Author Topic: Fix house now for $10,000 or sell and factor loss into sale price?  (Read 3777 times)

lukebuz

  • Stubble
  • **
  • Posts: 195
  • Location: Bowling Green, KY
So, I may be moving in a 1-2 years, and the basement walls need shoring up.  Got a quote to fix them for $2,400.  I'll need a new roof about that time too, both house and garage.  Estimating $7,500.
So, what a would you do?  Spend $10,000 to fix these 2 big items before selling - or sell as is, have inspector bring these items up, and then give a seller allowance to cover it?   If they were fixed, I could ask for me $.  If not, you have to think about reduced asking price and the allowance to fix.
Do you think one choice would be better than another?  Why?

MayDay

  • Magnum Stache
  • ******
  • Posts: 4374
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #1 on: February 06, 2014, 10:03:33 AM »
Around here, no one would buy a house with foundation issues (which basement wall needing shoring up sounds like).  Best case is you get it fixed by a well known company in the area that offers some kind of warranty.  Worst case is you take a huge hit on the price because foundation issues can be $$$$$$$, and people know it. 

The roof I think is not a big deal either way.  Curious what other people think about that.  Around here lots of houses get sold needing a roof, the price just reflects it.

Greg

  • Handlebar Stache
  • *****
  • Posts: 1449
  • Location: Olympia, WA, USA
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #2 on: February 06, 2014, 10:04:12 AM »
If it were me I'd fix then sell.  For a couple of reasons..  One reason is that I could do the work myself and save some money.  Another is the property will sell faster and potentially for more without having obvious flaws.  I think "fixer-uppers" take a hit sale price wise that's greater than just the cost of the repairs for this reason.

unpolloloco

  • Stubble
  • **
  • Posts: 185
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #3 on: February 06, 2014, 10:06:17 AM »
I'd fix the foundation without any hesitation - it's a HUGE red flag for buyers.  Is the roof just old or starting to show signs of needing replacement?  You may want to speak to a realtor about that one.

Numbers Man

  • Guest
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #4 on: February 06, 2014, 10:16:33 AM »
I would fix the basement since you know it is defective. I wouldn't do anything with the roof unless it needed to be replaced.

 I sold my 22 year old house (roof should be replaced about other 25 years) about 3 years ago and was blissfully unaware of how bad the roof was. Fortunately the buyer's home inspector didn't go up on the roof since the inspection was during a rain storm. I love rain! The buyers ended up spending about $15k for a new roof, they even tried to get me to pay but my attorney told them to take a hike.

soccerluvof4

  • Walrus Stache
  • *******
  • Posts: 5929
  • Location: Artic Midwest
  • Retired at 50
    • My Journal
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #5 on: February 06, 2014, 10:21:48 AM »
I would definitely fix the foundation because not knowing what you have found out it could worsen and become a bigger expense. Also you will reduce your buyers. Foundation issues rightfully so scare people. The roof i would replace too as you said you could get more money for the house if you did but that is a case by case thing too. I also think if you know its something the inspector will for sure say it turns off some buyers. In good conscious i too wouldn't want to sell anyone something i know has problems. And a lot of inspectors are really not that clear the potential of the problem and can make light of it but in most cases scare the crap out of the buyers!

lukebuz

  • Stubble
  • **
  • Posts: 195
  • Location: Bowling Green, KY
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #6 on: February 06, 2014, 02:51:51 PM »
I agree with the basement foundation issues.  I'll be addressing those probably right away.  Mainly because 1 rainy spring could bring them in.  Unlikely...but most certainly a possibility!

The roof has no issues yet - just looking a little ratty.  No curling, no leaking, no breakage, and it has another old layer underneath it (that couldn't do anything but help, right?).  I bet I can ride it out until I go.  Seems like the best bet is to try to time the move in winter, when they won't look at it :)

Thegoblinchief

  • Guest
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #7 on: February 06, 2014, 03:10:00 PM »
Foundation: ASAP

It's only going to get more expensive to fix. Just make sure the $2,400 fixes it. And foundation issues are an immediate full-stop, I'm leaving this house during a showing unless it's being sold as a dirt-cheap fixer-upper.

