Selling a House in Poor Condition: 3 Legit Options

If you need to sell a house, but are concerned about its condition, rest assured that you have options — even without making any repairs.

Plenty of real estate agents and investors specialize in helping homeowners with houses in less-than-ideal condition — and chances are, the situation's not as bad as you think.

"No matter how bad your house is, we’ve seen worse," says Minnesota-based real estate broker Bryan Clapper, whose specialization in probate real estate means he often works with sellers who have inherited outdated or otherwise imperfect homes.

From listing your house 'as is' to selling to a reputable cash buyer, here are your options for selling a home in poor condition, plus some key considerations for homeowners to keep in mind.

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Options for selling a house in poor condition

1. List your house 'as is'

When looking to offload a property in poor condition, the first option homeowners often think of is selling to a property investor promising to pay cash and close fast, regardless of the home's condition. However, selling as is with a realtor is often the more lucrative option.

"Selling as is doesn’t necessarily mean calling a cash-for-homes outfit," advises Clapper. "Plenty of as-is sales happen in a traditional manner through the MLS and those sellers tend to get more money than if they had gone through an investor or wholesaler."

Clapper's team recently did a study comparing probate properties sold on the area MLS — most often as is — vs. those sold off-market to an investor or wholesaler. The data showed that, on average, homes sold through the MLS netted sellers $49,000–104,000 more than those sold to an investor. That's after accounting for realtor fees, which average 5–6% of the home sale price.

The benefit of the MLS is that it exposes your listing to a much broader pool of potential buyers — ranging from local investors to traditional buyers looking for a bargain.

"There are many young buyers looking for a home where they can build sweat equity," explains Clapper. Recent research from Real Estate Witch shows that 65% of Millennial home buyers are open to buying a fixer-upper. But even if your home is in such a state that it would only be suitable for a cash investor, you're still more likely to create competition with an MLS listing.

⚡Quick Tip If you want to get the most equity out of your home, you can often find significant savings through a low commission brokerage or agent-finding service offering pre-negotiated commission rates with top agents across the country.   » LEARN: Where to find the best agents for less

2. Sell your house for cash

Cash buyers can close incredibly quickly, often in just 1–3 weeks. Many are also willing to cover closing costs and cut agents out of the deal, allowing you to save money on realtor fees.

The catch is that investors typically only offer about 70% of a home’s estimated post-repair value, minus repair costs. Therefore, selling for cash makes the most sense when speed matters more than price — for example, if you’re facing foreclosure or selling an inherited property with a lot of maintenance costs. 

If you have a little wiggle room in your timeline, some investors may be willing to partner with you on more creative solutions, such as novation agreements.

With this type of deal, an investor won’t buy your property outright. Instead, they'll fix the issues needed to get it salable and then list it on the MLS. Once the house sells, the investor will recoup their costs and then split the remaining proceeds — either 50/50 or at some other percentage you agree to upfront.

While these types of partnerships can take longer than selling to a cash buyer directly, some sellers may benefit — especially if they're in debt and can't afford to sell at a loss.

⚡Quick Tip A cash offer is generally good for several days or weeks before it expires, so you can always use that time to compare it against home valuations from a few different realtors to see if it's in the ballpark before accepting. A free service like Clever Offers can save you a lot of time by connecting you to vetted cash buyers and leading local agents to assess your home — no pressure, and no strings attached. ⚡ Compare fair cash offers to the sale price you'd get with an agent — allowing you to sell on your timeline for the best possible price.

3. Consider making high-impact repairs

If your home is uninhabitable and only likely to appeal to an investor, then sinking money into repairs makes little sense. But if it simply needs some updating, it may be worth investing a little in the presentation to ensure you're showing the home in its best light. That will give you the best chance of attracting traditional buyers, who will almost certainly offer more than an investor intent on making a quick profit.

But keep in mind that not all repairs are going to get you a good return on your investment.

"If opting for repairs, focus on minor yet impactful improvements like painting or fixing obvious defects, suggests Jave Blackburn, CEO of WeBuyAnyHouseAsIs. "Over-investing in major renovations often doesn’t yield proportional returns."

