Selling a house that’s in poor condition presents unique challenges. Such properties often struggle to attract buyers as they require more than just cosmetic fixes, and you may even be embarrassed by its condition.
Significant issues could include a leaking roof, a non-functional HVAC system, outdated electrical setups, or even mold problems—problems that go far beyond mere cosmetic items like drywall cracks.
When faced with selling a home like this, a crucial decision is whether to sell the property as-is or to invest in repairs to potentially attract more buyers and achieve a higher sale price.
We consulted with leading realtors and investors, including seasoned house flipper Brett Johnson, to explore the best strategies for ensuring you receive a fair price, regardless of your home’s condition.
Ready to sell your home, even if it's in poor condition? Clever Offers provides flexibility: instant cash offers for speed or 7-Day Sold for maximum market value. Compare all your options with the help of a trusted agent and choose the solution that works best for you. Get started today and take control of your home sale.
🛡️ Why you should trust us
In preparing this comprehensive guide on selling a house in poor condition, we've researched and included the expertise of numerous real estate professionals, including seasoned house flippers, investors, and realtors like Brett Johnson, Dan Belcher, DJ Olhausen, and Jave Blackburn. Our discussions focused on providing the most effective strategies to ensure you receive a fair price for your property, regardless of its condition.
Additionally, Steve Nicastro, a real estate investor and former agent with over five years of experience buying and selling homes in poor condition in North and South Carolina, has thoroughly reviewed every piece of advice and information. His firsthand experience and insights ensure that our recommendations are based on real-world successes and industry knowledge.
Our research also includes surveys of over 700 real estate investors, giving you a clear picture of the current market. This data informs our discussion on potential returns from house flipping and the realistic offers you might expect from investors for homes needing significant repair.
What does poor condition actually mean?
A home in poor condition can mean anything from an outdated but otherwise livable house to one that's uninhabitable and may need to be torn down.
1. Uninhabitable home
Best selling option: Cash home buyers
Homes considered uninhabitable—or nearly so—face severe issues that render them unsafe for occupancy. These properties, often labeled as teardowns, typically exhibit critical problems, including:
- Severe roof or foundation damage.
- Broken HVAC systems.
- Major plumbing failures.
- Faulty electrical wiring.
- Extensive pest infestations, including termites or rodents.
- The presence of hazardous materials like black mold, lead, or asbestos.
"A 'poor condition' home has substantial structural, aesthetic, or systemic problems that make selling challenging. I usually avoid homes with major foundation issues or extensive fire damage because of the high risk and unexpected repair costs," says Johnson of New Era Home Buyers.
Such properties mainly attract cash home buyers and investors seeking homes at significantly reduced prices.
Just how low of an offer can you expect? Our survey of over 700 real estate investors indicates that investors generally propose buying homes at about 65% to 70% of the property's after-repair value (ARV), with the median offer being 67.5%. This suggests that investors might offer up to $337,500 for a home potentially valued at $500,000 post-repairs.
These properties can offer substantial returns, especially for house flippers: According to our survey of investors, 60% make $50,000 or more in profit per project, and nearly a quarter (22%) earn $100,000 or more on average.
Investors will buy nearly any type of property in any condition. They may consider renovating or rebuilding a home if it's in a highly desirable or up-and-coming area. However, properties in less favorable locations might be avoided, with 39% of investors steering clear of areas that renovations can't improve.
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2. Major repairs needed
Best selling option: iBuyers, investors who specialize in renovations, or a traditional sale
Many homes in "poor condition" may require significant repairs but remain habitable. Issues that typically categorize a house as such include:
- Electrical faults.
- Plumbing issues.
- A functioning yet damaged roof.
- Foundational problems.
- Outdated but operational HVAC systems.
- Extensive hoarding.
- Excessive dirt or grime from neglect.
Although these homes are livable, their deficiencies may pose future hazards if not addressed, complicating financing approval for potential buyers.
Despite these challenges, homes needing substantial repairs often attract iBuyers, investors and cash buyers, who see value in purchasing at a discount and enhancing through repairs.
If you're considering making significant repairs before selling, it's essential to manage your budget carefully. Our survey revealed that 78% of homeowners recently exceeded their renovation budgets, with 44% going over by at least $5,000 and 35% by $10,000 or more.
Effective budget management and setting realistic expectations are key to avoiding costly overruns.
