Buyers tend to want listings that are in move-in condition. For that reason, sellers often put a lot of time and money into prepping their homes for market to realize the largest profit possible from the sale. But, is it worthwhile to fix a property up before selling if it is in a dismal state?
It's usually worthwhile to fix up a needy property in a good location that has great potential and that can be improved considerably with cosmetic improvements. The reason why it makes sense to go through the effort is that most people don't have good imaginations and can't envision what a house might look like with work done to it. They simply relate to what they see.
For example, last year a grand old home sold in the downtown Portland area. Neighbors went directly to the sellers and asked if they could take a look at the house before it was fixed up for marketing. The sellers agreed and showed them the house. The buyers didn't like what they saw.
The house was subsequently improved by removing wall-to-wall carpet and refinishing the original hardwood floors that were underneath the carpet. The entire interior of the house was painted in beautiful decorator colors. Light fixtures were updated; the yard was spruced up; and the house was staged for sale. The transformation was stunning.
The property sold with multiple offers for considerably over the asking price. The buyers who had turned the property down before the house was fixed up were one of the four bidders; they weren't the ultimate buyers.
Home Selling Strategy
There's a tip to be gleaned from this experience that's relevant to all sellers. Don't let a prospective buyer look at your home until it has been prepared for sale. Buyers remember what they see, not what you tell them the house will look like when you're done with the prep work. You could lose a good prospect by showing your home before it is ready.
Circumstances may not permit you to do much to a property in disrepair before you put it on the market. You might be short of funds or have a pressing deadline. In this case, the best approach can be to take advantage of the fact that the property you're selling is a fixer-upper. In other words, market it as a fixer.
Some sellers bridle at the notion of calling their home a fixer-upper. It is often difficult to remove the personal emotion from the selling equation. But, it can make good marketing sense. A certain segment of the market is looking for fixer properties that can be improved to increase value. In fact, these buyers sometimes overpay for the perceived potential.
Limiting the Buyer Pool
Even though you might get lucky and sell an inferior house for more money than you thought was possible, don't lose sight of the fact that you're marketing to a limited pool of buyers. Most buyers won't even look at a fixer because they don't have the time, expertise or resources to turn a property around. Listing a fixer at an enticing price is an important part of selling it for a good price. The list price should reflect concessions made for work that needs to be done.
To attract a fixer buyer, make sure you get broad marketing exposure. It's also a good idea to have pre-sale inspections done. Make the reports available to buyers to review before they make offers. This will help to minimize the chance of a deal falling apart when the buyer finds out the extent of the necessary work.
Even if you don't do fix-up work, the yard and house should be clean and free of debris so that the "fixer" buyers with vision will be able to see what the property has to offer.
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