According to the more recent Home Renovation Trends survey from Clever Real Estate, the most popular home improvements among homeowners include: 

• New faucets and fixtures (36% of homeowners)
• Updated interior lighting (35%)
• Minor kitchen upgrades (i.e., new appliances) (34%)
• Minor bathroom upgrades (i.e., toilet, mirrors) (34%)
• Repainting rooms (33%)

» LEARN: The most important repairs to make before selling

Is your home's condition really 'poor'?

If you're feeling a little iffy about the condition of your house, rest assured you're not alone.  Surveys of American home owners show that approximately 70% are embarrassed by the state of their home when considering selling.[1] But in reality, there are buyers for homes in every condition — whether they're move-in ready or complete tear-downs.

That said, the condition of your house will definitely influence the types of buyers that are interested. So let's take a look at the different categories that your house could fall into, as well as who the prospective buyer might be.

Uninhabitable

Uninhabitable properties are those that are too dangerous to live in. They may need a "down to the studs" renovation or have to be demolished and rebuilt. Many issues can make a home uninhabitable, but some of the most common are:

• Severely damaged roof
• Major foundational issues
• Significant plumbing problems
• Pest infestation
• Biohazards (i.e., black mold, lead, or asbestos)
• Fire or smoke damage
• Flooding
• Faulty electrical wiring

Most buyers won't be able to get financing for an uninhabitable home, since the property itself acts as collateral for a home loan. Hypothetically speaking, if a buyer was approved for a mortgage on a teardown, but then defaulted after the house was demolished, the lender wouldn’t have any collateral that it could sell in order to make back the loan.

Because of these financing issues, uninhabitable homes are usually bought by cash buyers, such as private investors and 'we buy houses' companies.

» LEARN: The best companies that buy houses for cash

In need of major repairs

Many homes in need of significant repairs can still be lived in, but may still have a limited buyer pool due to the scope and cost of the work needed. Some of the repairs considered major include:

• Flooring needing replacement
• Minor foundation issues
• Electrical issues
• Plumbing problems
• Damaged roof
• HVAC issues
• Hoarding and clutter
• Broken windows and doors

Traditional financing can still be a problem for buyers considering a home needing major repairs, since lenders see them as a risky investment. So, cash buyers will still be your most likely audience.

However, plenty of investors will see the opportunity in being able to add value to this type of home.

» LEARN: How much will an investor pay for my house?

In need of significant cleaning or cosmetic updates

Homes that fall into this type of category don’t have anything that makes them unsuitable for living in. They just need some work to address normal wear and tear, an outdated design, or possibly excessive dirt or clutter. Items that buyers might want to address with this type of home include:

• Outdated kitchen
• Outdated bathroom
• Dirt and clutter
• Worn flooring or carpet
• Unattractive paint jobs
• Stained, scratched, or marked up walls
• Old, but functioning appliances
• Poorly maintained landscaping

You can often list this type of house as is and still sell for a decent price — especially if your home is in an area where a lot of revitalization is happening.

In desirable markets where inventory is low, buyers are often willing to look beyond minor issues, says Sharlys Leszczuk, broker at Windermere West LLC.

Is it worth it to make repairs?

While a move-in ready house will certainly attract a larger pool of buyers, repairs aren't always worth the investment. Here's what to consider before springing for repairs.

Consider the cost vs. return on investment

Most home improvements don't offer a dollar for dollar return — and if you're planning to sell, you won't be in the house long enough to make up the cost with additional home price appreciation.

So before taking on any repairs, you'll want to be sure the expense is justified by a higher sale price.

You can start by consulting with a local listing agent to see how much value those repairs will add based on comparable homes in the area. A realtor should also be able to help you get quotes from local contractors to see how the costs compare to the value added.

Even if you don't complete the repairs, these steps will help you with negotiations later on, since you can realistically assess the costs when negotiating repair credits or price reductions based on condition.

Consider the end buyer

A key factor in deciding whether or not to make repairs before selling is who your buyer is most likely to be. If your home is in really rough shape, your buyer pool may be limited to cash investors, who can generally make repairs faster and cheaper than the average homeowner—so best to leave the repairs to them.

That said, if your home is in decent condition except for a few issues that might scare off traditional buyers — or prevent them from getting traditional financing — the issues may be worth addressing in order to expand your buyer pool and get a fair market offer.

