Severely damaged roof – either completely blown away during a natural disaster or eaten away by wood rot, on the verge of collapse
- Severe termite infestation – structural members such as beams and columns made of wood must be thoroughly inspected
- Extensive presence of mold and/or asbestos
- Badly damaged and unusable chimney
- Serious structural issues such as failing foundation, bowed basement walls, sagging floor and ceiling joists, and so on
- Hoarder house
3 Options in Selling a House In Poor Condition
Sure, selling a house in rough shape can be challenging, but it’s doable.
You’ve got three options: invest upfront in big repairs for a higher price; do quick, cheap fixes before selling locally; or sell the house as-is to a real estate investor for cash.
Let’s go through each option.
Option #1: Invest in major repairs before listing on the local real estate market
If you want top dollar for your home, this is what you should do.
Buyers often need loan approval based on the livability of the property. First-time buyers usually want a house they can move into right away, often called “turnkey” properties.
Big repairs are expensive. We provided national average costs so you can factor them into your finances.
- Roof replacement – $8,314
- Kitchen remodel – $25,000
- Bathroom remodel – $10,000
- Foundation repair – between $250 and $100,000
- Asbestos abatement – $1,994
- Mold remediation – $2,214
- Termite removal and treatment – $575
Restoring your property to its former condition can be a lengthy and costly process, potentially taking months and requiring significant investment. It’s essential to assess the potential increase in property value resulting from major repairs.
Additionally, you need to consider if you’re prepared to oversee the construction work, which can be complex and unpredictable (referred to as VUCA). While you can delegate the construction tasks, it’s important to strategically invest as there’s no guarantee of recouping all upfront expenses.
If you’re working with real estate agents, they can advise on which repairs offer the best return on investment (ROI) and enhance the chances of selling your property at a higher price.
Once repairs and renovations are complete, you can enlist the services of a real estate agent to list your property. They’ll handle tasks like staging, showings, and negotiations, with you covering the agent fees and commission.
Option #2: Undertake cosmetic fixes before listing with a real estate agent
In a seller’s market, you may skip small repairs and still fetch your home’s full value. But in a buyer’s market, it’s wise to tackle these minor fixes to draw in buyers and sell for a better price.
Now, let’s check the prices for some of these minor touch-ups:
However, if your house isn’t too run-down, you can still sell it as it is through the usual route, as long as your buyer qualifies for a loan.
Opting to list with a professional real estate agent can save you time and effort, as they’ll handle showings, staging, and negotiations with the buyer. They’ll also offer real estate advice and answer your questions. But keep in mind, that agents charge fees, which will be deducted from your sales earnings.
If you want to cut costs on commission and other expenses associated with selling through an agent, you can try the For Sale by Owner (FSBO) approach. With this, you have complete control over the selling process but also full responsibility.
Option #3: Sell as-is to cash buyers
If you want to save money, time, and effort and want to sell quickly, selling as-is to cash buyers is a good option. However, be prepared to accept a lower offer, as they will bear the risk and cover the repairs.
If your property is severely damaged, selling as-is may be your only choice if you lack funds for major repairs. Traditional buyers’ loans are not approved for rundown properties.
Selling your property as-is means skipping inspections, repairs, appraisals, and the hassle of staging. In fact, distressed properties can attract more cash buyers, as some actively seek them out.
Your most advantageous option as the seller of a storm-damaged property is to find a cash buyer. They provide cash offers and won’t require you to make repairs. We’ll delve deeper into this topic in the following discussion.
Selling a House in Poor Condition: What Should I Do?
Deciding which option to take hinges upon whether you have the time, money, and motivation to fix up all your home’s issues prior to listing. If you’re the type to take on home improvement projects, then, by all means, do the repairs.
Otherwise, to make it easier for you, here are some steps you could take:
1. Find out Your Home’s Actual Condition
Before anything else, it’s essential to assess your property’s condition. Scheduling a home inspection is key to identifying any necessary repairs or improvements that could enhance its appeal to potential buyers.
During an inspection, a certified inspector meticulously examines every aspect of your property to ensure everything is functioning properly. Any issues discovered are documented in a report, empowering you to address them proactively. This proactive approach prevents surprises during the buyer’s inspection and gives you leverage during negotiations.