» How to sell a house that needs work
3. House is outdated, but livable
Best selling option: Traditional sale
Outdated homes, or those showing signs of wear and tear, may not win any beauty contests, but they often have solid "bones," meaning they're structurally sound and require no major repairs.
Their flaws are usually cosmetic, making these properties fully habitable and in need of only aesthetic updates such as:
- Kitchen renovations
- Bathroom updates
- New flooring
- Fresh exterior and interior paint
- Updated finishes and fixtures
- Landscaping
It's important to note that these updates aren't essential for making the home livable—they're more about adding appeal. Such improvements might not be dealbreakers for buyers simply looking for a comfortable place to live, even if it's not the most updated.
These updates also typically don't impact mortgage approvals, thus attracting a broader range of buyers. However, the absence of move-in readiness can turn away those who prefer a home that doesn’t require immediate work.
Given the potential for low repair costs and favorable market conditions, outdated homes can elicit more competitive offers from a diverse group of investors and bargain hunters.
If your home fits this description, listing it on the open market with a traditional realtor could be your best option for maximizing returns and achieving as close to 100% of fair market value as possible. Clever Real Estate can assist you in this endeavor, offering a pre-negotiated 1.5% listing fee with a top-rated local realtor to help you get top dollar for your home.
Best options for selling a home in poor condition
This section explores your primary choices for selling a home in poor condition. We examine the advantages and disadvantages of each option to assist you in making the best decision based on your situation.
1. Sell as-is to cash buyers or investors
If you don't have the time or budget for repairs, or if the cost of repairs exceeds the potential increase in your home's sale price, selling your house "as is" could be the best approach. This option means that buyers will accept the property in its existing state and won't be able to request repairs after an inspection.
Selling as-is can lead to faster closings, as the main buyers are often cash investors who don't need to secure financing and typically buy without contingencies.
However, be aware that selling as-is usually means you won't achieve fair market value. Investors consider the cost of repairs in their offers, which are generally lower as a result.
Brett Johnson adds: "For sellers looking for a quick, as-is sale, be prepared for lower offers. My offers reflect the home’s potential value post-repairs, minus transaction costs and my profit margin."
🏚️ Reddit insights on selling a home in disrepair
Redditors share mixed experiences and advice on selling homes that need significant repairs.
Many caution against accepting quick cash offers from companies that buy "junk houses," suggesting that these often result in lowball offers. Instead, they recommend listing the home on the open market, even in poor condition, to potentially attract a broader range of buyers and better offers.
One common theme is the importance of transparency— being upfront about all known issues. This approach helped one Redditor sell their mother's home quickly; after some minor cosmetic updates like new paint and staging, the home received multiple offers and sold for over the asking price in less than 30 days, according to the post.
For those facing major repairs, such as a new septic system or HVAC, Redditors suggest consulting with professionals to determine what must be fixed before selling. In some cases, local regulations may dictate these repairs, especially if they involve environmental or safety issues.
Ultimately, engaging a knowledgeable realtor who understands the local market can guide you in making repairs or selling "as is," helping to maximize returns and minimize stress. Clever Real Estate can connect you with a knowledgeable local agent to assist you.
2. Sell as-is to traditional buyers
Selling your home as-is allows buyers to factor in the cost of repairs in their offers. However, this doesn't always result in a steep discount, particularly if you're targeting first-time buyers interested in a fixer-upper they can tailor to their tastes.
For example, Dan Belcher, CEO of Short Sale RE, recommended that a client avoid costly repairs that wouldn't increase the home's sale value. By listing the property as-is and being clear about its condition, the client received multiple offers.
Johnson, a seasoned real estate investor, echoes this strategy, emphasizing the potential advantages of an as-is listing in the open market.
"Even an as-is listing, when fully exposed to the market, can attract better offers than quick cash sales, especially in desirable locations," he says. "It's all about reaching the right audience who sees the potential in a fixer-upper."
This approach can be particularly effective if the property is in a sought-after area where buyers are ready to invest in turning an imperfect home into their ideal space.
Remember that any known issues must typically be disclosed according to your state's property disclosure laws. Being upfront about the home’s condition can prevent future complications and ensure a smoother transaction.
3. Make repairs and then sell
Your final option is to make all the required repairs you're aware of and then list on the open market to get 100% (or more) of your home's fair market value.
This approach allows you to market the home as recently upgraded, which can significantly enhance its appeal. For example, having a brand new roof and HVAC system or a freshly updated kitchen can make the property more attractive to buyers than one without these improvements.
