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At the BREL team, we’re often tasked with selling “fixer-upper” properties. Our clients may be selling an investment property that’s been tenanted for years; sometimes, they’ve inherited a property that wasn’t properly maintained; and other times, they’ve simply neglected to make repairs or chosen not to update their home.
The Good News: There is a lot of demand for fixer-upper properties in the Greater Toronto Area.
The Bad News: Selling a fixer-upper property presents unique challenges and is different than selling a typical move-in ready home.
Below, we take an in-depth look at the process of selling a fixer-upper, address some common fears and questions and share tips on how you can maximize the sale price.
What’s a Fixer-Upper Property?
The term ‘fixer-upper’ isn’t a technical term, but it’s the expression that most people use to describe homes that need a lot of repairs and renovations. Some fixer-uppers are habitable, while others need to be renovated before someone can safely move in.
You can spot ‘fixer-upper’ homes on the MLS by looking for words like:
- Handyman special
- Renovation project
- Diamond in the rough
- Needs TLC
- Rehab property
- Opportunity to gut and renovate
Steps to Selling a Fixer-Upper Home
1. Hire a REALTOR with Proven Experience Selling Fixer-Uppers
While it’s always a good idea to involve your REALTOR early in the process of any home sale, it’s even more important when you’re selling a fixer-upper. They’ll be able to provide critical advice on what (if any) repairs to complete and whether or not you should consider renovating it before listing it for sale.
It’s important to hire a REALTOR who has experience in selling fixer-upper properties. Specifically, you’ll want to work with someone who knows how to target the right potential buyers for this kind of property and understands how to reach them. They’ll need in-depth knowledge of the kinds of marketing and pricing strategies that work; advanced knowledge about disclosures, as-is/where-is properties and the unique legal pitfalls of fixer-upper properties; and they’ll need to be experienced in handling and negotiating with the types of buyers who are attracted to homes that need a lot of renovation.
When interviewing agents, ask lots of questions, seek examples of past successful fixer-upper sales and read online reviews to understand their track record and reputation in the industry.
2. Assess the Condition of the Property
One of the first things you’ll do with your REALTOR is an honest assessment of the condition of the property. Does it just need cosmetic renovations, or do the electrical, plumbing and mechanical systems need to be replaced too? Is it really a fixer-upper, or do you simply wish it had a more modern kitchen? Would the average buyer be able to move into, or would they need to complete the renovations first? Are there any safety hazards? Any reasons the home might not be insurable? When assessing the property, your REALTOR will be looking to identify the good, the bad and the ugly. What are the most likely objections? What are the selling points, no matter the condition it’s in?
3. Decide What (if anything) To Repair and or Renovate
We regularly see homes for sale that have undergone a quick and cheap reno before being listed for sale. What those homeowners don’t know is that in many cases, they could have saved themselves time, money and stress – and possibly sold for MORE money if they’d sold as a fixer-upper.
While it can be tempting to replace 40-year-old laminate countertops with newer laminate counters, if the rest of the kitchen needs to be renovated anyway, you’re wasting your money – the new buyer is just going to rip them out. A partial or cheap reno is also confusing for the buyers…most buyers either want a home in move-in condition or a home they can customize and renovate themselves. Falling in between those two categories likely means it’ll take longer to sell.
Of course, in some situations, it makes sense to do repairs that might be deal-breakers for buyers or cosmetic renovations that may add value. Talk to your agent.
Before you repair or renovate, ask yourself:
- Is it worth my time and effort?
- Will I get a return on the money I spend or will I end up with less money after the sale?
- Do I have the skills to manage a big renovation?
- Will my target buyer prefer to pick their own finishes and complete the work themselves?
- Are there any small repairs that are worth doing before I list it for sale?
- What’s the state of the real estate market and how is it predicted to change?
- What does my REALTOR think?
4. Decide If You’re Selling it As-Is, Where-Is
When a home is listed for sale in ‘as-is’ condition, the Seller is not making any representations or warranties about the condition of the property. Many fixer-upper homes are sold in as-is condition to limit the seller’s liability.
