For Sale By Owner – The Master List
You've decided to sell as a For Sale By Owner (FSBO), however when it comes time to sell their homes, many people wonder what items they should repair and which ones are better left alone. This is often a question of budget, and market value but in today's real estate market where open disclosure is the norm, many savvy homeowners are pondering this question carefully.
If a home is listed with a real estate agent, the agent is compelled by law to tell purchasers all the property's dirty secrets. Many get the home owner to sign a Vendor disclosure form. As a For Sale By Owner, you're also compelled by law to distinguish those items that could pose a risk to health or safety, or that could be considered a structured defect of a major sort.
On the one hand, smart For Sale By Owners, do not want to spend needless amounts of money repairing items that are not going to bring in a return on their investment, but on the other hand, failing to repair some critical items could spell trouble during or even after the sale. For example, if the property suffers from a mold infestation then the Vendor is legally obliged to declare or repair the problem before a sale can be completed. If the Vendor fails to do so, then they are legally liable for this problem, and will likely have to pay the full price to repair it, plus accrued legal fees.
How does a smart For Sale By Owner go about intelligently deciding what to repair and what to leave undone? The answer is surprisingly simple, just make a master list then pare it down. In my previous article, entitled Doing The Walk Around, I describe a method that any FSBO Vendor can use to create a master repair list for this purpose. In this article, I will discuss taking that master repair list and paring it down to its bare essentials.
Health and Safety First
With the trusty master repair list in hand, take a moment to inspect all of the items on it and put a check mark around those items that if left undone, could pose a health or safety risk. You're on the hook for these items anyhow, so you may as well address them now. This is where the dreaded mold issue would be included. This is also the place to check off the broken stairs or loose handrails. Scuffs or holes in the walls, while still important to the sale, are not in the health and safety risk area of the list. In short, any item that could pose a health or safety risk must be included in your checked off items to repair.
Air Tight In and Out
Have a look at the condition of the roof, chimney, windows and exterior doors or entrance ways. These items should be in good form to avoid losing a sale on inspection. Nothing is more frustrating than having a sale conditionally completed and losing it on a bad inspection report from a home inspector. As a FSBO you should expect the Purchaser to insure on an inspection as a condition of the sale. By the way, do not imagine for a moment that the purchaser will forget to get an inspection. If they do not insure on it themselves, their lawyers will usually include it in the offer for them. Either way, you do not want to go there.
High Return Areas
Next, have a look at items that are in the kitchen or bathroom (s), and to a lesser extent the master bedroom. These items will likely get you a return of your investment. Now, I did not say you were going to get rich on these items, what I said is that you'll probably get the money spent on these items back in the sale price. Historically, kitchens and bathrooms have been known to return the greatest percentage of the money invested to improve them. Be very careful to avoid overspending on these items because it's easy to do. I would be remiss if I did not mention that in some cases, money spent in the kitchens and bathrooms is not fully recovered in the sale price.
Looks Nice and Easy To Do
Now comes those items that will increase the visual appeal of the property as a whole. These are things like painting the interior and exterior of the house in warming neutral tones. Replacing worn carpets, and repairing broken interior doors, walls or ceilings. This could also include landscaping and gardening.
Show Me The Money
Now that your list contains the bare essentials, it's a matter of figuring out how much the "have to do" items will cost, and then deciding if you have enough of a budget to proceed down to the next category. If you have a small budget, and you can only cover the bare essentials then do so, but remember that your end sale price will reflect this fact. If you do not have enough of a budget, and you're not forced to sell for some reason, then you might reconsider if selling is a good idea at all. I would say that if this describes your situation, then talk to your real estate lawyer to see what bare minimums you're legally responsible for doing, or at least disclosing. This is one of those time when the truth will legally set you free.
Until next time, this is George Grosso wishing you a profitable sale.
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Source by George R Grosso