Ultimately, this is the best strategy if you want to secure multiple offers and drive a bidding war.
"If time and finances allow, making key repairs or updates can significantly boost your sale price," says Johnson. "However, set realistic expectations and focus on repairs that increase safety and functionality."
When deciding which repairs to make, consider the ROI and prioritize essential fixes that ensure safety and increase property value
Why this strategy may backfire
The primary downside is the financial and logistical commitment required. Repairs can be substantial, with expenses like a new roof ranging from $10,000 to $60,000, depending on the size of your home and the materials used.
Additionally, securing contractor estimates and completing repairs can be time-consuming. Challenges such as finding available contractors or weather delays, particularly during rainy seasons, can further complicate the process.
A recent study by Clever Real Estate provides further insights to the potential drawbacks of this streatetgy:
- About 53% of homeowners using contractors exceeded their budget, and 46% experienced significant delays.
- Conversely, DIYers reported lower overages and delays but slightly less satisfaction with the outcome.
- 74% of homeowners who undertook renovations ultimately had regrets, often related to overspending or extended timelines.
Your best bet: Consult with both a local real estate agent and a contractor. They can help you identify which repairs will offer the highest return on investment and advise on which ones might not be worth undertaking. Let Clever Real Estate connect you with an experienced local agent for more specific advice.
How to decide which repairs to make
Repairs that require minimal cash or time upfront can bring in a larger pool of potential buyers, which can drive up competition and your final sale price. However, there's a risk of sinking too much money into projects that may not pay off.
As realtor Lee Harbaugh from Arlington, TX, observed, homeowners often invest heavily in repairs to maximize their sale price, only to find that these improvements don't always pay off. For instance, a $50,000 investment in new windows might only increase the sale price by $5,000 to $10,000.
Suzanne Seini, another realtor, shared a success story where simple updates like new paint and flooring significantly enhanced a home’s marketability. After these updates, a home that had lingered on the market sold in under 30 days for over the asking price, thanks to multiple offers.
Remember that if your home is uninhabitable or requires major repairs, investing in minor fixes could waste money. Such homes may only attract investors, who are less likely to be impressed by a fresh coat of paint or new landscaping. You should talk to a realtor first to determine which repairs will impact most.
Low-to-moderate cost repairs and upgrades
| Project | Average cost |
| Carpet installation | $200–$3,000 (10’x12’–20’x20’ room) |
| Flooring installation | $2,000–$7,500 (500 square feet) |
| Landscaping | $300–$4,000 |
| Countertop replacement | $1,500 – $8,000 |
| Cabinet replacement | $4,500 – $15,000 |
| Install new light fixtures | $70–$300 (per light) |
| Professional painting | $300–$800 (for 10’x12’ room) |
| Minor plumbing repairs (e.g., leaky pipe) | $150–$850 |
However, for homes that are uninhabitable or need extensive repairs, minor fixes might not be cost-effective as these properties typically attract investors more interested in the potential for flipping rather than cosmetic improvements. Before making any decisions, consult with a realtor to identify which repairs could truly enhance your home’s value.
Large-scale repairs require a significant investment, and realtors are generally less bullish about investing that kind of money into improvements before selling.
"If a house needs a costly renovation, such as full roof replacement or new HVAC, it’s better to leave the house at its current stage," says Boston-based real estate broker Seth Williams. A residential property with a dilapidated house attracts home flippers, while a new HVAC won’t bring a greater ROI."
For perspective, here are the average costs of some common major renovation projects:
| Project | Average Cost |
| Gut a house to the studs (1,500 sq. ft.) | $3,000–$16,000 |
| Window replacement | $450–$1,500 (per window) |
| Roof replacement | $10,000–$60,000 |
| Siding replacement | $10,000 – $32,500 |
| Full kitchen remodel | $15,000–$50,000 |
| Full bathroom remodel | $10,000–$30,000 |
| Install new plumbing | $12,000 to $20,000 |
| Install new electrical wiring | $6,000–$10,000 |
| Upgrade electrical panel | $850–$2,500 |
| Water heater repair | $150–$1,3000 |
| New HVAC system | $5,000–$16,000 |
🛠️ More tips on deciding which repairs to make
The value you extract from a home in poor condition will depend on not only the state of the house itself but also its location and how it compares to others around it.