In these cases, sellers should prioritize essential repairs over cosmetic ones, advises property investor Martin Orefice. "An outdated, but functional, kitchen is much lower priority than fixing a leaky roof."

Consider your home's location

Sellers should expect to leave at least some money on the table when selling a property in 'as is' condition, but location plays a big part in how much. I

For example, a recent study by Maker Real Estate found that:

• In areas with newer construction and plenty of homes available, as-is properties sold for as much as 27% less than the area average. 
• In more desirable neighborhoods, where homes tend to be older and there are fewer of them for sale, as-is properties sold for as much as 21% more than the city-wide median home price.

Similarly, research conducted by Porch found that the difference in sale price for homes designated 'fixer uppers' ranged from as little as 1% less to as much as 67% less than area averages, depending on the city.

"Hotter markets allow for higher ARV percentages, while declining or slower markets require more caution," says real estate investor Efrain Lopez of House Love Treatment Buyers LLC. "Desirable neighborhoods or growth areas may justify paying closer to the higher end of the offer range."

Tips for selling a house in poor condition

Price your house to sell

Pricing is the most powerful factor in a real estate sale. Sellers often need to list slightly below market value to create urgency and drum up competition.

“List 5% under the last sale on your street or neighborhood that's comparable to size and finishes," says Ben Bacal, Founder of Revel Real Estate in Los Angeles. While it may seem counter-intuitive, listing on the lower side can lead to multiple offers and a higher sale price in the end.

Offer credits for the work needed

If your home has a few repairs that need addressed, but is other wise livable, consider offering buyers a closing credit to cover part or all of the cost of fixing them. Doing so may help you appeal to a larger pool of buyers, leading to more competitive offers without having to put in the work yourself.

"A credit can also be more beneficial for a buyer because they can then go hire the vendor of their choice to complete the work," says realtor Tamar Asken, who's listed among the top 1.5% of agents nationwide.

Disclose known issues upfront

Even if you choose to sell your home as is, you'll still need to complete a seller disclosure form detailing all known issues with the property's systems and structure. Failing to do so is more risk than it’s worth.

If the buyer discovers a defect during the inspection, they can walk out of the contract or demand it be renegotiated. Similarly, if the buyer discovers a defect after they’ve purchased the property that the seller knew but didn’t disclose, then the seller could be held liable for the cost of repairing it.

Being transparent not only protects you legally, it also helps you attract buyers willing to take on the necessary work.

Help buyers see the potential

Even if your home isn't turnkey, you can often get a higher return simply by investing some resources into clearing it out so that buyers can see the space and imagine its potential. Many realtors are willing to organize the work upfront, then deduct the costs from the proceeds at closing.

"I sold a major hoarder house recently," shares Toronto-based realtor Barry Lebow. "Took weeks to clear it out. Stripped out all contents, then ripped out the filthy carpet and left only the plywood subfloors. Had to take out bathrooms and kitchen as well."

"If I had tried to sell it as it was, the offers would have been terrible." Lebow continues. "Once stripped the buyers could see the potential and most of the bad stuff had been dealt with. Received 11 offers! Sold for $200,000 more than the previous, hoarder condition."

Market your home strategically

"Truth in advertising always pays," says Lebow. "To generate interest in the hoarder house, I had a professional flier designed and posted it all over social media. The heading was, 'This House is a Disaster!' The ad then continued, 'but it is incredible value for someone with vision and who wants to renovate to their own tastes.'"

By marketing the home directly to the right buyer — someone with the vision and will to add value through sweat equity — Lebow was able to attract multiple offers.

Bottom line: You can sell a house in poor condition

With the right strategy, you can find a buyer for just about any house. Whether you choose to sell to a cash buyer or list on the open market will depend on how fast you want to sell and for how much.

To decide which option is best for you, remember to ask yourself how much your home is worth as is, how much it would cost to repair, and what kind of buyers you’re trying to target. The answers to these questions will determine whether you should invest in repairs or try to sell as-is.

Whichever path you choose, you’ll want to compare all your options. Talk to an agent to find out what your home could sell for on the open market. And if you’re considering selling to a cash buyer, get multiple offers and compare them to your home’s market value to ensure you’re getting a fair deal.

⚡ Compare fair cash offers to the sale price you'd get with an agent — no added fees or pressure to move forward

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