Our son owns a home in a rural area and wants to sell in the next few months. The house is large, old and in terrible condition — it has hot water heating and an oil furnace. He can’t even get oil deliveries until he spends a lot of money on repairs, which he doesn’t want to do. Do you have any advice on how he can sell this home? – CONCERNED MOM
In a power of sale, the bank will typically employ a standard process that allows them to sell the home for the most amount of money and the least amount of work. This approach doesn’t leave much room for new projects, as the only repairs that tend to get done are those deemed absolutely necessary.
The condition of your son’s home sounds similar to a power of sale, but I wouldn’t recommend the same “hands off” approach. The fact that he can no longer receive oil deliveries leads me to believe that his oil tank may be expired and in need of replacement. If this is true, your son would be well advised to take care of the problem, along with any other repairs that are required to restore the functionality of the heating system. Otherwise, he may squander his chances of getting a solid return on his investment.
Imagine if you were shopping for a vehicle and saw two identical cars for sale, but one was missing an engine. Even if the two cars were priced according to their condition, most people would perceive the one with the engine to be a smarter purchase, since a car without an engine isn’t drivable. Likewise, a working furnace is an essential part of what makes a house livable. If your son chooses not to spend the necessary money on repairs, he may find that his short-term savings could end up knocking tens of thousands of dollars off the sale price of his home.
In most of my home searches, I’m looking for options that will make my clients’ lives simpler and less stressful, which means taking livability into account. While just about anything will sell in real estate, most buyers want a move-in ready home rather than a project. Solid fundamentals (such as a roof, furnace, and electrical system) are an important part of that equation.
PRO TIP: Take a deep breath before you succumb to sticker shock. Repairs may seem expensive, but it’s important to put them into perspective; compared to the value of a home, most are merely a drop in the bucket. If your son is short on cash right now, he may find it worthwhile to put the repairs on his credit card over the short term. Running up a bit of interest isn’t ideal, but it sure beats taking a dramatic hit on the price when it’s time to sell. #AskDavid #Advice