Even specific repairs can offer a varying return on investment (ROI) in different markets. For example, while fiber-cement siding replacement has an 88.5% ROI nationwide, in Seattle, where the rainy winters make good siding especially valuable, the ROI is 151.3%.
"The key is to understand what components of home upgrades buyers are willing to pay more for," says Harbaugh. "If you don't understand your local real estate market, chances are you will spend money on repairs that you won't get back in the home sale."
To determine which repairs are worth your investment, get quotes from multiple contractors. Then, ask a realtor or two for a comparative market analysis to see what your home may sell for both with and without the repairs.
💸 Should you finance your home repairs?
If you don’t have enough savings to cover the cost of home repairs upfront, you may be able to take out a loan or line of credit. However, financing repairs may not make sense in the long-term, especially when you consider interest and loan fees. It depends on the expected return on investment.
“I usually advise against home equity loans for repairs unless the ROI is guaranteed to exceed the loan cost, including interest,” says Jave Blackburn, CEO of WeBuyAnyHouseAsIs. Other real estate professionals we talked to felt similarly.
"Before taking out a loan," says real estate broker and investor Chris McGuire, "it's crucial to evaluate the estimated repair costs and compare them to the potential increase in the sale price."
🏦 Conventional financing options for repairs
If you decide to finance home repairs, you have several options available. Personal home improvement loans, home equity loans (often called second mortgages), and home equity lines of credit (HELOCs) are among the most common. Each type of loan has its own set of benefits and drawbacks.
A home improvement loan is an unsecured personal loan that can be used for any home repairs or upgrades. The advantage is that you don’t have to use your house as collateral, but the trade-off is typically higher interest rates compared to other types of loans.
On the other hand, a home equity loan provides a lump sum that can be repaid over several years with fixed interest rates and tax-deductible interest. However, since your home is used as collateral, there is the risk of foreclosure if you fall behind on payments.
Lastly, a HELOC offers a flexible line of credit, allowing you to borrow against your home equity at relatively lower interest rates than personal or home equity loans. The downside is that HELOCs have variable interest rates, which means your monthly payments could fluctuate over time. Each option should be carefully considered based on your financial situation and the specific needs of your repair or renovation project.
Tips for selling a house in poor condition
When selling a house in poor condition, you'll primarily attract investors, developers, and bargain hunters. These buyers typically look for properties they can renovate and either flip or rent out.
While selling to these buyers can be quick, it's crucial to approach the sale strategically to maximize your returns and handle the transaction effectively.
Don't rush the sale
While it might be tempting to accept the first offer that comes your way, especially from cash buyers who can close quickly, it's often wise to shop around.
Cash buyers, like companies or individual investors, often propose no-contingency deals and can close within days. However, as real estate investor Don Chambers advises, although quick sales can be convenient, listing the property might fetch a higher price. It’s beneficial to get multiple offers and understand your home’s potential market value before deciding.
Disclose known issues
Transparency about your home’s condition isn't only ethical but also required by law in most states. You must disclose any known issues such as lead paint, structural problems, and histories of flooding or infestations.
This honesty prevents future legal issues and ensures that deals don’t fall apart during the financing stage, as many lenders hesitate to fund homes needing significant repairs.
Consider working with a realtor
Listing your home with a realtor can significantly broaden its exposure and increase your sale price, even if it needs some repairs. For instance, Realtor DJ Olhausen successfully raised an offer from $515,000 to $675,000 using strategic marketing techniques such as professional photography and open houses.
Choose an agent with a solid track record and a strong network of buyers, particularly those specializing in selling homes in less-than-perfect condition. Clever Real Estate is here to help with this process. We offer a pre-negotiated listing fee of just 1.5% with one of our top-rated local realtors, ensuring you receive the best possible return on your sale.
Use a discount broker
To maximize your earnings from the sale, consider working with a discount broker. These firms offer services similar to traditional brokerages but at a reduced commission rate.
For instance, networks like Clever connect sellers with experienced agents who charge lower fees, potentially saving thousands without compromising on service quality.
Be prepared to negotiate
Selling a home in poor condition often involves significant negotiation. Be prepared to discuss the price and terms extensively, especially with investors aware of the leverage they have.
Understanding the lowest acceptable offer and the potential costs of necessary repairs can help you negotiate more effectively.
By understanding the full scope of your options and the intricacies of selling a home in poor condition, you can make informed decisions that align with your financial and personal timelines.
