PROPERTY NEWS - Those whose homes are in ill repair face a complex decision when deciding whether to list as is or fix the property before it goes to market, especially within the current market where financial resources are under pressure.
Sellers in this position will need to choose whether to spend money on repairs or lose money by setting a lower asking price.
"It goes without saying that a home in good repair will achieve a far higher selling price than one that needs attention," says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett. "However, fixing a home will cost money and will delay the sales process by the amount of time it takes to complete the repairs. Sellers ought to weigh up the pros and cons of each of these options before making any decisions."
In most cases, homes that are in good repair will appeal to a greater number of buyers and will be sold sooner than a home in need of repair.
"While it largely depends on the reasons why the homeowner is selling and when they need to sell the home by, taking the time to get the home into its best shape will attract far more attention from potential buyers than one that is not well kept," says Goslett.
So how much should sellers do before placing their home on the market? Goslett says most sellers will spend some time and money preparing the home to be sold, even if it is just a fresh coat of paint and seeing to the items that need fixing.
However, if there are larger structural issues, like a roof that needs to be replaced, sellers can find themselves in a difficult position. "In today's market, many buyers want to have the property inspected by a professional before they sign the sales agreement. Ideally, the seller should have the home inspected before they put it on the market to ensure they are fully aware of any potential issues that need to be addressed.
"They are then obliged to inform their real estate agent and the potential buyer of any known defects," says Goslett.
Having the property professionally inspected will also allow the seller to obtain quotes for the required repairs, which will grant a much clearer picture of whether it is worthwhile fixing the home before placing it on the market or selling as is at a lower asking price.
"If the asking price of the property would decrease by as much as R100 000 or R200 000, but repairing the home would only cost around R50 000, it would make more sense to delay the sale and have the repairs done before going to market.
"However, if the cost of the repairs is R50 000 and the asking price of the property will only change by R50 000, it would seem more feasible to rather put the home on the market sooner and advise potential buyers of the repairs needed," Goslett recommends.
While cost is a factor, it is often not the only consideration. Major repairs will take time which, if the sellers have committed to another property or are semigrating or emigrating, they may not have. Another consideration is that, in a case where the repairs are cosmetic by nature, the buyer may want to make these decisions themselves.
Ultimately, regardless of the decision made, it is vital that all parties are fully aware of all the home's defects and are prepared to agree to the terms and conditions of the contract. Finally, Goslett suggests that sellers enlist the advice of a local real estate professional, as this will give them a more accurate picture of how the repairs will affect their listing price.
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