Selling a Distressed House
Any real estate transaction must have a motivating factor. For example, a first-time home buyer may be motivated by the freedom to own verses rent. A growing family may be motivation to purchase a home with more bedrooms. Children leaving home may be the motivation to sell and purchase a retirement property. For the motivation of selling distressed a house, the thoughts of updating could be overwhelming.
No matter the motivation, the first step is to have the selling mindset. Ensure everyone involved in the selling a distressed house decision making process all agrees on the following: 1) Timeframe 2) How is the transaction of selling a distressed house going to happen? 3) Reasons for wanting or needing to sell 4) If the property is currently occupied, where will the occupants live next?
Timeframe: When would selling a distressed house be realistic? For example, if the property was part of an estate that is going through Probate, has the property been given the go-ahead to be sold? Another situation is what if a property was damaged, therefore the homeowners decided that selling a distressed house is better than fixing themselves? Now the timeframe may depend on the insurance timeframe with assessing the property and then determining the next steps. Sometimes a property is just too much for someone to keep up with. For example, the homeowners travel for employment which means they are not at home to take care of the needs. Perhaps in this case the homeowners’ timeframe is to sell ASAP.
Another step of selling a distressed house is how will the transaction happen. Listing a property with a real estate agent, having a For Sale By Owner (FSBO), selling per instructions of probate orders, or perhaps reaching out directly to a buyer are all some possibly ways of selling a distressed house.
Now that motivation, timeframe, and how to proceed with the transaction is established, next part is realistic pricing. All too often the representative will have the mindset of “Well, my neighbors sold their house for (insert price), so I should be able to sell my house for (insert higher price).” When selling a distressed house, the problem with thinking this transaction will sell for similar houses nearby are 1) Condition of neighbor’s house? 2) What is the size along with number of bedrooms/bathrooms/garage stalls/lot size in comparison to the subject property? 3) When did the neighbors sell? 4) What was the original list price, final sale price and how many days on market?
Here are hypothetical scenarios: subject property has 3 bedrooms, 1 bathroom, 1,900 square feet with a 2-stall garage. Property is in distressed condition with a moldy basement from water damage, needs kitchen and bathroom renovations, and landscape is overgrown. Seller wants to list for $175,000.
Neighbors A bought the property 10 years ago, worked hard to update the past 2 years and has decided to upsize due to having more children. Property is in A+ shape, has 3 bedrooms, 2 bathrooms, 2,000 square feet with a 2-stall garage and listed at $200,000 which is under market value for a quick sale. Property had an offer within 1 hour of being listed and ultimately sold for $230,000.
In this scenario, selling a distressed house cannot be compared to the neighbor’s sale price.
Neighbors B bought the house 40 years ago, always cared for the yard/landscape but the interior needs updating. The bathrooms have linoleum that is being unglued, kitchen cupboards showing wear and tear, there was water damage in the basement due to intense spring thunderstorms which then caused mold in some areas. Property has 3 bedrooms, 2 bathrooms, 2,000 square feet with a 2-stall garage and listed at $150,000. Property was on market for 36 days and ultimately sold for $125,000.
In this scenario, selling a distressed house may be compared due to possible similar distressed ways.
Neighbors C bought the house last week for $375,000. Property has 5 bedrooms, 3 bathrooms, 3,000 square feet with a 2-stall garage. Original list price was $350,000 but due to a bidding war, final sale price was $375,000. Property went to Pending during the Coming Soon phase, therefore did not officially go on the market.
In this scenario, selling a distressed house cannot be compared due to only similar feature was same sized garage.
Therefore, it is important to be realistic about the list price. Perform due diligence (another term for research) to compare and contrast the subject property to other properties that have recently sold.
Choose the best way of selling a distressed house. Perhaps someone had reached out stating they wanted to purchase the property; now this can be done in a private sale. Sometimes the homeowner does not live near the property, therefore the homeowner wants a professional REALTOR such as Rochelle Markov from eXp Realty to represent the transaction. Perhaps the property would be a great find for an investor such as Reel Property Solutions, LLC to purchase, fix up and flip for to resell. Whatever the decision, ensure it is best for the property and all the decision makers.
Any questions about selling a distressed house can be directed to Reel Property Solutions, LLC which is brokered by eXp Realty. This is truly a one stop shop! First off, want to have your transaction represented by a REALTOR? Rochelle can do this in Rochester and southeast Minnesota (or can find a great REALTOR if in a different state, country, or part of Minnesota). Want to have a private sale? That is something Reel Property Solutions, LLC can look into. Our extensive education with real estate investing is from Fortune Builders who teaches, guides, and has endless resources for real estate investors like us! Again, a one stop shop!
There are many ways to connect. Let’s CATCH A WINNER!
info@reelpropertysolutionsllc.com
rochelle.markov@exprealty.com 507-358-0638
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