Moreover, a professional assessment instills confidence in potential buyers by providing transparency about the property’s condition.
2. Check the Market Conditions and Real Estate Trends
The prevailing market condition can be a deciding factor. In a busy seller’s market, where buyers quickly buy properties, you can likely sell your property for a good price without much effort.
But in a slower market, it’s beneficial to make small repairs and maybe even some big ones to sell your home for its true value.
Also, keep an eye on real estate trends. You may not need to spend a lot, but a small improvement to your exterior or some minor landscaping could significantly increase your asking price.
3. Scope out the Competition
To figure out how much your home is worth, you should aim for a reasonable price. To achieve this, you can perform a Comparative Market Analysis (CMA). This analysis estimates your home’s value by looking at recently sold properties nearby. If you’re working with a real estate agent, they can handle the CMA for you.
Even if your home isn’t in top shape, you can still fetch a decent price if the properties for sale in your area include a mix of homes needing renovation and those already updated, as long as your yard and house are tidy.
4. Compute the Return on Investment (ROI) on Repairs
Based on the inspection report, you can identify necessary repairs and assess their impact on potential return on investment (ROI).
For instance, investing about $4,000 to upgrade your garage door could yield a 95% return and enhance your home’s market value. Conversely, replacing the roof typically returns 90% of its cost in a real estate deal.
5 Tips in Selling Poor Condition Houses
1. Focus on the Positives
It’s a glass half-full, half-empty kind of situation. As a seller, you can highlight the positives, such as the square footage of your property, the lot size, the location, proximity to amenities, architectural style, and features such as the number of rooms and bathrooms.
2. Disclose Major Issues
Honesty is the best policy. It’s best to reveal any known issues, especially in states where buyers beware. This builds trust and gives the buyer a clear idea of what they’re buying. Plus, it protects you from legal trouble later on.
Consider hiring a pro inspector to check your home. Their report lists all important flaws, maybe even ones you missed.
This is crucial because buyers usually inspect before finalizing the sale. If they find issues first, they’ll have more power in negotiations.
Doing your own check ensures you’re not caught off guard. Except when selling as-is, then you can skip the inspection altogether.
3. Make Minor Repairs
Doing minor cosmetic repairs that you can do yourself, such as replacing outdated light fixtures, doing some basic landscaping, or giving your home a fresh coat of paint could enhance curb appeal and attract more buyers.
4. Compensate the Buyer for the Needed Repairs if Selling As-Is
Selling a troublesome property may seem easy for you, but it’s tough on the buyer. A rundown house requires significant fixes, so the buyer will anticipate compensation for this.
As the seller, you can scout for trustworthy contractors and gather quotes to hand over to the buyer if you’re selling as-is. These quotes also aid in determining a fair price for your property, speeding up the sale process.
5. Prepare to Make Concessions on the Price
You can expect your property’s market value to take a hit if it is in a really poor condition such as: having structural damage arising from a termite infestation; severe foundation issues; or asbestos present.
It is better to psychologically prepare for the concessions that the buyer may ask from you such as repair credits at closing, or a significant discount from the market value of your property.
Final Thoughts:
Selling a House in Poor Condition In San Francisco Bay Area
It’s important to grasp what “poor condition” means for your property. Doing major fixes and working with an agent can take a while and may fetch a higher sale price, but not necessarily more profit.
But selling a run-down property doesn’t have to be complex. You can sell it as-is to a cash buyer in just days, letting you move on fast.
At We Buy Houses in San Francisco Bay Area, we buy all types of real estate, even ones in rough shape!
Got roof issues? No big deal!
Flooring sinking? We’ll handle it!
Leaky roof and flooded basement? Sure thing!
No property is too much trouble. You skip the agent and their fees! You pick the closing date. And we cover all closing costs!
So, fill out the form below to start the process and unload that problematic property!
Need to reach us? Call (408) 557-7554. We’d love to chat!
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Author: Saini
My name is Saini, and I founded the We Buy Houses in San Francisco Bay Area team with years of experience in the real estate industry. I have assisted numerous sellers in selling their homes quickly, “AS-IS”, and for a fair price.
He’s been featured in multiple publications including Yahoo Finance, GoBankingRates, LegalZoom, The Mortgage Report, Apartment Therapy, US News and World Report, and SuperMoney among others.