As-is homes might not have working appliances, there may be rats nesting in the basement, the electricity might not work, and the walls might be full of mould. The buyer takes on all the risk and expenses to fix any deficiencies. What they see is what they get – and what they don’t see, well, they get that too.
It’s important that you understand the pros and cons and listing your home as-is – this is an important conversation to have with your agent.
5. Decide If You Should Get it Professionally Staged
We’re big believers in staging – so much so that we own a staging company for BREL clients. But when it comes to selling a fixer-upper home, professional staging isn’t always the right solution.
With fixer-uppers, we often see sellers hang some art, add a plastic plant or desk chair in a corner and convince themselves that they’ve ‘staged’ their home. It doesn’t work like that! Staging isn’t just about having furniture in the home – it’s about showing potential buyers the lifestyle they can have if they live there. When it comes to fixer-uppers, you want to showcase the opportunity and potential – and half-ass staging will just distract from that.
It’s also a mistake to spend money on the wrong kind of staging for the home. If you hire a stager whose inventory is full of contemporary furniture and decor to stage your great aunt’s home that hasn’t been updated since the 1980s, it’s going to look weird. And weird staging is worse than no staging at all.
Every situation is different. Sometimes, the right thing to do is stage the rooms that don’t need renovating; sometimes it’s best to list it with whatever belongings are already in the house; sometimes it’s best to clear it out and list it vacant; and still other times, if the home is liveable, it might make sense to bring in a stager with the right kind of inventory to make the home look its’ best.
Talk to your REALTOR.
6. Bring in Professional Cleaners
It’s almost always worth having your home professionally cleaned before listing it for sale. While buyers of fixer-uppers know how to see the potential in dated renovations and much-needed repairs, nobody wants to walk through a dirty, smelly home.
Note: It might make sense to skip the cleaning step in situations of extreme hoarding or if 99% of the potential buyers are going to tear it down.
7. Who’s Your Target Buyer?
Fixer-upper properties can attract a wide range of buyers, including first-time homebuyers, real estate investors, and contractors. First-time homebuyers are often attracted to fixer-upper properties because they are typically more affordable than move-in-ready homes. Real estate investors and contractors are attracted to fixer-upper properties because they have the skills and resources to renovate the property and turn a profit. And sometimes, the ideal buyer is drawn to it because it’s in a high-demand neighbourhood or school district.
8. Determine the Right Asking Price and Pricing Strategy
Pricing a fixer-upper property can be tricky, as it requires striking the right balance between the condition of the property and the local market conditions. It’s important that your agent understands the conditions of the local real estate market, current buyer demand for this type of property and their psychology; they’ll also need to know how your home compares to other recently sold homes in your neighbourhood and other fixer-uppers nearby.
Remember: You can impact how much your home sells for with photography and marketing, by being flexible with showing times and through negotiations.
9. Market the Property Effectively
Marketing a fixer-upper property requires a different approach than marketing a move-in-ready home. Everything – from the language in the property descriptions to photography to where the property is marketed is different.
Photography should focus on room sizes, layout and opportunity. Floor plans and virtual tours are critical. Drawings or cost estimates of needed renovations can be helpful. Pre-listing home inspections may or may not be beneficial, depending on the home and target buyer. Directly marketing to builders and renovators can work well. Being creative and highlighting (vs hiding) the home’s issues while showing its potential can also be a great way to attract attention.
Ask your REALTOR how they will be marketing your home and make sure that their efforts go beyond listing it on the MLS.
10. Be Transparent about the Property’s Condition
To avoid legal issues on closing and in the future, you may need to disclose known issues about the home to potential buyers. We wrote a whole blog about disclosures here.
If the real estate market conditions aren’t ideal, selling a fixer-upper home can take longer to sell than a move-in-ready home. Try to be patient and don’t panic if it sits on the market longer than average. Stay optimistic and make sure to regularly talk to your agent about whether you need to adjust price or strategy.
When it comes to selling a fixer-upper, hire a REALTOR who understands the unique challenges and approach required to maximize the selling price.