Steps to take before selling a fixer | Considerations for selling to a cash buyer | Considerations for putting your home on the market | FAQ
In a market flooded with move-in ready homes, houses needing work may get passed over by buyers more easily. However, with the right strategy, you can still sell a fixer-upper for a fair price.
The price you can expect depends on factors like location, market demand, the extent of repairs required, and the buyers you’re targeting. Investors and bargain hunters are typically the most willing to take on renovations — although they'll usually pay well below market value.
We consulted with top-selling real estate agents and investors to walk you through different strategies for how to sell a house that needs work for the maximum return.
Get competing cash offers from leading investors and iBuyers in Clever's network, plus get an agent's opinion of your home's 'as is' market value. Clever Offers is free to home sellers, and there's no obligation to move forward with an offer. Simply tell us about your property, and we'll do everything we can to get you the best possible deal for your home.
Steps to take before selling a house that needs work
Selling a home in less-than-ideal condition demands some extra planning compared to move-in-ready listings. Before diving headfirst, you’ll want to be mindful of the following best practices.
1. Get an accurate picture of your home's condition
Knowing the major issues lurking under the hood can help you price your home accurately and anticipate the major points you'll need to negotiate. It can also help you decide whether you want to sell as is or make repairs.
You can get a pre-listing inspection from a professional home inspector to identify any defects or issues otherwise hidden from plain sight. These usually cost a few hundred dollars.
2. Get a professional opinion of your home value with and without repairs
To understand your home’s market value with or without repairs, you’ll want to obtain a comparative market analysis (CMA) - a document that real estate agents put together by looking at comparables and other pricing metrics.
A good practice is to get multiple pricing opinions so you have a well-rounded perspective. Fortunately, many realtors are willing to offer this service for free. Free agent matching services like Clever Real Estate can help you make quick work of finding top agents in your area to ask for a professional pricing opinion.
3. Get estimates of potential repair costs to inform pricing and negotiations
Getting a contractor’s estimate on potential repair costs is key to helping you price your home accurately.
As Chris McGuire, founder of Real Estate Exam Ninja, puts it, “It’s crucial to evaluate the estimated repair costs and compare them to the potential increase in the sale price. If the repair costs outweigh the potential return on investment, it may be more advantageous to sell as-is.”
“However, if the repairs are relatively inexpensive compared to the potential value they can add, completing the repairs could potentially result in a higher sale price.”
Most well-established realtors have lists of contractors they trust. You can also find reputable contractors by asking friends and family, searching through online reviews, or even browsing neighborhood Facebook groups. Just be sure to get competing bids before making a decision.
4. Decide on a selling strategy
There are two main ways to sell a house that needs work: You can opt to sell to a cash buyer directly or put your home on the market.
Going the open market route exposes your home to a broader pool of buyers and has the potential to fetch maximum value, but may involve longer timelines, negotiations around repairs, and financing issues. Meanwhile, cash buyers offer speed, and minimal hassle—albeit at a tradeoff for price.
Dan Belcher, Founder and CEO at Short Sale Real Estate, describes how he took the as-is route for a home that needed repairs by “targeting investors and handyman types who are okay with a bit of work. Ultimately, I got some solid as-is offers to choose from.”
Option 1: Sell to a Cash Buyer
Cash home buyers, such as house flippers or rental property owners, are especially open to houses that need significant repairs, and are often willing to buy in cash. But there are definite pros and cons to working with these types of buyers.
Pros of selling to a cash buyer
- No need for major repairs: Cash buyers often purchase properties in their current condition, saving sellers both time and money.
- Quick closing process: Without waiting on mortgage approvals and financing contingencies, sales can move more swiftly - putting money in your pocket sooner.
- flexibility: Cash-buyers are generally more accommodating to issues associated with a property and more likely to purchase “as-is”.
- No realtor fees: If you’re able to connect with an investor or cash buyer one-on-one, you may be able to facilitate the transaction without a realtor and save on costs.
Cons of selling to a cash buyer
- Potentially lower offers: While cash buyers offer convenience, it’s typical for them to lowball offers and close below market value.
- Less negotiation leverage: Considering the fast-paced and simplified nature of cash transactions, sellers may have more pressure to accept offers as they come.
- Smaller market: Cash buyers represent a sizable, but still smaller segment of the market. With a limited pool of potential buyers, you may see fewer bids on your property.
Tips for selling to a cash buyer
You may still want to clean and declutter the home to show it in its best light
While selling to a cash buyer may involve less heavy lifting overall, you may still want to invest some time into making the property as presentable as possible.
You want to showcase the house so that it appeals to the vision of an investor or flipper and helps them see the potential. Most projects involve a day’s work of cleaning or gutting out. However, some houses may require more extensive focus.
Toronto broker Barry Lebow, describes a home he recently sold which belonged to major hoarders and took two weeks to fully clean out. Rather than leaving the house as is, he opted to gut it so that buyers could see its bones rather than its flaws.