Roof: Now if you DIY. Wait if you can't/won't.

If you DIY, you'll gain money. If you pay a contractor, you'll actually lose 20-50% (i.e., resale value will only go up 50-80% of what the contractor charges) depending on your area. This presumes it doesn't get SO bad that it starts leaking, etc, in which case you'll need to fix it regardless.

GM404

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #8 on: February 06, 2014, 06:16:22 PM »
An issue you might run into is that even if the buyer *would* buy as-is, if they are getting a mortgage through the VA or FHA, it could very well be a "lender required repair".

Nords

  • Magnum Stache
  • ******
  • Posts: 3271
  • Age: 59
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #9 on: February 06, 2014, 06:50:42 PM »
I agree with the basement foundation issues.  I'll be addressing those probably right away.  Mainly because 1 rainy spring could bring them in.  Unlikely...but most certainly a possibility!
The roof has no issues yet - just looking a little ratty.  No curling, no leaking, no breakage, and it has another old layer underneath it (that couldn't do anything but help, right?).  I bet I can ride it out until I go.  Seems like the best bet is to try to time the move in winter, when they won't look at it :)
I'd fix everything to make it the best material shape it can be.  I don't mean upgrading Formica kitchen counters to granite-- I mean fixing all the current infrastructure to look as good as when it was new.

Here's why:  most buyers suck at imagining the possibilities.

Spouse and I are very good at going into a beat-up house and seeing the potential.  We've done it twice and we prefer to buy fixer-uppers because we have home-improvement skills.  (We actually once sold a home even though we were in the middle of a bathroom renovation.)  But after many hours of watching HGTV, we've realized that those buyers are very rare.  Most people give up on a house if it needs work.  They want to move in with just a toothbrush, not a complete set of contractor's tools.

If my spouse and I saw your house, we'd lowball you on that $10K of work.  Sure, $10K might be a fair price, but there's the risk of finding out that the repair cost is really $25K.  Meanwhile there's a nice home down the street for sale, and it doesn't need any work.  So we'd offer you $30K less than your asking price, haggle for a while, and then go down the street to buy the other home.

Unless you know a buyer who's specifically looking for a fixer-upper, you're locking yourself out of about 99% of your home's potential buyers.  After several months of this you may run out of time and have to do the work anyway-- so why suffer?  Do the work now, enjoy the results for a year or two, and then sell with the knowledge that you've been living in a creampuff.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 12995
  • Age: 62
  • Location: NorCal
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #10 on: February 06, 2014, 07:11:18 PM »
What Nords said.

I was just about to reply when I read his post. I second it wholeheartedly. In addition, you are not sure exactly when you will be moving. What if you end up staying there longer? Is a crumbling foundation ever going to get cheaper to fix? Do it asap. Next, please do not do any major work without getting multiple bids from qualified sources. Permits are also key when selling. Turnkey, turnkey, turnkey. You will never regret it, unless you overspend or choose a bad contractor, which I know you are too smart to do because you're here asking the questions.

Now, back to what Nords said...

P.S. Two layers of roofing ain't necessarily bad, but it ain't necessarily good either. And don't even think of adding a third layer. Two's the limit, as that stuff is mighty heavy and too much weight on the roof is never a good thing.

lukebuz

  • Stubble
  • **
  • Posts: 195
  • Location: Bowling Green, KY
Re: Fix house now for $10,000 or sell and factor loss into sale price?
« Reply #11 on: February 07, 2014, 08:06:37 AM »
Yup.  I'll be fixing the foundation this winter.  It's a no-brainer.
The good thing is the house is turnkey other than this, I DIY almost everything - and the interior and exterior are all Grade A.  These 2 issues were just avoided because they don't affect usability, and they were expensive and weren't stopping anything else...

The roof is just fine - just nearing the end of it's life.  I suppose it's got a few more years, but buyers like that new roof.  I'll probably leave it for now, and use it as a nego. piece.