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When you’re looking to sell a home, you may be discouraged by the imagery you see on home buying sites. It can feel like everyone remodels their home before putting it on the market. If your current home is in disrepair, it’s daunting to see how everything else on the market appears to be brand new.
Well, that’s not the case. In fact, according to a Porch survey, 57% of American homeowners feel their home is still a “work in progress.”
That’s not to disparage sellers. Nearly 80% of America’s housing stock has weathered at least two decades of wind, rain, and sun, while that Porch survey found that more than a third of homeowners have put off at least one home improvement project for a year or more. Homes need constant care and maintenance, and most of us don’t have the time or money to keep our property in ideal condition.
Whether you inherited something that needs a lot of work or if you’ve fallen a bit behind on home improvements, it’s no problem. You can still sell a house in bad condition. But how you choose to sell a house in poor condition depends on your personal goals, timeline, and financial situation. In this guide, we’ll help you determine what kind of condition your home is in, figure out the best bang-for-your-buck repairs you can make, and how to find the right buyer.
How do I know if my house is in poor condition?
Without a real estate background, it can be hard to honestly assess if the home you want to sell is in “poor condition.” Breaking your home assessment down into a few categories is an easier way to understand your home’s quality.
1. Totally uninhabitable
A totally uninhabitable house is, as the name suggests, not suitable for people to live in. Such a property has multiple severe issues that render it uninhabitable. Such issues include:
- Serious electrical issues
- Serious plumbing problems
- Severe and/or extensive roof damage
- Black mold
- Lead and/or asbestos
- Termite damage or infestation
- Severe foundation issues
- Sever chimney damage
- Non-functioning HVAC
2. Visible repairs needed
A habitable house with several flaws and repair issues may receive a “fair condition” rating from a home inspector, but potential buyers and agents may still view it as in poor condition. A “visible repairs needed” house has less severe flaws than a totally uninhabitable house. These flaws include:
- Minor electrical issues
- Minor plumbing problems
- Roof damage
- Wood rot
- Minor foundation issues
- Failing buy functioning HVAC
- Damaged and outdated kitchen and bathrooms
- Damaged flooring
- Damaged or non-functioning faucets and light fixtures
3. Fairly good, but in need of updates
A home with good bones that may require some general repair will likely receive a fair grade from home inspectors, but may not fetch the top price you wanted. Some things that can put a cap on your house’s potential:
- Dirty, cluttered interior
- Outdated kitchen and bathrooms
- Stained flooring
- Peeling paint
- Overgrown or untended landscaping
- Weathered exterior
What are your options for selling a house in poor condition?
Now that you have an idea of how to assess the quality of your home, what can you do if it’s in truly poor condition? You have a number of options.
Selling the house as is
If you’re ready to just move on as fast as possible, you may want to sell your home as is. You won’t spend any time or money making any repairs, so what the buyer sees is what the buyer gets.
If you choose to sell as is, you should complete a pre-inspection and disclose everything found on the inspection report. A buyer may still request an inspection to discover the full extent of damages and repairs they’ll need to make, but it will be with the understanding that the sale price will be less than market value.
Cons of selling as is
- If you aren’t prepared to put any money into repairs before listing, you’ll have to accept a lower price. Most home buyers will not pay market value for a home that still requires thousands of dollars in repairs. As such, a totally uninhabitable house will limit your buyer options.
- There’s also risk involved with selling as is. You are legally required to disclose any known problems in most states and intentionally hiding known issues about your house may result in legal consequences.
Pros of selling as is
- Positioning a totally uninhabitable home as a fixer-upper opportunity can help it sell faster. While it’s not ideal to take less money, many real estate developers will buy a poor condition home as is so you don’t have to worry about it languishing on the market. Developers have access to wholesale materials and contractor networks to fix your home for considerably less than you or other buyers could.
- Selling as is may also save you the expense of a real estate agent. Unlike traditional real estate transactions, selling as is to a developer or cash buyer bypasses real estate agent commissions and ensures you won’t incur any additional closing costs.
- Most developers will pay off any outstanding tax liens, house payments, and other financial obligations as part of their cash offer. You also won’t have to wait for a buyer’s loan approval so the whole process moves faster.
Making small improvements
In many cases of selling a house in bad condition, it’s worth making at least small improvements, especially if you’re trying to sell a “visible repairs needed” house. Such a house comes with some moderate expenses to the buyers, which may cut into the sale price you receive.
Many buyers don’t mind making a few cosmetics fixes. If you’re limited in time and budget, invest in the sticking points that are likely to kill a deal, like foundation damage, mold, leaks, or furnace replacements. If those fixes prove too costly, you can make more cost-effective fixes like a new coat of paint, cleaning up the landscaping, or updating broken or outdated faucets and lighting fixtures.
While a complete home remodel may cost upward of $50,000, painting and replacing fixtures may only cost $1,000 and can be done in a weekend. These low-cost fixes will give you a better chance of getting your full asking price.
Investing in major repairs
If your home is in truly bad condition — “totally uninhabitable” — you likely won’t be able to sell it to anyone except developers or flippers. That’s fine, but many investors who know the market well may try to lowball you.
It may not make sense for you to invest tens of thousands of dollars to get your house to like-new condition, but one or two major repairs could get your list price closer to what your home is actually worth. Those investments will also intrigue families and individual home buyers.
Some of the most common big-ticket items that can raise your list price include replacing the roof, updating the electrical panel, installing a new water heater, repairing pipes, and updating the HVAC system. Additionally, things like replacing the flooring and appliances can save buyers a bundle and increase your home’s value.
Should you invest in fixing a poor condition home?
So, the big question: Should you fix your poor condition home before selling? There are a number of factors to consider before putting money into your poor condition home.
1. Current market conditions
What does the current market look like? What are buyers buying and how fast are they buying it? In 2021, most of America is in a seller’s market where home values are rising and buyers are jumping at every available house. If you’re in a particularly hot market, you might be able to get the price you want without putting much work into your home. If you’re in a slower market, it’s worth at least making minor improvements to make your home more attractive.
2. The competition
Do some research into your neighborhood to see what’s listed in your area. If every home in your neighborhood looks brand new, with updated finishes, new appliances, and beautiful new paint, your poor condition home is going to stick out like a sore thumb in the local market. Your home may have more square footage and be in a better location than other homes in the area, but if it’s in significantly worse condition, it will sell for below market value.
3. Value vs. spend
Most transactions in life come with some value proposition. You may buy a painting by an up-and-coming artist for $100 today, but it could be worth $1,000 in a decade. The same rule applies when selling a home in poor condition. Of course you’d be willing to spend $1,000 in order to get $10,000 more for your home.
Make a list of every repair or update the house needs, and then do some preliminary research to see how much each repair would cost in your area. Realtor.com has a great resource to help you figure out the ROI on individual repairs so you can best maximize your investments. The projects most likely to get the highest return are:
- New roofing: 107% of value recovered from the project
- New wood flooring: 106% of value recovered from the project
- Hardwood flooring refinish: 100% of value recovered from the project
- New garage door: 95% of value recovered from the project
- HVAC replacement: 85% of value recovered from the project
So don’t get discouraged if the house you’re trying to sell is in poor condition. As you can see, there are a number of ways to get someone to take it off your hands. It’s up to you to decide how much work to put in beforehand.