“If I had tried to sell it as it was, the offers would have been terrible,” says Lebow. “Once stripped the buyers could see the potential and that most of the bad stuff had been dealt with. Received 11 offers!”
Go into the negotiation armed with an estimate of your home's fair market value and potential repair costs
Knowing both your home’s fair market value and the cost of potential repairs will not only allow you to price your property more accurately but also put you in a stronger position at the negotiation table.
For starters, you can use detailed work estimates from licensed contractors to back up your price point. Investors and cash buyers are known for lowballing, and with accurate estimates at hand, you’ll be in a stronger position to deliver a credible counteroffer.
Screen cash buyers thoroughly
While most cash buyers are legitimate business owners, homeowners have occasionally been ripped off by 'we buy houses' scams. Therefore, screen cash buyers and their offers thoroughly before accepting and taking your house off the market.
Steps to take when vetting a cash buyer include:
- Ask for proof of funds (i.e., bank statements or a letter from a lender) and past closing statements to evaluate whether a buyer has a track record of successful deals.
- Check out the investor's online presence, including reviews from past customers.
- Ask for a breakdown of how they arrived at their offer price to evaluate their transparency.
- Get offers and contracts reviewed by a professional, such as a real estate attorney, before signing.
Make sure you're comparing apples to apples, including closing dates, earnest money deposit, and contract terms
Consider factors like available money deposits, closing time frames, and contract contingencies across the board.
Scrutinizing these subtle differences allows you to select the strongest offer and avoid taking the house off the market in anticipation of a deal that ends up falling through.
For example, you’ll want to watch out for contingencies that let the buyer out of the contract without penalty. And know that you can hold off on signing anything until an investor has done their full inspection to avoid the possibility of them lowering their offer at the last minute.
Request cash offers from multiple buyers to compare
Rather than accepting the first cash offer you receive, tap into multiple potential buyer channels to compare proposals. You can do this on your own, with the help of a realtor, or through a free service like Clever Offers. By casting a wide net, you’ll have a better chance of maximizing your sale price.
Provide the same property and inspection details to competing bidders to incentivize them to put forth their best terms, which you can then analyze side-by-side.
Where to find cash buyers
Seeking offers directly from local investors has the potential perk of allowing you to possibly avoid hefty realtor fees - even if it means you’ll need to do most of the marketing work yourself. You can find investors by networking through your real estate agent or even local real estate investing groups.
Another option is to also work with companies that buy houses for cash, such as Clever. Clever matches you with fully vetted cash buyers who place competing bids on your home, allowing for both convenience and a speedy transaction.
Compare multiple offers from trusted cash buyers in your area against the sale price you'd get with an agent.
Option 2: Put your house on the market
Selling your house on the open market entails casting a wider net that attracts both traditional buyers and bargain hunters. Let’s take a look at some of the pros and cons to this approach.
Pros of putting your house on the market
- Larger pool of buyers: Listing on the open market helps ensure broader visibility. As real estate expert Don Chambers put it, “if you get an agent and list it with the MLS, you're going to expose it to many more buyers. And when you get many more buyers, you'll get a higher price.”
- Realtor representation: Realtors bring expertise in marketing and negotiations, and can help you navigate the legalities of a sales contract. They make the sales process smoother and take tasks off your hands.
- Potential for more competitive offers: The open market enables competition, potentially leading to multiple bidding scenarios. This can result in more favorable offers and improve your chances for maximizing the sales price.
Cons of putting your house on the market
- Realtor fees: Engaging in the open market often involves paying real estate commissions, which can eat into your overall proceeds from the sale.
- Potential financing challenges: Homes in need of repair may face challenges with traditional buyers requiring financing. “If someone makes an offer with a mortgage contingency, the condition of the property could impede their ability to secure enough financing to cover the purchase and terminate the contract,” explains Sharlys Leszczuk, an Oregon Broker.
- Potential negotiation challenges: Buyers will leverage the condition of your home to negotiate lower prices. Depending on the extent of the repairs needed, you could find yourself going back and forth and ultimately settling for a lower price point.
Tips for listing a house that needs work
Choose a real estate agent with experience selling homes like yours
Any realtor can lower the list price to get a home to sell, but a top real estate agent will work their networks and know how to attract the right buyers.
“When renovations are not an option, selling your home through a realtor will get you the most money in almost every situation. The only time I advise selling to a flipper is when money is not your main concern, and hitting required timeframes or selling it the easy way becomes more attractive,” explains DJ Olhausen.
Some brokerages even offer home prep programs that will pay for home improvements upfront and then recover their costs out of the proceeds at closing, allowing you to sell for max value.
Be transparent about any issues with the home
It’s important to always be transparent about any underlying issues with the house, as many states have disclosure laws holding you liable for misrepresentation. Being upfront about existing problems can also help you target the right buyers and allow you to avoid potential problems down the line.
