A recent study finds that most homebuyers – especially first-time buyers – want a home that they can move right into and hang up their toothbrush. And, they say they are willing to pay more for such a home. Face it: many of the competing homes in your area will be closer to this condition than yours if you choose not to make improvements and/or repairs. Unless your home is priced low enough to compensate the buyer for what he or she will need to spend to bring it to comparable condition, it will sit on the market. So, if your budget can tolerate a very low listing price, you’ve passed the first challenge of trying to sell as-is.
Lenders have their preferences too
Should you find a buyer who is using a government-backed loan program, such as the VA or FHA, the lender will have a thing or two to say about your home’s condition. Typically, it’s “fix it or we won’t loan the money to the buyer.” You can almost guarantee this for problems of a health or safety nature. Considering that the VA grants almost a half-million mortgages a year and the FHA is the preferred program for first-time buyers, that’s a lot of people to exclude from the buyer pool The FHA-approved appraiser will be the one to determine what needs to be fixed before the home qualifies for an FHA-program buyer. Repairs listed as essential on his or her report are the ones to be most concerned about. Even a conventional lender may balk at making a loan for your home if the repairs needed include HVAC, roof or structural problems. Some will require that broken window glass be repaired and ask that any code violations in existence be remedied. By the way, some home insurance companies are also asking for repairs before they will insure the home for the new owner.
Come up with a strategy
Again, it’s understandable that some fixes are just too expensive for some sellers to manage. For these, we can suggest the FHA 203(k) program in our marketing materials. With this program, FHA will wrap the cost of the home and the cost of rehab in one loan, so the buyer has only one payment a month. There are other rehab mortgages out there as well. You’ll also want to consider how you’ll deal with the very low offers you’ll receive. The mere mention of the words “as-is” act as a magnet to investors and flippers. Know the lowest price you’ll accept and remind yourself to keep your emotions in check and to not take low-ball offers personally. Finally, despite the problems with the home, the one way you can help boost the price, even a small amount, is to ensure that it’s clean at all times. If your home will be vacant, consider some inexpensive staging techniques to help buyers overcome the as-is aspect of the sale. When a home is neat and tidy (both inside and out) it sends a subliminal message to potential buyers that someone does care about the home.
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