If you’ve seen the move Money Pit with Tom Hanks, you know the stress and headache that is involved with owning a house that needs too many renovations to count. If you own a money pit and you are thinking about selling, there many things for you to consider before you decide to stay or sell.
A money pit is typically described as such when you are you are spending more than 2% of the home’s value annually on repairs. This is when you have to ask yourself if it’s really worth it. Houses don’t age like wine. They need a lot of upkeep to keep them in good, comfortable condition.
So how should you go about selling a money pit? Here are some suggestions to keep in mind:
-Generally, you should not have a problem selling a distressed home. The sale actually depends on the amount of money to expect to receive when escrow closes. If your loan exceeds your home’s value, then you might be looking at a short sale.
-There is a difference between a fixer-upper and a tearer-downer. Some houses that are renovated still become “tearer-downers” because their defects are architectural.
-Begin with getting the opinion of a structural engineer to determine the scope of your home’s defects. Then get bids from independent contractors. These second opinions will help you to better understand your options.
-You should decide if the repairs will be more costly than selling and buying another home. Keep in mind that selling costs including commission and other fees. You should also consider the copious and inevitable moving costs when you move to another dwelling.
-It’s a good idea to get a real estate agent involved who has knowledge and experience in dealing with money pits to give you a more professional opinion of the sale of the property.
Remember that some of your home’s current problems simply cannot be fixed. Maybe the neighborhood has gone downhill and shows you signs of improving. Maybe you are tired of the area’s weather, which is something else you can’t change. In these cases, moving may very well be the best solution.
When to avoid selling
-Do you still have equity left in your home? If so, it may be feasible for you to fix the house instead of selling and buying again.
–Already having trouble making ends meet? If so, you should not spend more money on housing. Even if you trade your current home for one of a comparable value, you might not be able to afford all of the costs associated with buying and selling.
Keep in mind that selling won’t always solve all of the problems concerning your home. You must disclose all of your home’s defects to prospective buyers in order to avoid legal trouble.
You can always rely on a free home valuation report from Neighborhood IQ to learn what your home is worth right before you sell. Or, if you are moving into a new home while you are selling, consider getting a free home valuation report from Neighborhood IQ absolutely free.