As real estate investor Steve Nicastro puts it, “If a significant issue is discovered during the home inspection that was not disclosed, the buyer may have grounds to request a price reduction, a credit, or even to back out of the sale.”
Decide whether you're going to make any repairs or sell as is
When it comes to making repairs, real estate agent Lee Harbaugh urges sellers to be on the cautious side. “Oftentimes I have seen sellers pour money into a property just so they can sell for top dollar. The problem is, those sellers don't always recoup their investment.”
“For example," he goes on, "spending $50,000 on new windows is not going to allow one to sell a home for $50,000 more than if it sold as-is. You might get an additional $5,000 - $10,000 at best. On the other hand, spending $20,000 on kitchen upgrades will very likely result in an additional $20,000 on a sale.”
However, if you plan to put your house on the market as is, it’s important to keep in mind that mortgage lenders have minimum property requirements that a home must meet before they're willing to lend money.
Some lending options, including FHA 203k and Fannie Mae HomeStyle Renovation loans, can help traditional buyers cover the costs of repairs. However, they tend to come with a lot of red tape, so if time is a factor, they may not be an option.
If you opt out of making repairs, you're probably looking at selling to an investor. Just be sure to disclose your home's condition so you're attracting these types of buyers — rather than traditional homeowners with little chance of securing funding.
Present your home in its best light
Most realtors agree that minor repairs like painting, deep cleaning, and decluttering are just enough to bump a price point and offer a good return.
Likewise, talking up a home's convenient location and unique features in the listing description can get more people through the door.
However, “with any repair project, it's important not to over-improve and exceed the neighborhood standard," Jim Olenbush of Austin Real Estate maintains. "Updating surfaces like flooring and paint are generally worth it, whereas spending heavily on customized renovations may not pay off.“
If you go overboard on renovations, you may end up being the most expensive home on the block. Buyer's agents will have trouble justifying your asking price to their clients if there aren't similar recent home sales nearby to support it.
Mention any concessions you're willing to make
Offering repair concessions or credits upfront can motivate buyers and take repairs out of negotiations — allowing for a faster transaction. Sellers can offer to cover a portion of a buyer’s closing costs or other fees as concessions while credits are typically a discount on the property’s price.
Tamar Asken of Parasol Realty explains, “a credit can be beneficial for a buyer because they can then go hire the vendor of their choice to complete the work”.”
Realtor Sammy Lyon is a big proponent of being upfront about problems and offering concessions to help move the transaction along. “The buyer gets surprise quotes like that and the seller takes a hard-line stance on not making any repairs or giving credit, the transaction is likely to fall out of escrow.”
Consider working with a realtor willing to negotiate their listing fees
When listing as is, chances are you'll be selling your home for a lower price, but you may be able to offset the loss in profits by working with a realtor who’s willing to negotiate on listing fees
There are a couple of ways to find good low-commission realtors in your area. You can browse local listings, social media, or work with an agent matching service like Clever to find agents with the best rates in your area.
Bottom line: What's the best way to sell a house that needs work?
Ultimately, the best way to sell a house that needs work will boil down to the level of repairs needed and your priorities around timeframe and convenience.
Retail buyers are often willing to pay more after some modest work and improvements. However, houses with intensive structural and mechanical renovation needs are often easier to sell directly to cash buyers.
Texas Realtor Josiah Carter explains, “In my extensive experience, I've found that sellers who opt to make the necessary repairs almost always come out ahead in terms of overall profit. While there are situations where a quick sale without repairs is necessary, such as urgent financial needs or timing constraints, in most cases, investing in repairs yields significantly higher returns.”
No matter what level of repairs you decide to invest in, working with a realtor will often give you the most potential to command a higher price. And whether you choose to list on the open market or sell directly to a cash investor, remember to highlight the unique attributes of your house and the potential it can offer future buyers.
Explore a full range of offers from local, regional, and national cash buyers. Plus, get agent proposals sent straight to your inbox. Compare all your options in one easy go, with no added fees or obligation to move forward.
FAQ about selling a house that needs work
How do you sell a teardown house?
Builders or house flippers specializing in full reconstruction are mostly likely going to be your target audience for teardown house. That said, you may also be able to find retailer buyers by listing on the open market, but this may come with extra costs and involve a longer sales period. .
Should I list my house or sell it to a flipper?
Consider listing if repairs are minor or if the potential return is high. However, if you’re looking for a faster turnaround, selling to an investor directly can expedite the sales process while offering a lower but guaranteed return. .
How can I determine my home's as-is value?
Consult with a real estate agent knowledgeable of the fixer–upper market in your area to run an analysis of what similar homes are selling for. They should be able to give you an indication of your home value both in its current condition and after making repairs. .
Is it better to fix up my house or sell it as is?
If you can afford some modest repairs, fixing up your house may allow you to aim for a higher sales price. However, it's best to get estimates from contractors before undergoing major renovations. Selling as is is probably best when time and resources for repairs are limited or the market favors sellers. .
