Low inventory and escalating property values throughout California have created a great situation for homeowners that are looking to unload “fixer-uppers” in lucrative neighborhoods. In fact, the San Diego real estate market is so under-inventoried, that many homeowners are first seeking out fixer-uppers instead of paying exorbitant prices for freshly remodeled homes. On the other hand, these same homeowners will have to apply for separate loans in order to remodel their new homes, which can be difficult, especially if their income to debt ratio isn’t what it should be.
For those trying to sell a fixer-upper, the market is much better. But the same pressures that prevent homeowners from wanting to invest in one are going to be the same pressures that make it more difficult to sell. Nonetheless, there are ways.
#1. Setting the Price Low
This may seem obvious, but let’s think about why it has to be this way. For a prospective homeowner to buy a property that requires a lot of work, money they would have spent on a move-in-ready house that requires little to no work will need to be put into the fixer upper. That money isn’t going to be covered by their mortgage and if the work required is extensive, they’ll have to apply for a second loan. Most folks would rather not bother, since the move-in-ready house is going to be about the same cost from their perspective as a “fixer-upper” plus the work required to get it market ready. In other words, be prepared to take a loss on the property value.
#2. Find an Experienced Agent
An experienced agent can go a long way toward highlighting the high points and itemizing what precisely needs to be fixed up. The trick is making a pitch to a prospective buyer by itemizing the costs of renovation plus the cost of purchasing the house. A good real estate agent is going to be honest about the building’s flaws, and understand what kind of prospective buyer would be interested in incurring the risk. That means a lot toward securing a good price for a beat up house.
#3. Work with a Renovation Firm
You can, of course, do all the renovations yourself, but one option that you may not be aware of, are firms that are willing to renovate the property on consignment. That means that you wouldn’t have to pay a dime toward the renovations until the property was sold. This is an ideal option for maximizing the closing cost of your house, and a service that you won’t find in many housing markets. It’s largely because San Diego property values are so high right now that such a business model can be successful.