For years, a retired home improvement contractor considered selling his house in a leafy Baltimore suburb served by a top-rated elementary school.
What caused him to delay his sale? Living solely on Social Security, he lacked savings for essential repairs to his run-down place. For instance, he couldn't afford to replace his leaky roof and malfunctioning heating system.
But after stern warnings from a few local real estate agents, the contractor recently sold his place for a sacrificial price $200,000 below what his place could have fetched in good condition. The agents convinced him that waiting until next year wouldn’t have helped him at the bottom line.
Eric Tyson, a Connecticut-based personal finance expert, doesn’t know the contractor in this true story. But he says the man likely made the right decision.
Tyson, co-author of “House Selling for Dummies,” says that in many neighborhoods, sellers are gradually losing the upper hand as buyers gain somewhat more leverage. What’s more, he contends that in most areas this trend will likely intensify next year.
At CoreLogic, an economic think tank, CEO Frank Martell says the seller’s market is gradually weakening due to rising mortgage rates and affordability concerns on the part of potential purchasers.
“Our consumer research indicates younger millennials want to purchase homes, but the majority of them consider affordability a key obstacle,” Martell says.
A new report by the U.S. Commerce Department also reflects a possible slowdown ahead for real estate. In October, sales of newly built homes fell 8.9 percent, tumbling to their lowest point in more than two years. New home prices also slipped.
No owners want to sell their property for a sacrificial price. But if your place is in run-down condition and you lack savings for major repairs, you might have only enough money for cosmetic fixes.
Here are a few pointers for the cash-tight sellers of flawed homes:
-- Seek guidance from a seasoned real estate pro in your area.
Ashley Richardson, who sells homes through the independent Long & Foster realty chain, says a solid agent will give you a realistic list of doable tasks.
“For example, you wouldn’t want to put high-end cabinets into the kitchen of a house that’s in overall poor condition. But you might want to have your current cabinets repainted,” she says.
As the first step in the agent-selection process, Richardson recommends you interview three candidates, asking each to critique your home and itemize low-cost steps that would make it more saleable.
“You want someone who will look you straight in the eye and tell you the truth -- not someone who just tries to flatter you into giving them the listing,” she says.
-- Look for assistance in the decluttering process.
As Richardson says, many longtime owners trying to sell a home in poor condition feel overwhelmed by the sheer magnitude of the tasks that face them. Decluttering is an especially daunting prospect for those with health problems.
“Sellers who can’t do this work themselves should ask family members and friends to help,” she says.
But what if no volunteers step forward? In such cases, Richardson suggests owners may wish to hire students or others looking for temporary, part-time work.
Richardson recommends you give the person you hire a series of manageable tasks.
“For example, tell them to pack up the contents of your china closet or an overloaded bookshelf. Tell them to put the packed boxes in your garage in neat stacks,” says Richardson, who’s affiliated with the Residential Real Estate Council (crs.com).
It may seem counterintuitive for the owners of a home priced for an “as is” sale to bother with the removal of clutter. But Richardson says it’s imperative.
“No one will buy a house if they can’t even see how large its rooms are,” she says.
-- Help buyers imagine your home’s possibilities.
Though many owners of property in poor condition lack the funds for major improvements, Richardson says it’s important that they make their place at least minimally appealing.
Besides clearing out your clutter, you’ll want to remove any outdated furnishings and drapes that make your home seem dark or drab. In their place, your agent might lend you a few attractive pieces to make your place look better.
“Realtors sometimes have a stock of good furniture, rugs and lamps that clients can use during the showing period,” Richardson says.
Besides adding cosmetic touches, she says the owners of an “as is” home should give visitors mock-ups and contractors’ estimates for needed improvements, like the replacement of a worn-out deck or the renovation of a bathroom to replace broken ceramic tile.
“The truth is, most people have a terrible time envisioning the potential of any house in poor condition. You’ve got to get them excited about the possibilities,” Richardson says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)